Sufficient funds should be spent on distribution to eradicate ever-increasing power demand-supply gap, says JG Kulkarni, President of IEEMA

The recent restructuring of age old policies by the government for discoms is a big breakthrough,  but besides  generation segment,  power transmission and distribution segments also require focus of investment, as informed by JG Kulkarni, president of  Indian Electrical & Electronics Manufacturer’s Association (IEEMA), who is  also executive vice president (EVP) of Crompton Greaves Ltd & President CG Power ( Asia) in an exclusive interview.

 

 

What are the growth opportunities for electrical and the electronics industry in India? How does IEEMA as an apex body facilitate electrical equipment manufacturers to cope up with these opportunities?

 

JG Kulkarni:  The demand supply gap in availability of electrical power offers a huge opportunity and IEEMA is actively working to improve the availability of reliable and economical electrical power to all Indians through energy efficient and reliable equipment. The Indian electrical industry over several years has doubled or tripled its capacities in line with the vision of Govt. of India to provide electricity for all.

 

 

 

What are the measures that the government and industry should take to eradicate this ever-increasing power demand-supply gap?

 

JG Kulkarni:  Everyone in the nation should have 24X7 access to power, but this is not the reality. The availability of power depends on the ability of user industries to distribute power to the users. Power shortage is a cause for concern. The investment proportion in the three specific categories of power, viz., generation, transmission and distribution, should ideally be 2:1:2. According to the 11th Plan, there is 55% investment in generation, 15% in transmission and 30% in distribution. Even though the 12th Plan has made some amendments, the ratio is still not 2:1:2. According to recent announcements, if a good amount of money is spent on discoms, it would not only better the proportion ratio, but would also cut short the wastage. Also, apart from generation of power, sufficient funds should be spent on distribution.

 

 

 

What are the major causes of negative performance by the Indian Electrical Equipment industry in Q1 of FY13?

 

JG Kulkarni:  The sluggish domestic demand due to the slow-down in the power sector and a surge in imports of electrical equipment are the major causes of the negative performance.

 

 

 

Our inability to meet targets for generation capacity addition, due to multitude of problems such as unavailability of coal linkages for new projects, land acquisition issues, delays in environmental and other clearances, etc. is adversely impacting the downstream transmission and distribution sectors.

 

 

 

The entire power sector value chain crucially hinges on the financial viability of the power distribution sector and poor financial health of State distribution utilities continues to adversely affect both existing and planned projects, leaving developers with no option but to run projects at sub-optimal capacities or go slow on the commissioning schedules.

 

 

 

Further, projects under RGGVY and APDRP also are not getting finalised for varied reasons, resulting in sluggish demand for the domestic electrical equipment industry, which is already facing intense competition from cheap imports in the domestic market.

 

 

 

To what extent, the Central government's debt restructuring package for state electricity boards (SEBs) will meet the needs of ailing power discoms?

 

JG Kulkarni:  The accumulated losses of power distribution companies reached a level of Rs. 1.9 lakh crores, as on 31st March 2011. Poor financial health of State distribution utilities has been adversely affecting both existing and planned projects, leaving developers with no option but to run projects at sub-optimal capacities or go slow on the commissioning schedules.

 

 

 

The announcement by the government of the package on ‘Financial Restructuring of Discoms’ will very positively impact the entire power sector as the entire power sector value chain crucially hinges on the financial viability of the power distribution sector, which has been severely eroded in the last few years. With the debt restructuring and improvement in the financial health of the discoms, banks will regain confidence in sanctioning loans to them.

 

 

 

Do you think this package will bring investments for distribution segment? What reforms does distribution sector currently require?

 

JG Kulkarni:  The focus of investments in the Indian power sector has typically been in the generation segment. Power transmission and distribution (T&D) segments have lagged behind.  The T&D sector requires greater and focussed attention than given till now. The asymmetrical d investment pattern needs to be corrected and we need an investment ratio of 2:1:2 amongst generation, transmission and distribution segments in order to achieve a balanced growth in the power sector.

 

 

 

It is heartening that there is some move towards correcting this lopsided investment pattern in the 12th Plan. The total funds required by the power sector in the next five years have been estimated at Rs. 13.72 lakh crores, out of which 47% are for generation and the rest 53% for T&D and others. Distribution sector alone requires over Rs. 3 lakh crores in the 12th Plan.

 

 

 

As part of the package, the government has mandated concrete and measurable action by the discoms, including annual revision in tariffs, bring in private investment in distribution, etc., which hopefully will be strictly monitored. If what is envisaged is put in place, then it should help in substantially reforming the ailing distribution sector.   

 

 

 

Please elucidate the proposed 10-year vision plan of Heavy Industries Department? What growth opportunities do you see for electrical equipment manufacturing industry?

 

JG Kulkarni:  This mission plan is a co-creation between IEEMA and Department of Heavy Industries. This also involves active participation from E&Y. We were together able to come up with a document which would be released very shortly. That document would aptly define the needs and steps that should be taken by the industry. There are five different work groups which are being formed to guide and help industries to do what is necessary. This would help the growth of the electrical industry and also help in meeeting exports demands to an international level.

 

 

 

What is your roadmap foru IEEMA during 2012-13?

 

JG Kulkarni:  The primary role of any industry association is to undertake activities which help in capacity building of its members and also to proactively engage on their behalf with the government and its agencies on issues of concern and challenges faced by the industry as a whole. IEEMA has been very effectively providing a forum and a platform for knowledge sharing and capacity building not only for member companies but all stakeholders. Similarly, IEEMA has been playing a crucial policy advocacy role with the policy makers, both at the Central and State levels, and with power utilities across the country. We will continue to intensify our efforts in all these directions so that our industry becomes even more robust, healthy and dynamic.

 

 

What special initiatives IEEMA executes in creating awareness of latest technology trends among the electrical equipment manufacturers?

 

JG Kulkarni:  IEEMA regularly organizes various international level technical conferences every year like SWICON for Switchgear, TRAFOTECH (conference, workshop & exhibition) for Transformers, TECH-IT for Instrument Transformers, METERING INDIA for meters, CABLEWIRE for Cables & Conductors, ELROMA for rotating machines, CAPACIT for capacitors and INSULEC for electrical insulation materials. Other technical conferences are also held based on topial scenario like CIGRE conference on heavy electrical equipment and GRIDWEEK ASIA on smart grid.

 

 

 

Being the president of IEEMA, what is your vision for this association for next coming years?

 

JG Kulkarni:  As a president of IEEMA, I would desire to see IEEMA as sole spokesperson of Indian electrical and industrial electronics industry, which also has the power to do good for the ordinary citizens of this country who use electricity. The very reason for existence of the association is to further the Indian electrical industry across the country and the globe. Accordingly, my vision on a global level would be to increase our share from current 1% to 5% over the next decade. A mission plan is already under preparation for helping achieving this vision.