Bhel and SAIL have decided to go ahead with their plans to set up a facility to manufacture cold rolled grain oriented silicon (CRGO) steel. The proposed plant will be set up under a trilateral joint venture (JV) involving a technology partner, besides Bhel and SAIL. The search for a technology partner is still on.

However, Korean steelmaker Posco, which was earlier supposed to be part of the project as a technology partner, is unlikely to be the partner for the PSU duo.

?After initial discussions, Bhel and SAIL have agreed to set up a CRGO steel unit under a JV route. Just details have to be worked out,? Bhel chairman BP Rao told FE.

?We are looking for a technology partner. If the technology partner comes with equity, it is fine. Otherwise, there is no condition of equity contribution for a potential technology provider to become a partner,? Rao said.

?The capacity of the proposed plant is yet to be decided pending finalisation of manufacturing technology. The actual investment will depend on technology and project capacity,? Rao added Significantly, SAIL had signed an MoU with Posco in May to set up a 1.5-million tonne-a-year CRGO steel plant in Bokaro, Jharkhand with an estimated investment of Rs 11,000 crore through a JV. Bhel was also in talks with SAIL to join the JV as the third partner. But the proposed JV failed to take off because of differences between SAIL and Posco over issues like equity sharing and technology.

Now, it seems the SAIL-Posco deal is finally off, with the Bhel chairman saying that the technology partner for the proposed CRGO steel unit is yet to be finalised. Bhel is the biggest consumer of CRGO steel in the country and its participation would be critical to making any such project commercially viable. ?The capacity of the CRGO steel unit and investment requirement for setting up that will depend on technology, which is not yet known,? Rao said.

CRGO steel is used to manufacture the core of generators and transformers ? a key component that converts mechanical energy into electrical energy. Currently, the entire requirement of CRGO steel is met by Bhel through imports because there is no facility to manufacture the specialty steel in India. Japan, Korea and Europe are the key sources of the CRGO steel.

However, heavy import dependence often leads to delay in timely availability of CRGO steel, affecting Bhel?s entire supply chain. That, in turn, makes it difficult for the company to stick to contracted schedule for project commissioning. Besides, it also increases production cost for Bhel.

CRGO steel supply of 3.5 lakh tonne a year will be required to achieve the 100 giga watt power generation capacity addition envisaged by the power ministry under the 12th Plan, as per an estimate by Indian Electrical and Electronic Manufacturers? Association. The proposed unit would help the domestic power equipment manufacturer improve delivery of the key input to its manufacturing plants and also cut costs.