Shriram EPC, Israeli firm to form venture

| Updated on: Aug 23, 2011
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Shriram EPC Ltd has tied up with an Israeli company for executing a Rs 640-crore order from Abhijeet Projects Ltd for providing ‘engineering, procurement, construction' services for Abhijeet's 50-MW solar thermal power plant at Jaisalmer, Rajasthan.

Abhijeet Projects is the special purpose vehicle of Corporate Ispat and Alloys Ltd, which won the 50 MW project through the bidding process under the Jawaharlal Nehru National Solar Mission.

Shriram EPC has forayed into solar power sector in collaboration with ENER-T International Ltd of Israel, a company formed by people who have together worked on several solar thermal projects in California and Spain.

While ENERT-T will be a technology partner for this project, Shriram EPC and ENER-T are also working towards establishing an equally-held joint venture “so that the relationship is permanent,” Mr T Shivaraman, Managing Director & CEO, Shriram EPC, told Business Line today.

All contracts secured after the formation of the joint venture would be executed by the joint venture, he said.

Scope of work

For the Abhijeet order, the scope of work includes the design, engineering, procurement, supply, erection, testing and commissioning for the entire project. In addition, the project entails setting up of a raw water storage system which includes a facility for pre-treatment of water and storage capacity for 60 days consumption. The project is scheduled for completion in 20 months.

On the NSE today, the Shriram EPC share closed at Rs 122.75, which was Rs 3.80 or 3.19 per cent higher than the previous close.

Abhijeet's is the first project to announce the finalisation of EPC contract among the seven winning bidders of solar thermal projects under the Mission. Market buzz is that Reliance (Rajasthan Sun Technique Energy) is talking to Areva, but there has been no announcement as yet.

“Award of EPC cost of Rs 640 crore for a 50 MW CSP project to a domestic company is a welcome development and affirms our belief that Indian engineering companies are competitive and ready to absorb new technology cost of Rs 12.8 crore/MW, the project cost is likely to be around Rs 13.5-14.0 crore depending upon the source of finance and financing cost,” notes Mr Vijay Lakhanpal, COO, Forum for Advancement of Solar Thermal (FAST).

Abhijeet Group won the project by bidding a tariff of Rs 12.24 per unit, the highest tariff amongst the seven developers who won the thermal projects. “At this price, it is unlikely that there will be any significant margins for the developer. The time frame of 20 months is also very aggressive,” Mr Lakhanpal told Business Line .

Published on August 23, 2011

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