“Power market is in crisis”

October 13, 2012 8:18 am

Commenting on the recent logjam resulted from misappropriation in coal block allocation and its impact over the performance of power sector; Sunand Sharma, Country President, Alstom India & South Asia said, “The power market is in a state of crisis and is witnessing its worst downturn in years”
Alstom is a global name in the world of power generation, how significant is the Indian market for your business?With the Indian power generation industry achieving a significant milestone in 2010/11 by recording its highest ever capacity addition, the outlook of the sector is redefined. The thermal sources of fuel continue to have a dominant share followed by hydro, other renewable sources and nuclear. Though the capacity addition is lower than the revised target of 62,374 MW set by the Planning Commission, we should commend the fact that it is two and a half times the achievement during the 10th Five Year Plan period. With government focusing on increasing the private sector participation in the total installed capacity to bridge its energy deficit, the power sector in India is definitely on the rise. The Government’s ambitious plans to add 90,000 MW by the end of 12th Five Year Plan further provides the opportunity for private players like Alstom to contribute towards the capacity additions.
With India’s emergence as one of the most promising and dynamic markets in Asia, for Alstom, the focus has definitely shifted to India. Alstom is keen to participate and contribute to the Indian growth story. We are also planning to make India our export hub for South Asian countries and West Asia in order to maximise gains from our expanded operations at the same time diversifying our client base. As part of the strategy, Alstom also plans to ramp up exports from its hydro manufacturing unit to more than 30% of its annual capacity to markets all over the world. Similar exercise is also planned for the other manufacturing facilities as well.
Is Alstom in India equipped enough to take care of increasing market needs?India is a growing market and offers plentiful opportunities because of its ever-increasing infrastructure needs. It is a top investment destination for the company given its inherent demand for infrastructure development. Alstom has recently won a number of contracts in India region, the prominent among them being the Euro 100 million order for Rawatbhata nuclear plant in India and the Euro 120 million order bagged by Alstom Bharat Forge Private Limited for NTPC’s bulk project. The gas-based project at Khulna in Bangladesh, Al Mansuriya project in Middle East etc. are the testimony of the growing importance of the India region in Alstom’s scheme of things. Alstom with its superior and diverse offerings across almost all fuel types, be it hydro, coal, gas, nuclear etc., and technological innovations make it ready to meet the varying needs of its customer as well as increasing market needs of the nation. We also want to focus on achieving leadership position in clean power – both in terms of efficiency and clean technologies. With the government emphasising on the need to up domestic capacities by building power plants with super critical and ultra-super critical technologies in order to reduce the coal requirement of electricity production, Alstom a leader in supercritical technology, is well poised to cater to the needs of the country. 
What are your expansion plans and how much you are going to invest to meet your target?In power, we certainly want to focus on hydro, while maintaining our leadership position in thermal power. We are also planning to expand our foothold in nuclear segment in a big way. The inherent market opportunities in India offer plentiful prospects for companies like Alstom. It is a top investment destination for the company given its inherent demand for infrastructure development. Alstom is investing where the demand is and it is clear that the priority put by the government in infrastructure in India gives us the visibility and market opportunities.
The government has imposed a duty of 21% on imported power equipment, could you share your comments in this regard?The power sector in India has huge growth potential and this decision by the government will help the sector and domestic equipment manufacturers gain a competitive edge. Indigenous manufacturers will have greater benefit from this decision.
What steps should be taken by the government to improve the business?Though the Indian power market is one of the most attractive markets in the world, various issues like fuel scarcity, coal linkages, land acquisitions, and environment clearances have been plaguing the sector thereby impeding its growth. The government should take immediate steps to ease the fuel crisis in the power sector. The government should take the initiative to ease the coal situation to witness fresh bout of orders. Without these reforms it will be difficult for the government even to achieve its 12th Five Year Plan capacity addition targets. However, we believe that the country has strong economic fundamentals and will overcome these short term economic anomalies in the near future.
In India, thermal power comprised of coal, natural gas and diesel accounts for 80% of the country’s generation, coal use alone accounts for two-thirds, whereas security of fuel is in stake. What is your take in this regard?India is one of the fastest growing economies in the world and has huge demand for power generation. Most of the power plants generate thermal power, which means that demand for coal is huge. Shortage in the supply of coal will surely impact the power generation. However, with the Indian government issuing a presidential directive against Coal India to ensure greater availability of coal for power sector by providing coal through various means, the situation is expected to greatly improve and it will definitely improve without which the country cannot move forward. It is so because infrastructure growth is the key to sustainable development of the economy.
Would you like to share your opinion on recent logjam resulted from misappropriation in coal block allocation and its impact over the performance of power sector?The power market is in a state of crisis and is witnessing its worst downturn in years. One of the primary reasons for the same has been the coal/fuel scarcity. There is a huge shortage of power, power developers are waiting for fuel and all of this has now trickled down to affect power equipment manufacturers like us. So it is a vicious cycle and we hope that the government takes immediate measures to break the logjam and push the sector towards recovery path.