In a landmark development for India’s industrial and energy sectors, Bharat Heavy Electricals Limited (BHEL) has secured a prestigious contract from Steel Authority of India Limited (SAIL) worth between ₹1,200 crore and ₹1,500 crore (excluding GST). The Letter of Acceptance (LoA) was received on 17 February 2026, and BHEL wasted no time in notifying the stock exchanges — BSE and NSE — through a regulatory filing on the same day. This contract is not just a business win; it is a powerful statement about the capabilities of India’s public sector enterprises and their role in driving the nation’s industrial future.
What Is the Contract About?
BHEL has been awarded the Captive Power Plant (CPP) Package No. CPP-1 for SAIL’s ambitious 4.08 million tonnes per annum (MTPA) crude steel expansion project at the iconic IISCO Steel Plant in Burnpur, West Bengal. The contract was awarded through a domestic global tender process, and BHEL will execute the entire project on a turnkey basis — meaning it takes complete end-to-end responsibility for delivery.
The scope of work under this contract is comprehensive, covering:
- Design and Engineering — detailed planning and technical blueprints for the power plant
- Manufacturing and Supply — production and procurement of equipment and components
- Transportation and Logistics — safe delivery of all materials to the project site
- Erection and Commissioning — physical installation and activation of the plant
- Performance Guarantee Testing — ensuring the plant meets defined output and efficiency benchmarks
The only component excluded from BHEL’s scope is civil construction work, which will be handled separately by SAIL or other contractors.
About IISCO Steel Plant — The Heart of This Expansion
The IISCO Steel Plant at Burnpur is one of SAIL’s oldest and most strategically important integrated steel manufacturing facilities. Located in West Bengal, it has a rich industrial heritage and is now at the centre of one of India’s largest steel sector investments.
SAIL has initiated a $5 billion investment program to construct a new 4.6 million MT integrated steel mill at the Burnpur site. Once completed, the expansion will raise the plant’s total installed capacity to 7.1 million MT per year — making it a true steel giant. The Captive Power Plant being built by BHEL is a critical enabler of this expansion, as uninterrupted, dedicated power supply is essential for the steel manufacturing process. Dependence on the national grid is risky for steel plants due to voltage fluctuations and potential outages — a captive power plant eliminates that risk entirely.
Project Timeline and Execution
BHEL is expected to commission the Captive Power Plant within 39 months from the effective date of the contract. Given the scale and complexity of the project, this is an ambitious but achievable timeline, especially considering BHEL’s vast experience in executing similar infrastructure projects across India and internationally.
Meeting this deadline will be crucial — not just for SAIL’s expansion schedule, but also for BHEL’s reputation as a reliable engineering partner. Analysts and shareholders will be closely watching execution efficiency and margin management.
Why This Contract Matters for BHEL
1. Strengthens a Massive Order Book
This contract adds significantly to BHEL’s already formidable order book, which currently stands at over ₹2,22,800 crore. For a company that has been fighting to stay relevant in an era of rapid energy transition and private sector competition, consistently winning large orders like this is vital for revenue visibility and investor confidence.
2. Reaffirms Industrial Power Expertise
BHEL has supplied equipment for over 70% of India’s total installed power generation capacity. This contract further cements its leadership in the captive power plant segment, particularly for heavy industries like steel, aluminium, and cement. Just weeks before this deal, BHEL had also secured a similar-sized order from Hindalco Industries, demonstrating strong and sustained demand for its services.
3. Demonstrates EPC Capabilities
Executing a project on a turnkey basis — covering design, engineering, procurement, construction, and commissioning — is the hallmark of a true EPC (Engineering, Procurement, and Construction) powerhouse. This deal showcases BHEL’s integrated capabilities across the entire project lifecycle.
4. Positive Market Reaction
Upon the announcement, BHEL’s shares rose nearly 1% to ₹265.90 on the bourses, reflecting investor optimism about the company’s order pipeline and growth trajectory.
Why This Contract Matters for SAIL
For SAIL, this contract is a key milestone in its broader capacity enhancement strategy. Securing a reliable partner like BHEL for the power infrastructure — the backbone of any steel plant — ensures that the IISCO expansion stays on track. A dedicated captive power supply will:
- Reduce operational costs over the long term
- Protect against grid disruptions
- Enable round-the-clock, high-intensity steel production at the expanded facility
Once operational, the expanded IISCO plant will significantly boost SAIL’s production capacity, helping it serve growing domestic demand from sectors like construction, infrastructure, defence, and automotive.
A Shining Example of PSU Synergy
One of the most noteworthy aspects of this deal is what it represents beyond business: two of India’s most respected Maharatna public sector undertakings (PSUs) collaborating on a project of national importance. BHEL operates under the Ministry of Heavy Industries, while SAIL falls under the Ministry of Steel. Their partnership reflects the Government of India’s vision of leveraging synergies within the public sector to drive industrial growth and self-reliance.
This is exactly the kind of inter-PSU collaboration that strengthens India’s industrial ecosystem and reduces dependence on foreign technology and expertise.
BHEL at a Glance
- Established: 1964
- Headquarters: New Delhi, India
- Manufacturing Units: 16 units across India
- Service Centres: 8 centres, 4 regional offices
- Global Footprint: Projects executed in over 80 countries
- Current Order Book: Over ₹2,22,800 crore
- Key Sectors: Power generation, transmission, transportation, defence, and industrial systems
Conclusion
The BHEL–SAIL contract for the Captive Power Plant at IISCO Steel Plant in Burnpur is more than just a ₹1,200–1,500 crore deal. It is a symbol of India’s industrial ambition — two powerful PSUs joining hands to power one of the country’s most significant steel expansions. For BHEL, it reinforces its leadership in industrial power infrastructure. For SAIL, it is a crucial step toward achieving its massive production targets. And for India, it reflects the momentum of a nation investing heavily in its manufacturing base and energy security.
As the project unfolds over the next 39 months, all eyes will be on BHEL’s ability to deliver on time, on budget, and to specification — a challenge the engineering giant has every reason to rise to.
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