BHEL’s exit from Udangudi Power depends on government’s offer

Power equipment major Bharat Heavy Electricals Ltd (BHEL) will study the Tamil Nadu government’s offer to it on the cancellation of the joint venture 1,600 MW Udangudi power project, an official said Saturday.

“We have not got any official communication from the Tamil Nadu government/Tamil Nadu Electricity Board (TNEB) on the decision to scrap the power project. We will study the pros and cons of the offer that we expect the state government to make and decide on exiting the joint venture,” a senior BHEL official not wanting to be named told IANS over phone from New Delhi.

Chief Minister J. Jayalalithaa Friday announced the cancellation of the joint venture citing the lack of progress in the Rs.8,000 crore Udangudi power project after the Memorandum of Understanding (MoU) was signed between TNEB and BHEL to promote the power project in 2007.

The state government would fully fund the project, she said adding that it would be executed by TNEB as a state project with imported coal.

In 2008, TNEB and BHEL floated a joint venture company Udangudi Power Corporation Ltd, each taking 26 percent. The balance 48 percent stake was to be contributed by a private player participating in the project or by a financial institution funding the project.

The project is yet to get coal linkage and the environmental clearance. The public hearing after preparing the environmental impact assessment (EIA) was held in 2009.

The two joint venture partners have invested Rs.32.5 crore each and completed the site levelling activities at the project site.

“BHEL will be interested to be part of the project either as supplier of boiler, turbine generator or as EPC (engineering, procurement and construction) contractor for the project,” S. Karthik, assistant vice president, Unifi Capital told IANS.

Power sector analysts told IANS the smooth option for implementing the project for TNEB is to buy out BHEL’s stake in Udangudi Power Corporation.

“BHEL has not much of leverage as the project land is yet to be registered in the name of Udangudi Power Corporation,” an analyst told IANS.