‘Overseas investors are not yet seeing power as a business in India’

— Mukul Bhatia, Managing Director, Citec Engineering India Pvt. Ltd  Citec Engineering India Pvt. Ltd, a 100 per cent subsidiary of Citec Engineering Oy Ab of Finland, offers multi-discipline engineering and consulting services for the power, civil, rail vehicles and process industries as well as a wide range of services and solutions related to technical communication. The company is one of the largest licensees for plant design management system, the high-end engineering design platform, in India. Sandeep Menezes, in an email interaction, sought Mukul Bhatia's views on the Indian power sector. The Centre is expecting an investment of $300 billion in the 12th Five-Year Plan in the power sector. What are the likely sources of funding? Many overseas owner operators may bring in investment once they can see a revenue cycle actually happening. Once the first among the current large projects being set up by Indian owner operators come on line and a revenue model is shown working, there will be no dearth of investment from overseas owner operators. The other things that need to fall in line are the land acquisition and environmental clearance as workable processes with clear guidelines, and the question of liability for one kind of power plants.  What are the various segments within the power sector that will see higher investment? Clearly, solar, wind and nuclear besides coal with better clean burn technologies; gas will see the current surge and then stabilise. The heavy lifting will still be done by nuclear and coal. As power availability increases, quick startup plants will be needed for power quality and peaking purposes.  Do you have any suggestions so that more international players are encouraged to participate in the Indian power sector? I have already outlined the concerns above. Clearly, overseas investors are not yet seeing power as a business which can be set up in a standardised process defined way with a working revenue model. That is why one is not seeing many overseas owner operators in the field. We need to change and they need to take a few calculated risks. A quick process defined way to realise the power plant and a way to get their bills paid on time is needed. Hurdles in land acquisition due to politicking and absence of working process for acquiring land and obtaining environmental clearance are the major challenges. In spite of having the second largest global pool of engineers and technicians, India still faces manpower shortage. This is a huge challenge too. We do have the raw product but do not have adequately trained and experienced technical manpower, but this is a challenge any fast growing area faces. A parallel can be drawn with the IT sector which has even less trained resources when their growth took off. Today also they need more but they have managed well. The power sector needs to learn from their experience. We still do not see any large organised effort by established industry stakeholders.  About 75 per cent of India's total electricity generation is thermal. Do you see the proportion of other energy sources increasing? If by thermal one means coal then, yes. In the short to medium term, coal-based thermal plants will continue to have a major share. Nuclear will grow exponentially assuming some irritants are removed but due to its large setup time, this will make a difference only in the medium to long term. If nuclear plants are set up and there is no major incident or concern due to stable operation for a period of time then it will become the growth technology of choice till limited by fuel availability. If it works well it may lessen the need for solar and wind as the concern for clean will not be a concern anymore. Solar will continue to suffer from storage issues as it is not available when the sun is down. This is difficult or costly to change unless some new storage technology shows up.  What are the various types of risks associated with power projects? How can these be identified, quantified and eliminated? Risks are already well known, identified and quantified by many thought leaders. I have outlined a few above. To eliminate is a major challenge as there are many irons in the fire with opposing points of view not always in collective best interest. Many are using the opportunity to personally benefit by using the situation. Everyone wants power but no one wants the plant in his neighbourhood! We need to show those in the vicinity a solution they can live with and benefit from.  Citec has been involved in over 900 power plant projects worldwide since 1987. What is your experience in the Indian power plant engineering scenario? Citec has used its knowledge and advanced techniques upfront in the design to ensure quick commissioning and fast startup mostly to do with 3D tools for doing multi-disciplinary design and accurate bill of materials. This allows better site management and faster startup due to factory fabricated and tested parts as opposed to fabrication at site. We have a very experienced team of project managers who can manage projects very well. In India we are still putting up power plants in the traditional way but this is changing.  What is Citec's long-term strategy in India? Citec has so far catered to mostly overseas clients but with the power sector seeing big growth in India, we too have been active in the market trying to convince players to use our expertise, techniques and get benefited. As it is a mindset change and has never been done the traditional way in India, it is taking time. Being L1 (lowest bidder) is always not easy with advanced technologies which offer benefits in terms of coming faster to production and being better in the long term.

Source:

http://www.projectsmonitor.com/POWDIST/overseas-investors-are-not-yet-seeing-power-as-a-business-in-india

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