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Power equipment supplier BHEL and power generation major NTPC sign an agreement to set up a JV, reports Deepak Joshi.

india Updated: Dec 17, 2007 21:44 IST
Deepak Joshi

Power equipment supplier Bharat Heavy Electricals Limited (BHEL) and power generation major National Thermal Power Corporation (NTPC) have signed an agreement for setting up a joint venture for engineering, procurement and construction (EPC) projects in the power sector.

"A joint-venture agreement between the company and NTPC has been signed for the establishment and operation of a joint-venture company for taking up EPC business," BHEL said.

The move would help NTPC, the country's leading power generation firm, to enter the equipment manufacturing space. A memorandum of understanding was signed between the two companies on September 10. The development comes in the wake of an ongoing tussle between the two state-owned companies over NTPC’s proposed move to foray into equipment manufacturing, which is considered to be BHEL's domain .

NTPC and the power ministry had in recent times passed on much of the blame for the slippage of the 10th Plan capacity addition target on to BHEL by citing “delays” in supply of equipment by the latter.

NTPC, as a generation utility, and BHEL, as an EPC contractor, have worked together on several domestic projects earlier, though without a formal partnership in place. BHEL has designed and manufactured equipment that accounts for about 70 per cent of NTPC’s installed capacity.

BHEL is also currently working on an expansion for its manufacturing capacity from 6,000 megawatt to 10,000 megawatt by the end of this year at an investment of Rs 1,200 crore. The capacity would be scaled up to 15,000 megawatt over the next three years in light of the capacity addition target of 78,000 megawatt set for the 11th Plan.