Mumbai: Bharat Heavy Electricals is teaming up with Andhra Pradesh Power Generation Corporation (APGENCO) to set up a 125 MW integrated coal gasification combined cycle (IGCC) power plant at Vijaywada.

"BHEL has signed a memorandum of understanding with APGENCO to set up the country's biggest 125 MW IGCC power plant at Vijaywada," a company release said.

"BHEL has embarked 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 Plates and Vessels (BHPV), to turn around the PSU.

"We are confident of meeting the capacity addition targets for the eleventh plan period, with BHPV complimenting our business," Kumar said.

BHEL expects the acquisition to involve capital investment to the tune of Rs236 crore. BHPV is expected to achieve a turnover of over Rs1,000 in five years.

"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 is also set to finalise joint venture with the Tamil Nadu Electricity Board.

The PSU already has a joint venture with the National Thermal Power Corporation - NTPC-Bhel Power Projects, which was formed last month.

BHEL also plans to increase its power equipment manufacturing capacity from the current 10,000 MW to 15,000 MW per annum by 2009.