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BHEL 'willing' to continue with Tamil Nadu on Udangudi JV

BS Reporter  |  Chennai 

Energy-related engineering and manufacturing enterprise Bharat Heavy Electricals Ltd (BHEL) has approached the Tamil Nadu government to reconsider its decision on cancelling a joint venture (JV) for the Rs 8000-crore Udangudi power project in downstate Tuticorin.

"We have written to the state government that we have enhanced our capacity to 20,000 Mw. So, considering our order-book size, we can complete the project within the set target of December 2015 if the job is given to us," said A K Ghosh, chief executive officer of the state-owned BHEL's power sector (southern region), called PSSR. He was speaking to reporters after announcing the performance results for PSSR, which handles the erection, commissioning and servicing of the 1953-founded company's power projects in southern part of the country.

In February this year, Tamil Nadu had announced its decision to dissolve the JV it had with Bhel to set up the 1600-Mw Udangudi power project.

This, Chief Minister J Jayalalithaa said, was considering a lack of progress in the project after the signing of the memorandum of understanding for the project way back in 2007.

BHEL's Ghosh now says the project has been delaying since the Union environment ministry was not giving its nod, stating that a long-term coal linkage was not available for the project. Further, the government, he claims, is "not cooperating", expect for allocating its share of Rs 32.5 crore towards its stake in the project.

"If the government goes ahead with another partner, it would take some months to complete negotiations and finalise the new partner," Ghosh says. "Whereas, if we take up the project, we will meet the target of commissioning the project in December 2015."

With the project now delayed by four years, the government decided that TNEB, the state electricity board, would go ahead with the project on its own. It will also get a mega-power status, since it will be implemented by TNEB on its own. What's more, it will get tax incentives, thus helping to bring down the project cost.

As per the MoU, TNEB and Bhel will hold 26 per cent each in the company, while the remaining 48 per cent will be held by the private partner and a financial institution that are supporting the project. However, till May 2011, none of the private player had picked up the stake, said Jayalalithaa in February this year.

Projects in the pipeline

BHEL PSSR is expected to commission around 4,250 Mw, in through various projects, in the next six to eight months — all of them in Tamil Nadu.

These comprise a 2x500-Mw thermal project for NTECL in Vallur, 2x250-Mw thermal project for Neyveli Lignite Corporation in Neyveli, 2x600-Mw thermal project for TNEB in North Chennai, 1,000 MW of nuclear project for NPCIL in Kudankulam and a 500-Mw thermal project in Tuticorin.

It has posted a turnover of Rs 1200 crore for the fiscal year 2011-12, a 17.17 per cent drop from the last years' Rs 1449.12 crore turn over.

It has also reported a loss before tax of Rs 33.60 crore as against the profit before tax of Rs 99.47 crore posted during the same period of previous fiscal year.

The turnover target was around Rs 1500 crore. Some strategic realignment of projects, which resulted in transfer of around two projects of PSSR to the Eastern Region unit, thus reducing the turnover and profit before tax, said a higher official from PSSR.

Besides, the material cost including steel has seen a 2.5 per cent increase, which also affected the profit badly.

The unit is expecting around Rs 1850 crore turnover this year, with the order book position and the upcoming projects, said the official. PSSR has ongoing projects to the total size of 22,596 MW, at present.

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First Published: Mon, April 09 2012. 01:07 IST