Power equipment manufacturer Bharat Heavy Electricals Ltd (BHEL) and Power Finance Corporation (PFC) have decided to come together to assist each other in bidding for power projects in India and abroad. The two companies are expected to sign a memorandum of understanding (MoU) soon.
"The MoU would entail PFC providing financial backing to projects for which BHEL makes a bid and vice versa. The two companies could also bid for projects jointly at a later date," power sector officials said. The National Thermal Power Corporation (NTPC) may also join the two companies at a later stage, officials said.
Senior executives of both the companies met last week to exchange drafts of the agreement, the details of which are expected to be finalised in the near future, the officials said. While BHEL would compete for equipment supply and turnkey projects in the country and abroad, PFC would take care of the financing aspects of these contracts, as per the arrangement, a senior power sector official said.
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In light of the renovation and modernisation of installed capacity being undertaken by the power ministry under the accelerated power development programme (APDP) and the accelerated generation and supply programme (AG&SP), both BHEL and PFC envisage significant roles in the upgradation process taking place.
Since a heavy chunk of the installed capacity in utilities in the country has been supplied by BHEL, the company is expected to be at the forefront of supplying equipments and upgrading systemic processes as part of the distribution reforms process initiated by the power ministry.
Among other activities, PFC (along with the Rural Electrification Corporation) would be expected to mobilise the loan component of the outlay of Rs 50,000 crore under APDP for conducting systemic improvements in the subtransmission and distribution systems in the 400 odd power circles of the country.
PFC was set-up in July 1986 as a development financial institution dedicated to the power sector and has been playing an increasingly important role in mobilising financial resources from within and outside the country and in providing various kinds of financial assistance to power projects. PFC also focuses on the institutional development of its borrowers.