BGR Energy ties up Rs3,000 crore for BTG plants

BGR Energy Systems, the Chennai-based power engineering, procurement & construction (EPC) company, has got an in-principle approval from two banks for a debt of Rs3,080 crore to set up supercritical boiler and turbine manufacturing facilities in Tamil Nadu, its chairman and managing director BG Raghupathy said.

BGR is building the plants through a joint venture with Japanese major Hitachi.

“IDBI Bank is the lead banker for the turbine facility and SBI for the boiler plant,” Raghupathy told DNA.

The two banks will now identify other banks and financial institutions to form two consortia.

He said the paperwork for the loans, which carry a tenor of 13 years and an interest rate of 10.25%, would be completed by June.

BGR holds 74% and Hitachi the rest in BGR Turbines Company Pvt Ltd. The special purpose vehicle (SPV) will spend Rs3,000 crore, of which Rs2,100 crore is debt, on the turbine unit. BGR and Hitachi Power Europe GmbH of Germany control 70% and 30% in BGR Boilers Company Pvt Ltd, which will invest Rs1,400 crore in the boiler plant. The debt component is Rs980 crore.

The facilities would be situated 70km from Chennai. They are close to the port at Mugaiyur, which is being developed by MARG Ltd.

The plants will have an annual capacity of 4,000mw. “The boiler plant will be commissioned in two years and the turbine unit partially completed,” Raghupathy said.

Land acquisition is currently on and construction work will begin in two months, he said.BGR and Hitachi had signed the JV agreement in August.

BGR recently emerged as the second-lowest bidder for the Rs12,000 crore EPC contracts of Rajasthan Rajya Vidyut Utpadan Nigam (RRVUNL) thermal power projects at Suratgarh and Chhabra, each of which has 2X660mw. The lowest bidder was Bhel.

But Raghupathy said RRVUNL can award one of the two projects to the second lowest bidder provided it matches the price of L1.
“We have already done that and we’ll book the orders in the quarter of next fiscal.”

BGR plans to use its own BTG (boiler turbine generator) for the project.

Competition for BGR-Hitachi comes from, besides Bhel, L&T-Mistsubishi Heavy Industries, JSW-Toshiba, Bharat Forge-Alstom and Ansaldo Caldaie, a Gammon India unit.

BGR is presently is awaiting the result of bids for NTPC’s bulk order of 11X660 mw boilers.

BGR has booked Rs2,500 crore of orders in the first nine months of fiscal. The company’s current backlog stands at Rs9,300 crore.

A March 29 report by IDBI Capital said in the last few months order inflow delays have been a key concern for BGR.

“The RRVUNL twin tenders are deferred due to delay in obtaining coal linkage,” wrote Piyush Nimgaonkar in the report. BGR originally planned to add Rs12,000-15,000 crore of orders this fiscal but it is unperturbed.

“The orders are enough for next fiscal. For 2012-13, we have 6-9 months to bag orders,” said Raghupathy.