New Delhi, May 13: State-run Bharat Heavy Electricals on Monday said it would set up Integrated Coal Gasification Combined Cycle (IGCC) power plant at Vijaywada with Andhra Pradesh Power Generation Corporation (APGenco).

"Bhel has signed a Memorandum of Understanding with APGenco to set up country's biggest 125 MW IGCC power plant at Vijaywada," a company release said.

"Bhel has earmarked on several initiatives to meet the growing demands of the country's power sector," Bhel chairman and managing director K Ravi Kumar said. The state-run company has also formally taken over Visakhapatnam-based Bharat Heavy Plate and Vessels (BHPV). "We are confident of meeting the capacity addition targets for the Eleventh Plan period, with BHPV complimenting our business," Kumar said.

BHPV's turnover is expected to cross Rs 1,000 crore in five years and the capital expenditure of the company for three years is Rs 236 crore.

The Andhra Pradesh government has extended various concessions for the revival of the BHPV. The concessions include the transfer of title of land measuring 386.73 acres in possession of the BHPV as gift title deed in favour of BHPV and also waiver of registration and stamp duties. Waiver of Sales Tax arrears of Rs 42.16 crore and waiver of Nala Tax of Rs 43 lakh.

"Today, we are crossing a milestone in power generation technology with the signing of MoU between APGenco and Bhel for setting up a 125 MW IGCC plant at Vijaywada," Union minister for heavy industries and public enterprises Santosh Mohan Dev said.

Bhel plans to increase its power equipment manufacturing capacity from 10,000 MW to 15,000 MW per annum by 2009.