BHEL questions NTPC entry into equipment making

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A. K. Puri, Chairman, BHEL.
A. K. Puri, Chairman, BHEL.

Sujay Mehdudia

Ready to rope in strategic partner to access capital, Chairman tells Parliament committee

  • Power generation cos. fear BHEL may not meet the demand
  • It is better to support existing entity, says BHEL chief

    NEW DELHI: With National Thermal Power Corporation (NTPC) far head in the race for putting up a new power equipment manufacturing facility, Bharat Heavy Electricals Limited (BHEL) has questioned the very idea of state generation utilities entering into such a venture.

    Instead it has stated that BHEL was ready for taking on a strategic partner to deal with the emerging situation.

    With the Power Ministry setting an ambitious target of 74,000 MW capacity additions during the XI Plan, fears were expressed by the public sector generation companies that BHEL would not be able to meet the growing demand for power equipment and therefore some other alternative should be looked. In fact, NTPC has emerged as a serious contender for setting up such a facility on its own or entering into a partnership with a global partner in the near future.

    Deposing before the Parliamentary Consultative Committee, BHEL Chairman A. K. Puri said there were reports suggesting that there was a proposal under consideration for setting up of a power equipment and engineering company on the lines of BHEL.

    This would be a sub-optimum solution to the problem of equipment manufacturing capacity constraints and the need for technology upgradation, he added. Further, Mr. Puri said that from the details available so far, it was not clear as to why capacity addition in BHEL would not be sufficient to meet the growing demand. A new company that operates in the same area would be setting up similar capacities too. "It is better to support an existing entity like BHEL where economies of scale for utilising 15,000 MW capacity annually would outweigh setting up new manufacturing capacities where the gestation period could range from three to four years, not considering the skill requirements and capability building needed,'' he added.

    Mr. Puri said it remained a `questionable idea' even if the intention was to attract private capital by involving a domestic company or a multinational company. He said BHEL itself could raise capital or access technology by taking on strategic partners. The Heavy Industries Minister, Santosh Mohan Dev, said BHEL had emerged as an active player in ensuring energy security related to electrical power by playing a larger role than just being a manufacturer and supplier of equipment.

    The Minister said BHEL recorded a turnover of Rs. 18,702 crore in 2006-07, a growth of 29 per cent over the previous year, after registering similar higher growth levels in the preceding two years.

    He said BHEL was enhancing its manufacturing capacity to 10,000 MW per annum by December at a cost of Rs. 1, 600 crore and it planned to further hike the capacity to around 15,000 MW by December 2009 by investing around Rs. 3, 200 crore.

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