China power giant inks $2.4-bln India project

UPDATE 1-China power giant inks $2.4-bln India project | Reuters

HONG KONG/NEW DELHI, April 13 (Reuters) - Power Construction Corporation of China has signed a $2.4 billion contract to build the second phase of a massive coal-fired power complex in southern India to help meet soaring local demand for electricity, the firm said on Friday.

China has been playing an active role in power project construction overseas, particularly in developing countries, taking advantage of state financing as well as experience and technology acquired through three decades of economic boom.

Many Indian power companies have been ordering equipment from overseas, especially from China, as India's power gear makers have struggled to compete on price. After losing out to Chinese rivals, Indian manufacturers have been lobbying the government to impose duty on equipment imports.

The second phase of the project for India's Infrastructure Leasing & Financial Services Limited (IL&FS) will include the addition of four generators each of capacity 660 megawatts (MW), the Chinese group said on its website.

The deal is an EPC contract, meaning Power Construction Corp will be responsible for engineering, procurement and construction. It said the project will create more than 10,000 jobs in India and use power equipment made in China.

Power Construction Corp, a sprawling enterprise under the direct supervision of China's central government, was created last year through a state-dictated merger of dozens of domestic survey and design institutions, power construction companies and equipment manufacturers.

The group, parent of Chinese dam builder Sinohydro Group that was listed in Shanghai in October following a $2.1 billion initial public offering, aims to list itself as well, Chinese media have said.

Power Construction Corp, with total assets of 196 billion yuan ($31 billion) and 200,000 employees at the end of 2010, said it generated total profits of 6.47 billion yuan on revenue of 160 billion in 2010.

Its strategy is to "become a world famous corporation with strong international competitiveness," it says.

INDIA COAL SHORTAGE

IL&FS said it would import coal from Indonesia, Australia and South Africa to fuel the plant, the first phase of which included two generators each with capacity of 600 MW, and is scheduled to commence commercial operations by June next year. It has acquired a mine in Indonesia to supply the generators.

IL&FS plans to sell the power from the project to state-run distribution companies on a long-term basis as well as in the open market.

Indian newspaper The Financial Express, citing an unnamed source, reported in March that Singapore-based Ascol, a consortium of four private equity investors, planned to buy control of the project's operator -- IL&FS Tamil Nadu Power Company that is a unit of IL&FS.

Officials at IL&FS Tamil Nadu Power and Ascol were not immediately available for comment.

Coal fuels more than half of India's power capacity of 191,000 MW and will be required for 85 percent of the 76,000 MW additional capacity targeted to be added in the next five years.

About 9,000 megawatts, nearly 10 percent of India's total coal-fired generating capacity, became unviable last year after Indonesia changed rules on coal prices. These plants have long-term agreements to sell power to states and no flexibility to pass on increased costs.

Slow environmental clearances and land acquisition have led to stagnating coal output in the country and have increased dependence on imports. State-run Coal India, which accounts for 80 percent of India's coal output, produced about 436 million tonnes in 2011/12, missing a scaled-down target. ($1=6.3073 Chinese yuan) (Reporting by Charlie Zhu and Sanjeev Choudhary; Editing by Clarence Fernandez)

I for one am against this type of deals， for it is not in the long-term interest of China to help India build infrastructure with the lowest cost and the shortest time that are the defining features of Chinese executed projects。

Yes， the Chinese company in question might stand to make tens of millions of dollars， but this gain，when considered in the grand scale of things， pales into insignificance。

Yeah India should reconsider giving the contracts to Chini companies who make towers that collapse. God when will we learn. Keep the cheap Chinis out.

indian power companies are attracted because of low price and credit availability given by Chinese. Quality should be monitored but considering how badly we need construct more n more power plants as quickly as possible, it leads to negligence.

You must have forgot that the collapsed chimney you are talking about was actually built by Indian company.

but still there were some complaints regarding build quality with power equipment imported from china.

But still that chimney was not built by Chinese. Try find something else when you are talking about quality of Chinese companies.

If Chinese companies don't do a good job, it only means Indians are fools to hire Chinese companies.

Please keep that in mind, no one forces you to contract the project to Chinese companies, it is your choice, your decision.

dude there is no need to all worked up about it. don't get pissed off. if one doesn't like to do business with china, it would never. take it as a feedback, if Chinese companies improve and resolve any problems, it all the more better for both of us.

What is the guarantee that the Chinis will not rig the power plant for future use as a weapon.

Seriously, china cannot be allowed anywhere close to important projects no matter how cheap their price is.

It's best to import cheap electronics, toys etc if at all.

Dude, you should suggest your compatriots stop spreading misinformation about Chinese companies first. I want to have a fruitful discussion, but it requires efforts from both sides.

Chinese companies need to be improved, but that doesn't mean they are doing a good job.

Most Indian members keep running down contributions by Chinese companies to the development of Indian infrastructure, discrediting the quality of their works as if Indian companies could do better.

The fact that Chinese companies, along with many South Korean companies are building roads, power plants in India indicates that Indian companies, no matter how you hype their abilities, can't fulfill their missions of building enough decent roads and power plants for India.

In fact, the collapsed chimney is the only segment conducted by Indian in the whole construction.

What you can expect from their big mouth, lower ability? If they can do the job, why ask others. This only prove the inability of India company, look at their world-class poor infrastructure and their world-class big mouth. I really wonder what India can do in this world except talking and talking. But honestly, India's big mouth and low ability meet our interesting. So let them continue talking, we should encourge them to continue, so don't stop them.

im with you. hope indian gov would ban such deals, for both sides' interests.

The reality is that India and China become depending to each other when both countries are developing faster than others. Ban Chinese companies or refuse to take Indian business are not the solution. Improve mutual understanding and encourage exchange of opinion and idea of people in both countries is the only way leading to peaceful cooperation in the future. In fact, this forum is providing such chance and I appreciate it.

you kidding me? "Improve mutual understanding" on defense forums such as dfi? am i missing anything?