BGR-Hitachi JV bids lowest for $3.3 bn NTPC order
Rakesh Kumar Kubde
February 29th, 2012

A joint venture between BGR Energy Systems and Hitachi Power Europe GmbH has emerged the lowest bidder for Rs. 16,000 crore ($3.27 billion) power equipment order from NTPC.
State-run BHEL, the biggest power equipment in producer in the country, is the second-lowest bidder, while the joint venture between Larsen & Toubro and Japan’s Mitsubishi Heavy Industries emerged the third lowest, a senior official at NTPC said.
NTPC opened the price bids on Wednesday for supply of the supercritical boilers for nine units of 660 MW power each. Price bids for two units of 660 MW each of Damodar Valley Corp, another state-run company, were also part of the process.

Shares of BGR Energy rose 9.61% to Rs. 368.95 on the news, while Larsen & Toubro fell 3.02% to Rs. 1,308.05. BHEL was down 0.37% to Rs. 307.35 after initially rising.

BGR Energy said in a statement it would be awarded contract for seven boilers worth about Rs. 6500 crore.

The award of the orders comes with one-year delay after Ansaldo Caldaie, a bidder, challenged in the Delhi High Court its disqualification in the technical round of bidding.

NTPC resumed the process to award the contract after the Supreme Court overturned the high court order which had favoured Ansaldo last month.

The power generator will award the orders to the two lowest bidders after it evaluates the bids submitted by the three bidders over the next few days, said the NTPC official.

“It brings clarity to NTPC’s expansion plans,” said V. Srinivasan, a sector analyst with Angel Broking.

This award of orders will help NTPC add about 6,000 MW capacity. The company plans to raise its capacity to 66,000 MW by 2017 from 36,000 MW now.

“There are not many orders right now in the market. It’s a relief for BGR,” said an analyst, rated five-star by Thomson Reuters StarMine. “It will improve their cash flows but it won’t improve their profitability as they will import 70-80% initially.”

The country’s power producers have slowed their expansion as they struggle to source fuel, acquire land and get environmental clearances. There were not many major orders for gear makers in the past one year because of this.

On the other hand, many equipment makers such as Bharat Forge, JSW Energy and Thermax have partnered with international players such as Alstom SA, Toshiba Corp and The Babcock & Wilcox Co, to bid for contracts better.

Shares in NTPC, valued at about $30 billion, ended 0.56% up at Rs. 181.05.
Source: live mint

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