TN gives nod for Toshiba-JSW unit

JV will set up supercritical power equipment manufacturing facility near Chennai

In a move that could boost India’s plans for setting up power plants based on supercritical technology, the Tamil Nadu government has given its nod to the Toshiba-JSW joint venture for setting up a supercritical power equipment manufacturing facility near Chennai.

Supercritical plants produce more power, around 3-4 per cent higher, per unit of coal and are thus seen as environment friendly.

Japan’s Toshiba Corporation and O P Jindal-promoted JSW Energy had earlier entered into an agreement to manufacture supercritical steam turbines and generators for power plants.

The joint venture partners had earlier sought the state government’s help for the project for which the Cabinet, which met on Tuesday, gave approval.

The partners are planning to invest around Rs 800 crore for setting up the facility, which will be able to manufacture 3,200 mega watt (Mw) equipment annually. The facility will be in Ennore district of the state.

“We are expecting to set up 3,200 Mw capacity at the plant using 800 Mw sets. But the capacity can be increased to 4,000 Mw if the government allows us to set up four 1,000 Mw sets,” said a senior official from Toshiba.

The joint venture will have an initial capital of $50 million (Rs 250 crore). Toshiba will hold 75 per cent, while the O P Jindal group will have 25 per cent. JSW’s stake will be held by group companies JSW Steel Limited (5 per cent) and JSW Energy Limited (20 per cent).

The facility will start producing equipment by 2011. Its second phase will start by 2015.

This would be Toshiba’s first venture in the Indian power equipment market, which is currently almost entirely dominated by state-owned Bharat Heavy Electricials Ltd (BHEL) and Chinese equipment manufacturers.

Currently, India’s overall power equipment manufacturing capacity stands at over 10,000 Mw annually — almost entirely contributed by Bhel. The shortfall is met by manufacturers from China, Russia and France.

Limited capacity has been a reason for delays in commissioning of power plants. The government is considering a proposal to make domestic manufacturing mandatory for overseas power equipment suppliers. This has prompted foreign firms to set up local manufacturing units in collaboration with Indian companies.

Around 33,000 Mw of equipment manufacturing capacity is expected to be added by the end of 2015, according to the latest data from the Central Electricity Authority (CEA).

While this would help the country meet its target of adding over 80,000 Mw generation capacity in the current Plan period and 100,000 Mw each in 12th and 13th Plan periods, it would also end the monopoly of BHEL.

Experts believe that deploying supercritical technology-enabled equipment in power plants should be made mandatory to address India’s energy security concerns.

“When availability of coal is becoming a bottleneck, supercritical technology should become a norm rather than an exception. It should be a part of every public sector project at least,” said Shubhranshu Patnaik, executive director, PricewaterhouseCoopers.