New Delhi, Apr 30: NTPC, the country’s largest power utility, has formed a joint venture with Bharat Heavy Electricals Ltd (Bhel), the power generation equipment manufacturer, which will execute engineering, procurement and construction contracts for building power plants and other infrastructure projects. It will also manufacture and supply equipment in India and abroad.

Both the state-owned companies will have equal equity stake in the new company, the agreement for which was signed in December last year.

The joint venture company - NTPC-Bhel Power Projects Pvt Ltd - will invest Rs 5,000 crore in the next four-five years to build a power equipment manufacturing facility with a capacity to make equipment to generate 4,000 megawatt of electricity a year, BHEL’s chairman and managing director K Ravi Kumar said.

“We will fund 30% of the capital expenditure through equity, and the rest through debt,” Kumar said, adding, the equity funding of Rs 1,500 crore will be provided by both the companies equally.

The facility, due to come up in four-five years from now, would preferably be situated near a port like Mumbai, Vishakhapatnam or Kolkata, Kumar said.

“The joint venture company can take up the engineering, procurement and construction projects to build power generation plants even now and can source equipment for such projects from other manufacturers like Bhel itself,” he said.

NTPC-Bhel Power Projects will also induct a partner to bring in technical expertise to the company, Kumar said. “The technology partner will be a foreign company,” he said without giving further details.

Bhel has a capacity to build equipment to generate 10,000 megawatt of electricity every year. It plans to augment this to make 15,000 megawatt of electricity-generation equipment per year by the year 2009.

India’s rising need for energy has put pressure on equipment manufacturers like Bhel to augment their manufacturing capacities.

India has a target to add about 78,000 megawatt electricity generation capacity in the 11th Plan period and about 82,000 megawatt in the 12th Plan period. The country currently produces 1,41,500 megawatt of electricity annually through the use of coal, water, gas and other means.

Out of the planned capacity addition, 9,000 megawatt has already been commissioned and orders have been placed for 61,000 megawatt capacity, while the orders for remaining 9,000 megawatt will be shortly awarded.