The Hindu Business Line : BGR Energy reiterates strength in power EPC

BGR Energy Systems’ rapid stride into larger power projects of over 500 MW is becoming increasingly evident with its latest order win worth Rs 4,900 crore. With this order, BGR has been chosen over BHEL for the second time in a row.

Second in a row

Stated to be the single largest power EPC contract in the country, BGR has bagged a 2 x 600 MW thermal power project from Rajasthan Rajya Vidyut Utpadan Nigam. The contract involves design, engineering and supply of boiler, steam turbine generator (BTG) and other balance of plant (BoP) works such as electrical, mechanical and civil works. Earlier this month, BGR won a similar order worth Rs 3,100 crore from the Tamil Nadu State Electricity Board for a 1x600 MW thermal power plant. With this project, BGR’s order book stands at over Rs 11,000 crore.

These two orders are significant to BGR for the following reasons: One, the company has moved up the value chain from being a pure BoP contractor to a full-fledged EPC player offering power equipment, as well as BoP works. Two, it is positive that the company’s strength and prequalification in the BoP space has enabled it to outbid established competitors. BGR’s in-house manufacture of as much as 60 per cent of the components needed for the plant may have helped in competitive pricing and worked to its advantage at a time when several power projects face delay in infrastructure works, even while the power equipment supply is in place. Three, by quickly scaling up to projects over 500 MW, BGR has moved to a segment that holds few competitors.

Interestingly, while BGR is still in talks with overseas players for technology transfer for BTG power equipment, the company will be sourcing equipments from Chinese power equipment company Dongfang for the recent two projects. With reports of some of the earlier Chinese equipment being challenged on qualitative issues, this can carry an element of risk. If BGR is successful in a technology transfer that would allow it to produce BTGs in-house, it may well be a strong domestic contender for this segment too.

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