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Political will required to prevent grid failure, Gregoire Poux-Guillaume, President, Alstom Grid

29 Nov 2012

As half-of-India plunged into dark after national grid collapse in July everyone in the sector is busy finding practical solution so that there is no repeat of such an event. Gregoire Poux-Guillaume, President of Alstom Grid, attempts to offer workable solutions besides advocating for more accountability and transparency in the segment. An MBA from Harvard University bats for extending teeth to the regulators so that they can take much needed action at the right time to prevent the country from getting into an embarrassing situation.

How can India ensure that power outages, as bad as we have seen in recent times, don’t happen again?

It’s a complex issue and one that will take some political will to solve. There are five grids in India. There is an overarching control center and there are regional centers. The problem is that the national control center does not have the authority to control regional consumption. So if a region draws too much power from the grid, the national control center can flag it off but cannot cut off the regional centre from the grid. And as I read the debrief from the investigation, that seems to be one of the issues.

There is also the issue of power capacity in India. There is no shortage of it though we all know that some of the power plants are operating at limited capacity because of fuel issues.

According to you, what could be the possible solution?

The primary issue is how do you manage a country as vast and with as many grids as India. We need to have robust systems and for that India is investing a lot. Power Grid Corporation (PGCIL) has a very aggressive investment plan. But we need to do more—have more data, more real time data, more intelligence. We also need to have regulatory authorities which can and are authorised to take action. It’s good to have the data but it’s better to have the data and to be able to take action.

Nonetheless we can reinforce the grid in order to build an additional safety net. We designed and installed the national control centers. We also designed and installed three out of five regional centers.

How do you see Alstom’s business in India vis-à-vis China? And where do you see future investment plans in India?

We have invested heavily in both the countries but historically, India has been a stronger base for us. We have had a long and distinguished history here, starting in 1911 in Kolkata. We consider ourselves Indian. We have five world-class factories in this country and we manufacture every single equipment that we use here. So, there is little that we can do better in terms of our presence in India, besides being a better supplier to PGCIL and independent power producers (IPPs) and the various companies involved.

China is a different market for us. There too we have a lot of factories but we developed our presence in China through various joint ventures with different players. So, it’s a less coherent presence than in India.

Which country is easier to do business with, India or China?

It’s hard to choose, but again I would choose India because as a market we understand India well. In China we have had a shorter history and it’s a market which has evolved quite a lot in the last few years. It is sometimes a bit difficult to read.

Do you also face problems such as that of land acquisition and others that many firms are facing in India? For example, do you fear any problems for the Champa-Kurukshetra project that you have bagged? Do you feel frustrated like some others do?

Land acquisition is one part of the value chain where we are not in the front line. We are not responsible for securing the land but we usually sign a contract with our customers which says that we have to make progress and they have to make the land available. Yes we share the frustration because if the land is not available then we cannot install (machines). That usually means that we don’t get paid and it impacts our business.

You are the market leader in India, what is your strategy to stay ahead and maintain the leadership?

We have been historically successful in the HVDC segment. We have three good references in India there. With Champa-Kurukshetra project we have entered the 800 kV (kilo volt) segment and can now say that we are present in the whole value chain.  It was a big part of our going to the next level in India and that needs lot of investments. Take our transformer factory in Baroda. Through the Champa-Kurukshetra project we are building an extension. We are adding a test facility. Basically, we are laying the ground for the next 100 years.

What are Alstom T&D India’s capex plans for 2012-13 and the next few years?

Next year we are building an extension to our Baroda factory, so that’s going to involve lot of money and we haven’t disclosed the numbers. But I am pushing Rathin (Rathin Basu, Head, Alstom T&D India) to negotiate well with the suppliers. India is probably going to be the country next year where we will have the highest capex individually. And we have to also keep in mind that our five factories in India were commissioned less than five years ago -- in 2008-09. We invested more than INR 900 crore.

What kind of impact will the huge import duty on power equipment have on your business in India?

(Rathin Basu): Our imports are not that significant. Historically, we have been very local. High import duties might have an impact on power producers, particularly those who are relying on Chinese equipment.

(Gregoire Poux-Guillaume): It’s only impacting us on very specific projects where the rules of the tenders force us to bring something from elsewhere. I will give you an example — in  Champa-Kurukshetra, in order to qualify for 800 kV you need to have some references. So we can have one factory that can qualify in the UK, which is our case. The factory in Baroda does not qualify for the scope. So we have to import some of the transformers from Europe because we are only qualified for certain numbers of transformers for India. But through this project and next HVDC projects, we are hoping to be qualified for the full scope of operations in India.

Has the economic slowdown impacted Alstom?

In India it’s not so much to do with the economic slowdown as with independent power producers (IPP). Some of them are struggling financially and have huge debts. So we are having problems getting paid. There is less cash in the system and people are waiting till the last minute to pay.

In countries which were impacted by economic crisis, we see is delays in projects becoming reality. Time is stretching out between one project becoming visible and it actually being awarded to somebody. We see sometimes customers are not in a hurry to take delivery, so we have our products ready in our factories for delivery but we have to have an acceptance test before. And customers are not coming to witness the acceptance test, simply because their projects are slowing down.

(InfralineEnergy thanks Gregoire Poux-Guillaume, President, Alstom Grid 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.)