Even though public sector power equipment major Bharat Heavy Electronics Limited (BHEL) is facing difficulties in securing timely supply of basic raw materials for its manufacturing units, it remains confident of meeting its supply commitments for power projects envisaged for commissioning in the Eleventh Five-year Plan, says the company Chairman K Ravi Kumar. While talking to Hardnews, Kumar also said that BHEL has credible expertise in building nuclear power plants and should be able to support the country's ambitious nuclear power programme in case of any external supply disruption.
Q: How has BHEL fared so far in meeting equipment delivery schedule for the Eleventh Plan power projects? What is the latest status of equipment supply for the rest of the Eleventh Plan capacity addition projects?
A: The Eleventh Plan envisages a capacity addition of 78,577 MW to the installed power generating base of the country. We have embarked on several initiatives in order to be in a position to meet the growing demands of the country's power sector. For the Eleventh Plan addition, orders worth 44,000 MW have been placed with BHEL so far.
The various milestones for execution of the projects are mutually drawn up between the utilities and the company, wherein inputs - both by the utilities as well as BHEL - are firmed up and well defined. Considering the actual availability of the inputs from the utilities, we have generally been able to meet the delivery for the Eleventh Plan projects. However, certain delays in supply of equipment by us have taken place due to slow delivery of raw material like boiler quality plates and steel, alloy steel piping material, casting and alloy steel forgings. This is because there are very few vendors for these raw materials and they are heavily booked.
BHEL has outstanding orders of 32,841 MW for execution between 2008-09 and 2011-12 (last four years of Eleventh Plan), against a capacity of 50,000 MW in this period. This would be adequate to take care of the backlog of orders with us.
BHEL has undertaken various initiatives that will ensure timely availability of supplies for the rest of the Eleventh Plan projects.
The company has completed its manufacturing capacity expansion to 10,000 MW a year in 2007. In the second phase, the company is now enhancing this further to 15,000 MW a year, which is to be completed by December 2009. This enhancement of manufacturing capacity is, in fact, facilitated by the availability of basic infrastructure and qualified manpower, as well as skills developed through four decades of hard work - a feat not given to replication in a short time. Further, all these are brown field expansions. In the third phase, the capacity will be further enhanced to 20,000 MW by 2011, for which also the work has started.
BHEL has also taken all the preparatory steps and tied up technology for higher rating thermal sets - based on super critical technology Alstom boilers and Siemens and steam turbine generator sets. We have already received orders for supercritical boiler supply to the Krishnapatnam thermal power project in Andhra Pradesh and Barh thermal power project in Bihar.The company has also started on the technology absorption and is confident of participating in projects with supercritical parameters. The company is also ready with the introduction of Advanced Class Gas Turbines, for which a number of orders have also been bagged against international competitive bidding. Necessary initiatives are being put in place to gain from the emerging opportunities in transmission and transportation business segments.
We are confident of meeting our commitments for the Eleventh Plan period.
Q: How well prepared is BHEL to compete with overseas vendors for equipment supply orders for nuclear power projects?
A: BHEL has proven turnkey capabilities for execution of thermal, hydro, gas, and nuclear power projects. It possesses the technology and capability to manufacture nuclear steam generators, steam turbines and generators, along with associated auxiliaries, up to a rating of 540 MW. It is also gearing up for the manufacture of equipment for higher capacity nuclear sets of 700 MW, 1000 MW, 1600 MW and above ratings, in view of the substantial nuclear capacity expansion envisaged in the country based on such sets.
We have designed, manufactured and commissioned equipment accounts for around 80 per cent of the Nuclear Power Corporation's (NPCIL) installed capacity of 4,120 MW. The company has so far supplied state-of-the-art power generating equipment of various ratings corresponding to nearly 3,280 MW for various nuclear power plants. NPCIL, as a utility, and BHEL, as an EPC (engineering, procurement and construction) contractor, have worked together on several NPCIL projects.
BHEL is also presently executing several contracts for NPCIL for equipment supply and erection, which are in various stages of progress. This includes a prestigious contract for a turbine generator and secondary side equipment for the first prototype fast breeder reactor (PFBR) of 500 MW rating being set up by Bharatiya Nabhikiya Vidyut Nigam Ltd. (BHAVINI) at Kalpakkam in Tamil Nadu. The unit is scheduled for commissioning during the Eleventh Plan.
BHEL has been a major partner in NPCIL's vision to achieve self-reliance in nuclear energy and its association with NPCIL began in 1970 with the development of technology and manufacture of prototype channel covers and heavy water headers. For the first 540 MW nuclear sets based on PHWR technology at Tarapur, the design and technology for turbine generator sets and steam generators was jointly developed with our collaboration. This approach has helped indigenous vendors like BHEL in faster absorption of technology. The development of indigenous vendors has ensured long term support to nuclear power stations in case of problems and to facilitate easy availability of spares for the life of the plants.
Aimed at synergizing the strengths of the two companies, BHEL and NPCIL have also recently signed a memorandum of understanding to form a joint venture (JV). The JV will carry out EPC activities for nuclear power plants both within the country and outside on mutually beneficial terms.
Through the JV, BHEL and NPCIL will work jointly to complement their respective core strengths in the areas of nuclear power generation. This is essential at this crucial time when the nation is looking at adding huge power generation capacities from nuclear energy to meet the growing energy needs of the country. The JV will explore and evaluate the various technology options available for nuclear sets of 700 MW rating and above. It will also help in the development of BHEL as an indigenous source capable of designing and manufacturing steam turbine generator sets of these ratings to meet the needs of various nuclear projects proposed to be set up in the country in the future.
Q: The government has done away with ‘Purchase Preference' for public sector power projects. And now, there is a demand from a section of the industry for withdrawing price preference too. The argument is that the government must level the playing field for overseas power equipment suppliers if the country is to add generation capacity matching with electricity demand growth. How do you view this?
A: The power sector has been kept out of the purview of the ‘Price Preference' regime since 2005, when the policy was reviewed and extended for other sectors. So there is no question of the same being available to BHEL.