Mumbai: Larsen & Toubro (L&T) has won a turnkey contract for building a power generation project worth over Rs 7,000 crore from SJVN Thermal Private. The order assumes significance as it comes after a dry spell of three years. L&T will be responsible for engineering, procurement and construction (EPC) of a 1,320 MW ultrasupercritical power plant in Buxar district in Bihar.
‘This is one of the biggest orders’
The order is one of the biggest received by the company in recent times for a power generation project. And it is expected to give a boost to its power equipment business which has been reeling under pressure due to the lack of orders in the sector.
Shailendra Roy, chief executive officer, L&T Power, said, “This is one of the biggest orders we have received for power EPC, our first order in three years. We have been bagging jobs for flue-gas desulphurisation (FGD) units that have kept the order book going at a time when there are no orders for power generation projects in the sector.”
Including this project, L&T’s power generation projects business has an order book of Rs 18,000 crores as of now, he said.
A new business opportunity
As there’s a lack of activity in coal-based power generation sector primarily due to the poor financial health of companies and other challenges that beset the beleaguered sector, L&T has found a new business opportunity — retrofitting of old plants with emission control equipment (FGD and SCR). However, the average ticket size of these orders is smaller at Rs 800 crore-1,000 crore.
“In the past five years, we have hardly had the manufacturing sector contributing to the GDP. If industrial growth has to happen, power capacity has to be increased to support it. According to the 19th Electric Power Survey Report, we will have a peak demand for reliable power of 299 gigawatts (GW) by 2026-27. This means India will have to add 37 GW by 2023, translating into 8-10 GW every year,” Roy said.