Bhel To Enter Power Distribution

New Delhi, January 28: | Updated: Jan 29 2003, 05:30am hrs
In yet another big diversification, domestic equipment major Bharat Heavy Electricals Limited (Bhel) has decided to venture into distribution of power. Alongside, Bhel is also taking strategic initiatives to position itself as an independent power producer (IPP) in select global markets. To start with, Oman has been identified as one such market by the company where a number of IPP projects are coming up shortly.

This move comes close on heels of its plans to enter the global project financing and information technology business (FE, Jan 15).

When contacted, chairman and managing director, Bhel, KG Ramachandran confirmed the move to enter the power distribution business.

We are already associated with distribution companies and state electricity boards (SEBs) as the equipment supplier and system solutions provider. While doing so, we are also looking for suitable parties for taking up distribution in a big way. Staring with our own townships, we will soon firm up our plans for taking up full-fledged distribution business. We are currently awaiting passage of Electricity Bill in Parliament, Mr Ramachandran said.

Company officials said that Bhel has already been purchasing power from SEBs and distributing the same to its employees in some of its major townships in Bhopal, Hyderabad, Haridwar and others. However, collection has not been a problem in these townships as the customers are Bhels own employees.

So before the company decides to enter the distribution business in a full-fledged manner, it will have to evaluate all the risks associated with this business. The company may also appoint a consultant for handling the distribution business, company officials revealed.

Bhel, sources said, is also planning to create a strategic business unit (SBU) to keep a record of all the transactions of energy purchased from SEBs and sold in its townships.

When asked about its plans to position itself as an IPP in Oman, Director (HR and in-charge international operations), Bhel, Ishan Shankar said, This is still at initial planning stages. We definitely see new opportunities coming up in Oman in the power sector and Bhel is also looking at some tie-ups with the local companies there. So we may either work as an IPP or through an existing IPP in Oman which understands the market there. In Oman, Bhel has the record of securing five successive orders. Speaking on the companys plans on the exports front, Mr Shankar said that Bhel has drawn up plans to enhance its export turnover to 17 per cent of its total sales from the present 13.5 per cent in the next five years.

The export earnings of Bhel during 2001-02 stood at Rs 900 crore. Export markets identified by the company includes West Asia, GCC, Far East, CIS, East Europe and African countries. Bhel has executed projects and supply contracts to over 55 countries.

Bhel is also giving renewed thrust on high growth business areas like after-market services with special focus on R&M of hydro sets, international business through O&M services, emerging as a service centre for international OEMs and establishing manufacturing and assembly centres overseas.

The company has recently announced commissioning of its first ever state-of-the-art 159 mega watt gas turbine in Iraq. Bhel commissioned the unit for General Company Electrical Project (GCEP), Government of Iraq, at its Baiji power plant, located 250 km north of Baghdad.

Bhel is in the process of installing three more similar rated units at the Baiji power plant. It achieved a breakthrough by securing the largest ever export order, cumulatively valued at Rs 870 crore from Iraq. This order had been placed on Bhel by GCEP, under the United Nations Oil for Food programme.

The order for four 159 mw ISO rating (V94.2) gas turbine units, associated plant auxiliaries and complete plant engineering was the single largest order cleared by the UN for any country under this programme.