New Delhi: Amid state-run BHEL grappling with tough business environment, Heavy Industries Ministry will pitch for making the powergear maker the nodal agency for executing all overseas power projects that are financed by the Indian government.
Besides, the parent Ministry would make efforts for according preference to Bharat Heavy Electricals Ltd (BHEL) in providing spares and services for government-funded foreign power projects.
BHEL, the country's leading power equipment maker, is going through tough times, primarily due to sluggishness in the sector and cheaper overseas imports hurting its prospects.
The Ministry of Heavy Industries and Public Enterprises has assured BHEL of various possible assistance from the government side.
"BHEL may be appointed as nodal agency for execution of all power generation projects financed by the Government of India under the Line of Credit agreement," according to the Memorandum of Understanding (MoU) signed between the Department of Heavy Industry and the company for the current financial year.
The Department is part of the Heavy Industries Ministry.
BHEL already has good presence in various overseas markets, including the Middle East.
Reflecting adverse business scenario, BHEL saw its net profit slump nearly 50 percent to Rs 465.43 crore in the three months ended June. At the end of June quarter, the company's outstanding order book stood at Rs 1,08,600 crore.
Meanwhile, the Ministry has said it would pitch for giving preference to "project-tied credits for power projects with long gestation period where the company becomes a regular foreign exchange earner in terms of providing spares and services".
In addition, the Ministry would make efforts to provide a level-playing field to local power gear makers including BHEL.
Among them, it would take up with the Power Ministry the proposal to "tie-up power project orders on nomination basis with public sector manufacturers like BHEL to utilise manufacturing capacity already set up".
In another significant proposal, the Heavy Industries Ministry plans to push for steps to encourage domestic equipment manufacturers. As part of this, it would "take up with the Central Electricity Authority (CEA) to issue directive that mandates indigenous manufacturing as the qualification requirement for participation in utilities' tender".
With cheaper imports continuing to hurt the domestic industry, Heavy Industries Minister Praful Patel has sought additional five percent levy on overseas gear.
In this regard, he has written to Prime Minister Manmohan Singh and Finance Minister P Chidambaram.
Currently, import duty on power equipment is 21 percent.
Last year, the government had imposed a 21 percent import duty on power equipment. Then, the Cabinet had approved 5 percent basic customs duty, 12 percent countervailing duty and 4 percent special additional duty on imported power gear.
According to the Minister, local players such as BHEL and Larsen & Toubro -- which have added huge capacities -- have been adversely affected by the slowdown in the power sector.
First Published: Sunday, August 11, 2013, 16:21