With new projects in the power sector almost drying up and competition from foreign suppliers rising, state-run power equipment marker Bharat Heavy Electricals Ltd (BHEL) is looking to diversify operations into areas such as railway transport, metro train and renewable energy.
In his first interview after the Government extended his tenure by two years, BHEL Chairman B Prasada Rao says renovation and modernisation of plants which are 25 years old is expected to contribute at least 20 per cent of the company’s business. Edited excerpts:
What is your turnaround plan for BHEL?
Railway transportation and metro have been identified as the next big growth areas other than the power sector for BHEL. We have signed with the Railways to set up a venture in Rajasthan to manufacture 300 main line electric multiple unit train coaches annually. BHEL has made an investment of ₹800 crore. The plant will be operational in two years. We are also increasing the capacity of locomotives to 100 from 50 at Jhansi. We also have got some orders for control equipment from the Railways. Metro rail is another area we are looking at. We have tied up with Hitachi for this. We bid for the DMRC (Delhi Metro Rail Corp) project, but were not successful. But in this country, there are 36 cities going for the metro network, and we will bid for others. In fact, the Government is pushing for standardisation of the technology.
The Dedicated Freight Corridor Project is another business area we are pursuing. For this, two projects (an electric locomotive factory at Madhepura, and a diesel locomotive factory at Marhowra) in Bihar have been approved. We are with General Electric for diesel locomotives, while for electric locomotives, we are open for a tie-up. In the next two years, my effort would be to put in place solidly these projects.
BHEL has also joined hands with five other PSUs to set up a 4,000 MW mega solar power project in Rajasthan. What is the status?
For the first phase of the solar plant in Rajasthan (1,000 MW), it has been agreed to source from BHEL. In the remaining three phases, we will compete with others, but the first right of refusal will be with us. For us, renewable energy is a big growth area.
Currently, in India, there are small to medium capacity, while in China, companies are producing 500 MW to 2000 MW capacity.
We have also sought various tax incentives from the Maharashtra Government.
We are also seeking money from the National Clean Energy Fund. Our plan is to set up an end-to-end facility with a capacity of 500 MW.
What is the status of power sector projects?
I would extend the horizon to five years. Till 2011-12, 25,000-30,000 MW projects were being finalised annually of which 17,000-18,000 MW orders were placed with us.
But suddenly from 2011-12 onwards, the power sector was hit by various issues such as coal linkages and environmental clearances. This led to them (power developers) having financing issues. Banks were shying away from giving credit.
Genuine cases also suffered in the process affecting the sector as a whole. In 2011-12, only 4,000 MW projects came up. And 2012-13, it slightly went up to 10,000 MW.
In the current fiscal, no major project has been finalised except probably the one by Neyveli Lignite Corp. This has impacted the revenue.
How do you see the Cabinet Committee on Investment (CCI) clearing up power projects?
The North Karampura project was the first one on which the CCI took a decision. Tender for that was invited last week and we were evaluated as L1 (lowest bidder).
It takes some time for CCI decisions to fructify. Some more decisions have been taken. All of them are expected to be in reality soon.
At the same time, policy decisions such as the ones for distribution companies are expected. These companies are in bad situation because of dues. Once, they are able to pay for power they bought, then only power demand will pick up. Today, there is virtually no demand for power.