The company has recently completed 100 years of its operation in India. InfralineEnergy’s Chhavi Tyagi spoke to Sunand Sharma to discuss the company’s future plans in India, the importance India has in its global business aspiration and the problems the company is facing in expanding its hydro business in India.
What are the new initiatives planned for India?
Among the highlights of our 100-year footprint in India is the Alstom Centennial Award for Technological Excellence, which we launched recently. Innovation is at the heart of everything that we do at Alstom. Not only because we operate in high technological value sectors, but because of our culture, which is the basis of all our processes, products and services that create value for customers and the group. Keeping this in mind, we instituted an award which honours innovation and technological excellence. Through this, we aim to support development of technology and innovation, not only within our company, but also in the sectors in which we dwell, particularly in this growth-infused market.
With the recent inauguration of our new Hydro Bearing Factory in Vadodara, we will be able to cater to the vast potential that exists in the hydro market in India.
We are also waiting for the procedural formalities to complete for the full integration of Areva T, post which, Alstom will be better placed to address the power market as a total solution provider – from generation to transmission.
Our nuclear presence also got a boost with Alstom and BHEL consortium winning a contract worth INR 1,600 crore from Nuclear Power Corporation of India Ltd (NPCIL) for its 2x700 MWe Kakrapar Nuclear Power Station in Gujarat. Going forward, we will continue to focus on clean energy which will also help address India’s concerns related to energy security and climate change.
Other than this our ongoing strong partnership with BHEL, Infosys, BFL and NTPC will enable us to bring in frontline technologies and multiply our offerings to the customers from time to time.
Company CEO and Chairman Patrick Kron mentioned that the Indian government has confirmed to focus on sustainable infrastructure. What are the issues Alstom faces with the Indian infrastructure?
The greatest advantage with Alstom is that we are constantly working to ensure that we conserve the planet’s existing resources and innovate to replenish them – and all this without letting the pace of development slow down. India, sure, is a developing market, there are needs and these needs will continue to grow. There might be some oscillations, there might be some ups and downs but with challenges come great opportunities. We feel the opportunities therein are immense for a company like Alstom. With our expertise in power generation, transmission and sustainable mobility, we will continue to influence the future generations for years to come.
In the current scenario when the developed countries are still hesitating on big investment decisions, how important has the Indian market become for Alstom?
India is the focus market for Alstom globally and this is evident from the number of projects that are currently under execution or in the pipeline. To reinforce our commitment, we recently inaugurated our Hydro Bearing Factory in Vadodara that will cater to both the Indian as well as the global market. We are building a factory in Mundra in a joint venture with Bharat Forge, for steam turbines. We are targeting many opportunities and many projects across all our three businesses--power, transport and grid and our growth will depend on our ability to capture these opportunities and projects.
"There are many problems associated with generating power through water; some of which are a long gestation period, time consuming process for project clearances, more focus on thermal generation, highly capital intensive and absence of committed funds, technical constraints due to complex geological nature of the projects and inter-state disputes as water is a state subject."
Our transport business has gained momentum with the winning of contract for supply of track works to Chennai Metro. We recently had a ground breaking ceremony at Sri City in Andhra Pradesh for building a plant for rolling stock, which will complement what we already have in signalling in Coimbatore. There will be some projects in Indian Railways that we want to participate in. So, we are enthusiastic and optimistic about the forthcoming projects. Also, with our continued focus on R&D and clean power, we hope to capture newer markets.
What are the issues that Alstom is facing in India when it comes to hydro power projects?
Hydro-electricity is a clean process of power generation. Once the projects are constructed, there is no pollution ramification unlike many other power generation technologies and processes. Since it does not suffer from the limitations of inflation on account of fuel consumption, in the long run, it is the most cost-effective option for power supply.
The installed capacity of hydroelectric power plants in the country as of March 2011 is just around 37,570 MW which means there is a huge exploitable hydropower potential that remains untapped. The country has long suffered from bureaucracy and lengthy approval processes. With the renewed effort by the National Hydroelectric Power Corporation Ltd. (NHPC) to make hydro a stable 30 percent power source, there is a new optimism spreading in the industry.
"We have a choice when we deploy our own resource in a project like what we have done in Vadodara in the hydro business. There is a lot of growth opportunity in terms of customers, export and low production cost. On the other hand, forming a JV with a partner, involves various kinds of synergy and implications based on the market conditions."
However, there are many problems associated with generating power through water; some of which are a long gestation period, time consuming process for project clearances, more focus on thermal generation, highly capital intensive and absence of committed funds, technical constraints due to complex geological nature of the projects and inter-state disputes as water is a state subject.
Do you think that the various hurdles in the form of environmental clearances, infrastructure problems, etc., justify the investments made by you in the Indian power sector?
As the Indian economy continues to surge ahead, its power sector has been expanding concurrently to support its growth. The demand for power is growing exponentially; therefore, the scope for growth of this sector is immense. The government has targeted capacity addition of 100,000 mega watt (MW) each in the 12th Five-Year-Plan (2012-17) and 13th Five-Year-Plan (2017-22), which means immense potential for Alstom. The investments that we have made over the past few years prove that we are committed to the growth of the Indian market.
How do you choose between venturing out alone like in the case of Vadodara in the hydro business and forming a JV like the one with Bharat Forge?
The Vadodara site is home to one of Alstom’s biggest hydropower manufacturing sites as well as Alstom’s Global Technology Centre. The new hydro bearing unit at Vadodara is state-of-the-art manufacturing facility for producing bearings for medium-to-large sized hydro power projects in India and abroad and will employ around 200 people.
"Alstom’s nuclear business represents four percent of our total sales. Out of this, more than half is in service and aftermarket. The aftermarket of nuclear plants is only going to increase rather than decrease. Therefore, we don’t see any change of plans for Alstom in the nuclear market."
We have a choice when we deploy our own resource in a project like what we have done in Vadodara in the hydro business. There is a lot of growth opportunity in terms of customers, export and low production cost.
On the other hand, forming a JV with a partner, involves various kinds of synergy and implications based on the market conditions.
Does the nuclear disaster in Japan change your plans for nuclear market? How does it affect Alstom’s plans for the nuclear market in India?
The unfortunate incident that took place in Japan will bring some slowdown in the sector. It will take time to fully understand what lessons are to be learnt from this. However, whether an economy wants less nuclear and more coal, less gas and more wind, is a decision taken by the policy makers and the government. At the end of the day, the governments and regulators have to decide how they will generate the power required for the growth of the economy.
"India has great resources and potential to be the market leader in the energy sector. There is need for power generation to support its economic growth and social welfare needs. The need of the hour is to have a more vigorous and focussed national awareness campaign to meet the desired objective of achieving sustainable growth in infrastructure."
Alstom’s nuclear business represents four percent of our total sales. Out of this, more than half is in service and aftermarket. The aftermarket of nuclear plants is only going to increase rather than decrease. Therefore, we don’t see any change of plans for Alstom in the nuclear market.
What is the progress on the Alstom’s JV with NPCIL and BHEL?
Alstom has finalised a tripartite joint venture agreement with the state-run BHEL and Nuclear Power Corporation of India (NPCIL), a development that would help the company to tap about 45,000 MW of Indian nuclear power market. Currently, it is being reviewed by the Atomic Energy Commission. The joint venture company will aim to provide technical support and supply turbines to nuclear power projects in India.
What initiatives would Alstom suggest to government so that all stakeholders come together and join hands to make the infrastructure sustainable?
A sustainable infrastructure benefits the environment, the economy and social well-being, now and for future generations. It is, therefore, imperative to engage all stakeholders to seek inputs on ways and means for promoting energy conservation and efficiency, and realise the goal of building India in a sustainable way.
India has great resources and potential to be the market leader in the energy sector. There is need for power generation to support its economic growth and social welfare needs. The need of the hour is to have a more vigorous and focussed national awareness campaign to meet the desired objective of achieving sustainable growth in infrastructure. It is envisaged that a well-articulated vision, active engagement of all stakeholders and timely implementation of the road map would further strengthen India’s vision of infrastructural development in a sustainable way.
How are integrated facilities for turbine, generators and auxiliaries going to benefit the manufacturing of large sized power plants?
Alstom and Bharat Forge have worked together to form the largest integrated facility for turbine, generators and auxiliaries manufacturing in the private sector in the country. India is now a hub for advanced power equipment manufacturing because of this Alstom-Bharat Forge JV. Alstom and its partners are committed to utilise their strengths and world-class capabilities to deliver advanced and sustaining equipment in sub and supercritical ranges in India; setting global benchmarks in reliability and efficiency.
The BTG (boiler turbine generator) capacity in the country is expected to exceed demand. How Alstom plans to survive the competition?
Alstom expects to deliver the first turbine from Mundra by 2012-end or early 2013. When we look at our participation in a country, two things are primary -- first, the magnitude and sustainability of domestic demand, and the second, to what extent we can use our base to serve a global geographical scope. Our target is to serve our global goal with our skills and assets in India.
What are the likely policy changes in the Indian Electricity Market which Alstom expects and suggests so that the BoP market widens and at the same time, reduce the delays in project implementation?
The demand today has increased manifold and we are happy to see the rise in the number of public-private partnerships in the sector. The recent regulatory changes have created a conducive climate for the PPP model. The Electricity Act (2003) and its subsequent amendments make it easier for private players to invest in the power sector. Alstom is continuously utilising its R&D in India to provide cost-effective energy to its consumers. We have a JV with NTPC for renovation and modernisation of existing power plants, which we see as an opportunity to contribute to improve performance and efficiency.
(InfralineEnergy thanks Sunand Sharma, Country President, Alstom India for sharing his valuable insights with our readers. The column ‘In Conversation’, is a platform to engage experts from various sectors to share their views on the different transformations happening in the Indian energy sector.)