Cabinet nod for BHEL-NPCIL venture soon

The joint venture of Bharat Heavy Electricals Ltd with Nuclear Power Corporation of India Ltd (NPCIL) is likely to be approved by the Union cabinet soon.

The new company is to provide engineering, procurement and construction services in the nuclear power sector. The memorandum of understanding to set it up was signed in April 2008.

There will be a third partner, France’s Alstom. Each of the three are expected to hold 33 per cent equity stake. BHEL, the power equipment maker, already has a tie-up with Alstom for its boiler business.

BHEL’s chairman and managing director, B Prasada Rao, told Business Standard the three parties had signed an initial agreement and formation of the venture was in the final stages. With cabinet approval coming, the new company would start functioning in the next four to five weeks, he said.

On the recently enacted civil nuclear liability law and how far it would impact equipment suppliers, Rao said it would constrain present suppliers but a way out would be found, since suppliers could not bear endless liability. “There has to be a way out because business has to happen,” he said, noting that foreign players had expressed concern.

Rao said the JV would not require much capital investment and it would function as a front-end company, responsible for marketing and engineering. BHEL would do manufacturing, with the French partner supplying some parts. The company would place orders on BHEL, which would use its Bhopal and Hardwar facilities to enhance its equipment capacity for the nuclear sector.

BHEL’s boiler capacity at Tiruchirapalli would also be used for catering to the nuclear sector. The power sector constitutes 76-77 per cent of BHEL’s total business, of which coal comprises 83 per cent, gas another three to four per cent and hydro, two per cent.

Initially, the JV would supply turbines to eight units of 700 Mw each being developed by NPCIL. The value of supplies is likely to be Rs 6,000 crore. The Indian nuclear power market is currently estimated at about 45,000 Mw.