REL?s may rope in Chinese firm to supply equipment for Sasan

Anil Ambani?s Reliance Energy Limited (REL) is all set to rope in a Chinese company for supplying equipment for its 4,000 mw power project at Sasan in Madhya Pradesh.

Although REL has held discussions with a volley of equipment players from Korea, Europe and also with the state-owned BHEL, sources said REL was close to finalising an agreement with a Chinese company for procuring power equipments for Sasan.

Sources said the proposed power tariff of Rs 1.19 per unit as against around Rs 2 a unit by other bidders like NTPC and BHEL for the Sasan power project was impossible to stick to, without sourcing equipments for the project from China.

The Chinese power major, Shanghai Electric Company is already supplying equipments to REL?s EPC (Engineering, Procurement and Construction) division for its three projects?Hisar (1,200 mw), Yamunanagar (600 mw) and Rosa (1,200 mw).

Another buzz doing the rounds is that REL may set up a new manufacturing facility for power equipment such as boilers and turbines in a tie-up with a Chinese company. However, whether the tie up with a Chinese company for Sasan will be in the form of a new joint venture company or just a sourcing one is still not clear.

With the kind of capacity addition targets set up by the government in the power sector, it has been clearly accepted that the country needs more than just one domestic manufacturer (read BHEL). Roughly, 80% of the cost of a power plant comes from the equipment segment. Of this, about 40% is for boilers, turbines and generators.

L&T in collaboration with MHI of Japan is already in process of setting up manufacturing facilities for power equipments in India and few others leading international equipments manufacturers like Ansaldo of Italy besides Shanghai Electric and Harbin Power Equipment Company?which are the largest manufacturer of power equipments in China?are looking at suitable opportunities in India including setting up a production base. Another chinese company, Dongfang Electric and China Electrical are also eyeing power projects in India.