Saturday, February 25, 2017

NTPC not to exit BHEL JV; Govt forms panel to revive it

AFTER getting the board nod last year to exit NTPC   BHEL   Power Projects Pvt Ltd, the Maharatna power giant has now dropped its plan to turn its back on the loss-making joint venture company. The development comes in the wake of the Power Ministry setting up a committee to explore ways to infuse life into the struggling equipment maker for power plants. BHEL Chairman and Managing Director Atul Sobti heads the panel.
“We are no more pursuing that plan of shelving the JV. If need be, we will put more equity into it,” an NTPC source was quoted as telling a leading business portal. The two companies have Rs. 50 crore each as equity invested...
in the joint venture. “NTPC wanted BHEL to acquire its 50 percent stake in the JV, acquire all the assets and liabilities and absorb all the employees,” the portal recently quoted another source as telling. He further said the company had little revenue visibility after 6 months and hence would need a fresh injection of new orders or a new blueprint to sustain itself.
But the government is against the idea of giving up on the company, political factors too playing a role here. The JV company currently has around 80 employees on its rolls, most of them at its factory at Mannavaram in Andhra Pradesh. The joint venture company has been a victim of a drying market for thermal power equipment.
Cash crunch, land acquisition and environmental issues, general lack of demand for power and government's emphasis on renewable sources of power have left little to fight for in the thermal power equipment makers. Less than a decade ago, NTPC had lobbied with ministry of power to force Bharat Heavy Electricals to form a joint venture company with it and hence NTPC BHEL Power Projects Pvt Ltd was established in 2008.
However, the life of the new entity being dependent on orders from NTPC -- the company has managed to secure only four orders in nine years of its existence – the largest being of Rs. 2,219 crore for the 500 MW Feroze Gandhi Unchahar thermal power project out of total orders worth Rs. 2,717 crore.
The JV entity was set up after NTPC blamed BHEL being slow in supplying equipment that led to delays in commissioning of its plants. The two state-owned companies then came together with the broad understanding that part of the work of projects that BHEL bagged from NTPC would be given to the joint venture company.
The role of the equal joint venture was initially confined to balance of plant equipment such as coal-handling, ash-handling and water treatment facility.

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