NTPC Bhel Power Projects Pvt Ltd (NBPPL), a 50: 50 joint venture (JV) between NTPC and Bhel, is emerging as a key player in the domestic power sector EPC domain. Though the company started operations only recently, it has bagged orders worth Rs 450 crore. It expects an order book of Rs 7,000 crore by March 2011. NBBPL is investing Rs 6,000 crore to set up a 5,000 mw a year power equipment manufacturing facility in the Chittoor district of Andhra Pradesh, which should improve power equipment supply in the country and help expedite the pace of capacity addition in generation. NBPPL chairman CP Singh spoke with FE?s Noor Mohammad about the company?s strengths as an EPC (engineering, procurement and construction) contractor. Excerpts:

NBPPL is a subsidiary of Bhel, the state-run power equipment maker. Do you think there is space for another public sector firm in the domestic power equipment market?

The government has envisaged a capacity addition of 78,577 mw under the current 11th Five-Year Plan while the target for the 12th Plan is 82,000 mw. This comes to more than 150,000 mw, which is almost equivalent to what the country added in the past 60 years. According to the report submitted by Mckinsey & Company to the government of India, the country needs to have power equipment manufacturing capacity of 30,000-40,000 mw per year if it is to keep pace with the growth in electricity demand.

As per the projections of the Integrated Energy Policy, the power capacity addition will go up to 960 gw by 2031-32 under a 9% GDP growth scenario. All these point towards a continuous growth opportunity in the Indian power sector. Hence, it is most desirable that we have many more manufacturing plants in both public and private sectors. In view of this projected increase in power demand, a need was felt for a company like NBPPL that could supplement the domestic equipment making capacity.

Yours is a new company. Running a new company is always a challenge. What are NBPPL?s key strengths you count on?

Running a new company is always a challenge. But NBPPL is a sunrise company and it has a big role to play in the Indian power sector because of the prevailing equipment shortfall.

NBPPL, being a JV between NTPC and Bhel, is well placed to emerge as a strong player in the power sector EPC area. The two promoter companies have significant complementarities: Bhel is strong in power equipment manufacturing and project implementation while NTPC?s strength lies in project development and management. The JV was created to leverage the core strengths and synergies of the respective promoter companies and supplement their EPC and equipment manufacturing capacities. This would help in meeting the huge emerging demand for setting up new power projects in the country.

We have signed a performance memorandum of understanding (MoU) with NTPC and Bhel, which is a major initiative to ensure fast growth of NBPPL by giving it enhanced functional autonomy and empowerment.

The company is being managed by professionals drawn from Bhel and NTPC who have experience of 5 to 30 years.

What is your business model?

We will try to bag contracts for implementing power projects on an EPC basis as well as for the supply and installation of balance of plant (BoP) equipment. We are looking at securing contracts for undertaking project management and quality control and inspection work on behalf of developers. Besides, we will also try to get contracts for providing consultancy services on setting up of new plants and overhauling and maintenance of existing power plants.

What is the status of work on the manufacturing facility being set up in Andhra Pradesh?

We are investing Rs 6,000 crore to set up a facility in Chittoor district for manufacturing boilers, turbines, generators as well as BoP equipment under one roof. The government of Andhra Pradesh has allotted 750 acres for the plant. The construction work has started at the project site. Under the first phase, a facility for manufacturing BoP equipment will be set up. This project would be commissioned by March 2013. A facility for manufacturing boilers, turbines and generators will be commissioned by March 2015. The plant? envisaged to have power equipment manufacturing capacity of 5,000 mw a year?will be commissioned by 2014.

In another two years, NBPPL will set up the facility for coal- and ash-handling plants. Although the timeframe for completing each of the three facilities is different, work will go on in parallel.

The company will generate direct employment for 6,000 professionals and indirect employment for 25,000 people more.

How is the flow of orders?

We have started with a BoP sub-contract awarded by Bhel for the 726 mw combined cycle Palatana project of ONGC Tripura Power Corporation Ltd. The commissioning of the first set of this project is planned by December 2011 and the second set by March 2012.

Bhel has also sub-contracted us work for the supply and installation of BoP equipment at the 100 mw Namrup power station of Assam Power Generating Company.

Meanwhile, NBPPL is expected to get EPC orders from NTPC for the execution of a 500 mw unit at Singrauli. Besides, we are also expecting a similar order from Apgenco for building its 600 mw unit at Rayalseema. We currently have an order book of Rs 450 crore, which is likely to go up to Rs 3,500 crore by July 2010 and up to Rs 7,000 crore by March 2011.

The company has prepared a business plan to achieve a turnover of Rs 10,000 crore by March 2015.

What is the corporate vision of NBPPL?

We have a challenge to make NBPPL a world-class company in power and infrastructure sectors, committed to enhancing the stakeholders? value with a global presence. For this, we will strive to ensure economy and efficiency in the company?s operations to remain competitive in this highly competitive area where more and more players are entering.

We also want to emerge as an Indian multinational EPC contractor and excel in providing total business solutions through timely execution of power plants and other infrastructure projects in India and abroad with backward integration in power plant and BoP equipment making.