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Positives of power reforms will be nullified in the absence of fuel, Sunand Sharma, Country President, Alstom India

29 Nov 2012

Alstom, one of the key players in the power sector, has had a growing market base in India. However, the current volatile scenario in this sector has been a cause of concern for even the most remotely associated organisations. Sunand Sharma, Country President, Alstom India and South Asia, tells us how it affects Alstom, what are the company’s future plans for India and whether nuclear power is a viable business option for them. Edited excerpts:

How has the current volatile power situation affected your company?

The situation is definitely challenging with fuel scarcity and issue of coal linkages having badly affected the power industry, but we are closely following the developments. Almost 35,000 mw, or 20 per cent of India’s installed capacity, is running at sub-optimum level due to insufficient coal and gas supplies. But when we build new factories, we build on long terms. Our order base is largely government sector and all government projects go through the established methods of public tendering where fuel supplies are already secured.

Though the bailout packages announced by the government have cheered the sector, the positives emerging from the ambitious reform package would be nullified if fuel availability is not ensured. Even with the country making long strides in the renewable sector, the progress is marred due to factors like environment clearances and land acquisitions. Consistent efforts need to be made to eradicate the bottlenecks so that the industry and the nation on the whole can move forward on the path of development and growth.

Where do you think are we going wrong?

Our installed base of power generation is disproportionately small as compared to the size of the population. And it is only now that the country has started waking up to this reality. In fact, the amount of power generation, transmission and distribution equipment that was ordered in India in the past five years is much more than what was ordered in the previous 15 years.

Given the socio, cultural and economic diversity of India, to bring about an order in this complex system requires persistent and consistent contribution not only by the government but also the private sector.

But, it is the government’s job to set the ball rolling by easing the fuel situation which is stifling the development of the sector. The easing of the coal situation and the dissipation of fuel crisis will add a fresh lease of life to the stagnating order books and restore investor confidence.

What are your expansion plans for the current fiscal?

We want to focus on hydro while maintaining our leadership position in thermal power. We are also planning to expand our presence in nuclear segment in a big way. Our focus is on achieving leadership position in clean power – both in terms of efficiency and clean technologies. With the government emphasising on the need to increase domestic capacities by building power plants with super critical and ultra-super critical technologies in order to reduce coal requirement, we need to explore more options. In the wake of several large public and private investments in the sector, industry-wide improvements are needed for sustainable project and operational efficiency in the long run.

Alstom is the world leader in conventional islands for nuclear power plants and recently you have entered into a contract with NPCIL. Considering the uncertainty of the future of nuclear power plants across the globe due to environmental fears and radiation scare, how far is it viable as a business opportunity?

India currently derives only 3 per cent of its total electricity requirement from nuclear energy and is poised to expand its nuclear power programme. Its nuclear power market is currently valued at $150 billion and offers immense opportunities for power equipment suppliers like us as is evident with our winning of the Rawatbhata project.

Also, India is anticipating the construction of over 30 to 40 nuclear plants in coming years to produce clean energy, which, if it succeeds, ought to provide massive openings on the technology as well as the supply side. There are 19 nuclear power plants already operational in India with a total capacity of 4,500 mw and if the current market dynamics are taken into account, India is expected to generate an additional 25,000 mw of nuclear power by 2020, bringing the total estimated nuclear power generation to 45,000 mw. Hence, the growth opportunities are enormous and Alstom will be able to add immense value to the nuclear segment in India.

Has Alstom’s nuclear arm been affected post Fukushima? With Germany deciding to do away with all nuclear power plants by 2017, do you think it is a cause for concern for players like Alstom?

According to the International Atomic Energy Agency, there are 442 nuclear reactors in operation worldwide, with 65 new facilities being under construction. Eventually, nuclear is a real candidate and all the countries are trying to increase their energy diversity. When we talk about reaching a clean energy standard, nuclear energy becomes a vital part. Even India is looking to double its capacity. At the same time, it is also imperative that adequate measures are taken by the government to address the risks involved.

Alstom is not involved in the construction of nuclear islands (reactors), thus we are not experts as far as safety of reactors is concerned. Nuclear energy is a part of our business, as we are a multi-specialist in power generation; should some countries decide to shift from one technology to another one, we can provide solutions. Any trend towards technology and retrofit is good for us.

What are the challenges which Alstom is facing in growing its business in India?

The Indian infrastructure market is one of the most dynamic markets in Asia and offers a lot of opportunities in terms of growth and revenue. But there are still myriad issues affecting it. They have had a ripple effect on the companies operating in the sector and Alstom is no exception. But the pipeline of opportunities is wide and when they do arise, we will be prepared.

What is your biggest strength in the Indian market and how do you intend to make it stronger?

We have seen good growth here in terms of expansion and investments. In power, our primary focus would be on hydro, while maintaining our leadership position in thermal power. We are also looking at emerging renewable segment like solar and wind while planning to expand our presence in the nuclear segment. We also want to focus on leadership position in clean power – both in terms of efficiency and CCS technologies.

In transport, we are mainly targeting the metro market which is a growing segment, rolling stock contracts and signalling solutions for both metro as well as Indian Railways. We are capable of offering complete railway solution package on lot-by-lot or turnkey basis. In grid, the focus is towards leveraging India as a centre of excellence for its worldwide activities.

With the benefits arising from the synergies between all the three sectors of power, transport and grid we are well poised to increase our competitiveness and consolidate our position in the market.

(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.)