Powering India and Equipment Manufacturing

Let me start with good news first. If I go by media, a large number of private entrepreneurs and the big cooperates are rushing into adding power generation capacity in the country. Besides Anil Ambani’s Reliance Power and Tata Power, Hindujas, Birla, Baba Kalyani, GMR, Essar, Adani and many others are lining up huge investment in power plants. Even as reported Mukesh Ambani’s RIL may join the power league. I wonder why private companies took so many years to enter the power sector in big way, when the demand was so high that persists even today. It was because of certain flaws in government policies and the fear of not getting sufficient returns on the huge capital investments that the companies would have made, because of politically backed power large scale theft.

Even today, the country is far behind in creating the additional power capacity required to meet the actual demands. Most of the rural India still lacks light and power. And that has kept the areas backward. The rural entrepreneurs can’t think of starting any manufacturing enterprise that creates employment, as in today’s world nothing works without electricity.

I was stunned when I heard my grocery shop owner Singh complaining that if he would have power available in his home village, he could have started a business there instead of running his shop in Noida so far away from his native village.

However, there is another controversy that is getting a lot of media attention these days. It is about the lack of capacity of the power equipment sector causing undesired delays of the power projects. The Chinese are invading the market and taking away the orders from the sole state owned company BHEL. Both BHEL and L&T are trying to draw the government’s attention against the Chinese and are requesting to place certain restrictions on the Chinese import, because of its suspect quality and unfair trade practices.

All these years I have been questioning the reasons why BHEL couldn’t produce more and meet the requirements of the power sector. What are its constraints to increase the capacity? Why are the other players hesitant to enter?

As most of the power generating companies is in public sector, the system is corrupt. Those with authority to order equipment and contract expect a lot of bribe. BHEL being a government company itself can’t offer any bribes to the executives and officers with power to order. Naturally, the ordering companies create problems adopting different technical specifications, making it difficult for BHEL to deliver in time. One of the tricks is by demanding equipment of varying capacities that are to be custom-designed and manufactured for no reason. Why can’t the companies standardize on the equipment size for 125, 250, 500 MW, and 1000MW instead of asking for odd sizes such as 210 or 600 MW? BHEL or for that matter, any equipment manufacturer can manufacture the standard sizes with ease and faster too.

I came across a report today of a state company. One can see how many sizes are there in its planning of power stations.

I wish the big power generation companies could standardize every bit of its work at the plant site, and can also work with few standard sizes of equipment to build up the plant capacity with the equipment manufacturers that helps in improving the productivity of manufacturing and reduce the cost too.

Fortunately, many equipment manufacturing companies, both domestic as well as foreign, are setting up the shop in the country. South Korean company Doosan Heavy Industries and Construction Co Ltd is planning to set up a power equipment manufacturing facility in India. With Government mulling a safeguard duty on imported equipment, more and more foreign power equipment companies are planning to set up manufacturing facilities in India. Some of them have already tied-up with Indian companies. Mitsubishi of Japan has tied up with L&T, Toshiba with JSW, and Italy’s Ansaldo with GB Engineering, and Alstom with Bharat Forge.

The companies will ultimately taste the advantages of having the manufacturing facilities and then R&D centres in India. Let the Chinese also come and manufacture the equipment in India.

The competition between the private and state owned power generation companies as well as the same in equipment manufacturing will end the various red tapes, corruption and usher a brightly lit future for India pretty soon, when India will be surplus in power.

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