Lamenting on the dismal growth of the hydropower development in India, Mahadevan Anand, Managing Director, Andritz India Pvt. Ltd. sheds light on the sectoral challenges and the impact it is having on the businesses of the companies involved…
What does India represent for Andritz’s global revenues and what is the strategic importance of this market for you?
India is a key market for Andritz and we were the first multi-national company to have set up state-of-the-art manufacturing facilities in India way back in 1999. India has a large potential for hydropower which still needs to be tapped. Andritz sees India as one of the potential markets and strategically this market is very important for us. We have been actively involved in India’s hydropower sector and have been visible market leaders for couple of years now. This goes on to say a lot about our commitment to India and our dedication to develop the hydropower sector.
What are your ongoing projects at present? How has been your performance in the last fiscal?
We are involved in the development of various hydro projects with many important customers in India including NHPC, NEEPCO, KPCL, HPPCL, MeSEB from the public utilities amongst others and customers like Athena Group, Jal Power, Jaiprakash Group, etc from the private sector.
We are executing the largest IPP hydro project in India namely the Teesta III project in Sikkim with Athena Group which will add 1200 MW to the National Grid. Our order backlogs have helped us sustain our position despite a decline in growth in the hydropower sector. We commissioned the prestigious Karcham Wangtoo project (1000 MW) under Jaiprakash Group last year.
The hydro share in electricity generation has actually fallen in the last few decades. The sector has been grappling with environmental and displacement issues. In the wake of these issues, how do you see growth coming in this sector?
The hydro sector has seen a declining trend in the last couple of years mainly due to delays in clearances, land acquisition, local issues etc. These factors have affected project owners / developers and ultimately equipment manufacturers like Andritz.
Hydropower, with flexibility to start generation as per requirement, helps to meet the peak requirement of power. Thermal power alone is not cost effective to meet peak demand. In FY 2010-11, India had peak deficit of around 9.8% i.e. 12,031 MW. At the time of peak, deficit hydroelectric project can provide cheaper power. The sector can only see a growth again when timely clearances are in place. This will also boost the confidence of investors who are currently shying away from the sector to minimize exposure risks. Our existing policies are well defined but not well implemented. Timely implementations of laid-out procedures can definitely help the sector see a positive growth again.
According to you, what are the reasons for this poor show? How can sector be revived?
Like I said, the sector can be revived when government procedures happen within a stipulated time frame. When clearances are accorded in time, project developers can go in for financial closures of their projects and move towards implementing the projects within the scheduled time frame. This will encourage investment into the sector which otherwise now is almost missing. Developers are finding it difficult to raise funds to finance projects which are more or less a major deterrent to the current growth of the sector. Moreover, a single window clearance mechanism needs to be put in place for timely clearances
You are really active in the Chinese hydro sector. How do you see the sector developing in comparison to its Chinese counterparts?
Andritz Hydro has its own operations in China. Andritz is also involved in the Three Gorges hydro project there. However, since we have separate operations in both the countries, I am not in a position to comment on the activities in China.
Are there any of your plans suffering on account of lack of environment clearances?
Most of our esteemed customers have not been able to move ahead with the award of works for their projects in the last one/two years on account of lack of clearances. This has mired the confidence of our customers and has affected our operations as well. Project owners, investors and equipment manufacturers are all on the same boat. We are hopeful that the government will implement some confidence building measures for the dismal performance of the sector.
You have recently bagged a first hydro project outside India, in Nepal. Can we say a change in business strategy, because of slow hydro growth in India?
India is our primary market and will remain to be so. I must correct you that Andritz has been involved with the Nepal market for over 2 decades now. We have already executed various projects in Nepal and the recent project awarded to us only further consolidates our position in Nepal’s hydro sector.
Our focus is definitely on India and the neighbouring countries as this is our assigned region. We are working hard to maintain and sustain our market position in this region. As far as India is concerned, we need to wait and watch.
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