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Anand Pattani , Vice-President, Global Energy Division, Black & Veatch

01 Apr 2014

Black & Veatch is a leading global engineering, consulting, construction and operations company specializing in infrastructure development in sectors such as energy, water and telecommunications. With revenue of $3.3 billion, the company is ranked by Forbes as one of the largest privately owned companies in the United States. The company has already marked its presence in India and is looking to extending its operations in the EPC domain with a focus on power generation and LNG segment. Its Vice-President, Global Energy Division, Anand Pattani talks to Neeraj Dhankher on the opportunities being pursued in India and the company’s growth plans. Excerpts.

Project implementation has slowed down in India in recent years due to delay in clearances. What kind of challenges have you faced so far?

The challenges are both external and internal. There are internal challenges as far as the developer is concerned who is putting up a power plant. External challenges include environment clearances, issues with fuel linkages, land acquisition and financing. Given our experience in other parts of the world, we can advise the clients on what is the best way to mitigate these risks. For example, if they are looking at fuel linkage, we have a lot of information on where the fuel can come from, its appropriate property which would be right for India. But more important are the internal challenges. These revolve around project execution. One of the things that our company, as a global leader, brings is very strong project management practice. We believe that first you plan the work and then you work the plan. For example in the case of a large power plant which takes 50-60 months to build, we would spend the first six to seven months planning the work. Once that is in place, we work that plan diligently. That’s our way of executing a project on time and budget. The other part where we can make a difference is timely decision making. Often, projects get delayed because certain decisions whether it is procurement of equipment or something else, are not taken on time. That can delay the entire project. We put a lot of emphasis on taking timely decisions. At times one has to spend a little more money but if that can keep the schedule intact then we take that decision. We also have a strong focus on health and safety. Our safety record is one of the best in the world.

What is your view on the business environment in India?

We are looking at India in the long term. The short term shows a lot of challenges. But the fact remains that India needs a lot of infrastructure and the demand will continue to rise. We are emphasizing on building a team of professionals which will continue to serve Indian clients as we take on large complex projects. This being an election year, it is not uncommon for certain decisions to be stalled which is not unique to India but happens all over the world. When we look at the long haul, we see India as a very strong and robust market.

What kind of challenges are you facing in coal and power sector in India given the fuel supply issues being faced at present?

In the present scenario our focus has shifted from executing projects to helping our clients take decisions. For example, we have seen clients being concerned over change in fuel supply for their projects and how it will impact their plans. Once there is clarity in the client’s mind about the impact of these external conditions, the focus will come back on taking decisions and moving ahead on project execution. One area which we feel is becoming important globally is asset management. New standards are being developed, smart data analytics are being created across the world and we have lot of expertise to offer in this field. We find that the Indian market is yet to catch up in this area

What kind of operations do you have in India?

We are a 100 year old company, delivering solutions for infrastructure projects. We operate in the segments of power, oil and gas, water and telecom. Globally, we have 10,000 employees and a turnover of $12.5 billion. In India we are focused on two areas -- power and oil and gas. Within power, we have expertise in all types of technologies, including nuclear, but we have not introduced that in India. We also have an expertise in power transmission and distribution. Another area which is important for us is oil and gas. We are active in LNG terminals and plants and have a proprietary technology in sulphur recovery. We are also experts in gas processing but are not pursuing that in India as of now.

How do you assist clients in execution of projects from concept to commissioning?

We do a lot of work in EPC in key projects. When a project is conceptualized, it requires market assessment, studies to figure out the right scale of the project, its location, technology required, costing and so on. We engage with our clients in active decision making. Once a decision is taken to implement the project, comes the development stage where you have to apply for permits, licences, conceptual designs, figure our right specifications, select EPC contractor and bid for evaluation. We assist in this development phase. The third phase is execution i.e. building a facility. We do engineering design, buy equipment, give guarantees on the equipment, construct the equipment and then commission and start the facility. For the last phase, when the facility is on-stream and operational, we have a robust portfolio of asset management.

You are both into power generation and LNG segment. Today, there is a slowdown in the power sector due to fuel supply issues, while the LNG business is booming. How has this impacted your business portfolio?

We still have a balanced portfolio in terms of clients, prospects and professional resources, spread across power, oil and gas. In fact our Indian operations support our global projects. We are still executing some power projects which were initiated in 2008 and 2009 and are now nearing completion. With respect to LNG, we are actively looking at LNG terminals that the government is planning to develop, be it on the east coast like the ones at Ennore (of IOC) or Gangavaram (of PLL).

What are your LNG plans in India?

The LNG segment has two aspects — India and global. The trend that we have seen is that because of the shale gas boom in the US, producers of shale gas want to export gas. For that they have to convert natural gas into liquid through liquefaction process and Black & Veatch has a proven patented process called Prico which we deploy in the US to convert gas into liquid and then the gas is shipped into countries like Japan or India where we then get into re-gasification. So we are at both ends of the LNG spectrum. We are working with clients in the USA who want to export gas and looking at clients in India such as IOCL who are looking to re-gasify liquid into gas.

Do you have plans to participate in LNG terminals in India?

An LNG terminal has several components. First is the tankage part where you store liquid LNG which comes from the ships. We are not very active in this segment. But once the LNG is in the tanks, it needs to be converted back into gas. That’s where we are quite active in re-gasification components. India has only seen land-based terminals so far. We have expertise in floating LNG. In this process, the re-gasification happens offshore i.e. on the ship. We are actually involved in a major project for floating LNG right now where the entire project is being built on a ship and the ship will be positioned in North America where the gas sources are. So we are executing projects in floating LNG and if India takes the next step of considering floating LNG terminals, then Black & Veatch would be interested in looking at those prospects here. We are actively looking at IOCL and plan to bid for their upcoming projects.

You are yet to enter the nuclear energy segment in India. What are the reasons behind that?

Our nuclear offering is niche at this point and we are limiting it to a few geographies. We will certainly look at the Indian market for nuclear energy but at an appropriate time. At present our focus is on conventional, renewable power and oil and gas. We feel that we are not yet ready at this time to put our offering in the nuclear power sector.

Do you have any plans to venture into pipeline projects?

Not immediately at this point in time. We want to focus more on power generation with gas plants at the moment. The pipeline and transportation part will come only after we finish with the generation part and execute few projects.

What was your reaction to the recently announced interim budget?

It was a mixed bag. Not surprisingly, power targets were missed because of scarcity issues. But the country’s power capacity has doubled in the past 10 years and it will continue to increase till 2030. So that is a big positive. One announcement which has stood out in the interim budget is with respect to ultra mega solar power projects, which is quite encouraging. The reduction in excise duty is a positive; it would hopefully stimulate the economy. We do procurement globally for our power equipment and with this change, Indian equipment will become much more competitive for projects in India and abroad. We certainly have plans to procure a good amount of equipment in India.