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BHEL-NTPC joint venture for power project in the offing

According to reports, two public sector giants, BHEL and NTPC, are in talks to form a joint venture to put up a 100-MW power project based on a new technology. The talks have been initiated at the instance of the Union Government, BHEL officials told Business Line. The project will be based on a clean coal technology, called Integrated Gasification Combined Cycle (IGCC) — a technology which is less polluting and extracts more energy out of coal.

The first round of talks between the two PSUs would take place soon. Mr A.V. Krishnan, Executive Director, BHEL, confirmed this. It is understood that the project will cost Rs 700 crore and will be equally shared between BHEL and NTPC. IGCC converts coal into ‘synthetic gas’, which is a mixture of carbon monoxide and hydrogen. The gas is then fed to a gas turbine to produce power. Pollutants are separated in the process of gas production. Roughly, half the energy contained in the coal is converted into electrical energy; in conventional coal fired plants, this ‘efficiency’ is about 40 per cent. The significance of the technology lies in this.

However, this technology is costly — it takes about Rs 12 crore per MW, three times as much as a conventional coal-fired power plant.

The proposed BHEL-NTPC joint venture would be a ‘revisit’ by the two PSUs. In the early 2000s, NTPC wanted to put up a 100-MW plant with BHEL technology and equipment, with the Union Government chipping in with viability gap funding.

But the proposal got nowhere because the two companies could not come to an agreement over who would own the intellectual property.

According to BHEL officials here, the Union Government has “firmly told NTPC” that the IP belongs to BHEL.

In May 2008, the power generation company of Andhra Pradesh, APGENCO, signed up with BHEL to put up a 125-MW IGCC plant. But again, the project has not progressed at all. APGENCO says it is awaiting the promised Rs 300 crore of viability gap funding from the Union Government.

Now, with the APGENCO project getting nowhere, the Centre has asked the two companies to join hands again.

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