Petronet LNG is interested in buying a 25 per cent stake in a planned liquefied natural gas (LNG) terminal in Gujarat state, its chief executive said. Gujarat State Petroleum Corp plans to commission a 5-million-tonne-a-year LNG terminal at Mundra in the western Indian state by 2016. It holds a 50 per cent stake in the project, while Adani group has 25 per cent. Essar group, which held a 25 per cent stake, has withdrawn from the project. Petronet's A K Balyan said on 30 April' 2013 that the company would operate its LNG terminal in Kochi in Kerala state at 12 per cent of capacity in 2013/14 due to "pipeline constraints". It will process 4-5 spot LNG cargoes at Kochi during this fiscal year. It plans to operate the terminal at about 75 per cent of capacity in 2014/15. (Reuters)
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A busy Friday evening at Inderlok, the interchange station for Delhi Metro’s red and green lines, sees hundreds of commuters thronging the precincts. Inderlok station is home to one of the 10-odd Parsvnath Metro Malls dotting the Delhi Metro. The 150,000-sq. ft property houses a Big Bazaar, a Comesum (a restaurant chain), ATMs of at least four banks, a McDonald’s, a Raymond’s store and a Delhi government-run wine & beer outlet. Surprisingly, while the station is a hub of activity, there are not many people at the stores. In the brightly lit Comesum on the ground floor, there are fewer than 10 customers. At Big Bazaar, trolleys are seen lined up on the sloping passageway to the upper floor, awaiting the elusive shopper. There are a few people in the store, but nothing compared to the rush you see at other Big Bazaar outlets. Only the McDonald’s outlet is busy. Outside the liquor store, of course, there is the weekend queue. Delhi Metro started setting up stores on the network for two key reasons. One, they help people do basic shopping while on their way home after a hard day’s work. Two, they provide the mass transit network an additional revenue stream. This is critical for a network that provides subsidised travel despite continued high capital expenditure. However, Delhi Metro’s plans to earn big money by providing retail avenues on the network seem to have come a cropper, at least for now. Nearly seven years after Delhi Metro started retail operations, they accounted for just Rs 40 crore in 2011-12, and are expected to touch Rs 45 crore in 2012-13. Of the Rs 40 crore, Rs 6 crore is from kiosks. The total non-fare revenues, including those from ATMs, cellphone towers, advertising and shops, add up to Rs 200 crore, accounting for a mere 15 per cent of the Delhi Metro’s total revenues. The original target was 25-30 per cent. In sharp contrast, for the Hong Kong MTR, the non-fare revenues in 2011 accounted for 36.8 per cent of a total of HKD 21,144 million (about $2,725 million). Apart from stores, the MTR has at least 12 shopping malls at stations, plus a luxury mall. While trying to replicate the global metro retail model is fine, bringing in the footfalls is a far more difficult proposition. That’s what Delhi Metro has discovered. Of the 145 stations on its network today, it has stores in 40. In 10 other stations, including Dhaula Kuan (on the Airport Express route), Badarpur, Vaishali and Chawri Bazaar, empty store slots abound. ON THE GO: Dufry International and InterGlobe Enterprises have a 15-year deal with Delhi Metro for operating Hudson News & Café outlets on the networkThe idea of setting up stores on the metro network was a good one to start with. A city on the move, with little time to spare, would want to shop quickly en route. The numbers supported this argument — over 2 million people use the Delhi Metro daily and, therefore, shops at metro stations would ideally cater to them. Says S.D. Sharma, director of business development at DMRC: “The demand for retail is not that good. We still have many shops that are vacant.” For instance, despite three tenders, there have been no takers for five floors of 3,000 sq. metres each at the HUDA City Centre station (the terminal station in Gurgaon). Only the ground floor has stores. “The offers that we get are far too low,” says Sharma. Says a retail consultant: “The culture of shopping on the metro network has yet to gain traction in Delhi.”Catchment AreaAmong the earliest entrants to try and cash in on the retail business on the Delhi Metro was Parsvnath Developers. Apart from setting up the malls, it was also involved in building two stations — Akshardham and Azadpur. Sharma adds that Parsvnath also has the advertising rights for the former. Yet, many of the proposed outlets, including a Haldiram’s, are yet to open shop at Akshardham. A retail consultant says that the presence of a host of vendors around the Akshardham temple premises could be the reason for the lack of interest in setting up stores at the station. Parsvnath also has a plot by the side of the Akshardham station. But this could not be developed as the property was sealed by the erstwhile Municipal Corporation of Delhi. It finally got the green signal from the Delhi lieutenant governor in 2010. While Parsvnath built stations and set up malls at others, Kishore Biyani’s Future Group moved in as one of the anchor tenants at some stations. In all, it has 23 outlets of different formats at or near metro stations — close to a dozen are within 500 metres of a metro station; and three Big Bazaar outlets (Inderlok, Netaji Subhash Place and Mayur Vihar Extension), two Food Bazaars (Rajendra Place and Rithala) and a Fashion Big Bazaar (Karol Bagh) are within stations. Says Puneet Jain, NCR zonal head at Future Value Retail, a Future Group company: “The coming of the metro has changed buying patterns in the city. We are well on target in the capital region.” While that could be true, according to an industry expert, the bulk of the revenues for the group is from stores that are located near, and not within, stations. That’s corroborated by people residing in the vicinity of a station. Deepa S., 35, a resident of Mayur Vihar, says: “While I commute on the metro, I do not shop at the station since we have a good market next door. Rarely do I pick up anything from the station outlet.” This is a big problem for retailers on the metro network. break-page-breakJain agrees that while purchases at Future Group stores on the metro are largely impulse driven, shoppers at malls are clear about what they want to buy. Arvind Singhal, chairman of Technopak Advisors, says, “Primarily, food, groceries and medicines really sell at stores on a metro network.” Stations in residential areas focus more on groceries and items of daily use; at stations in commercial areas, the demand is for reading material, quick bites and chewing gum. The one favourite service across stations is recharging of pre-paid mobile connections. In a way, while they cater to different markets, the stores at metro stations and malls complement each other — as footfalls increase over the weekend at malls, stores on the metro network see fewer customers. However, unlike mall outlets, metro stores haven’t been able to determine the socio-economic profile of commuters. Since a diverse set of people uses the metro, it is difficult for store operators to do a catchment analysis and identify potential customers. This makes it difficult for metro stores to cater to shoppers’ needs. But the advantage is that running a store at a metro station is much cheaper than at a mall. A 300-sq. ft space at a metro station would be available for a monthly rental of around Rs 50,000. At a mall, depending on location, it can cost anywhere from double upwards. NEW ROUTESDelhi Metro is giving out property for developmentRESIDENTIAL PROPERTY• Khyber Pass Depot• Dwarka Mor• Rithala• Subhash Nagar• Vishwavidyalaya• Janakpuri WestOFFICE COMPLEXHUDA City Centre (Gurgaon)Another company trying to tap the metro retail opportunity is Switzerland’s Dufry International (a global travel retailer with operations in 43 countries). It has joined hands with InterGlobe Enterprises (which operates IndiGo Airlines) to set up outlets of Hudson News & Café, which has 45 stores in LA International Airport and another 40 at JFK International Airport, New York. InterGlobe has a 15-year lease with Delhi Metro. The brightly lit outlets offer candy, chocolates, wafers, newspapers, magazines, romance and motivational literature and, of course, coffee. Of the 40 stores planned, 37 are up and running. Says Siddhanta Sharma, director at InterGlobe Retail: “Around 30 per cent of our stores on the Delhi Metro network are doing much better than expected, while another 50 per cent are matching expectations.” In some stations, the stores are located on the wrong side of the traffic, which is why about 20 per cent are performing below expectations. If 2012 was the year for opening outlets, this year is one for consolidation. InterGlobe plans to expand its reach to Gurgaon’s upcoming Rapid Metro network as well. It is also in talks with the developers of Mumbai and Bangalore metros. All expansion on other metro networks is likely to happen in 2014. Another player to have understood the model is the Indian Railway Catering and Tourism Corporation. Considering that quick and clean food is a need on transit networks, it is all set to open food kiosks — Food Track — at 130 stations. These will offer a variety of snacks and quick bites, including samosas, rolls and burgers. These kiosks will also serve meals in sealed trays that users can take home and heat in a microwave. Over To Plan BDespite all the activity in metro retail, it is advertising that accounts for the bulk of non-traffic revenues for the Delhi Metro —within and outside stations, and inside coaches. Retail income, at Rs 40 crore out of a total of Rs 200 crore from properties in and around metro stations, has not matched expectations. So, Delhi Metro is now looking at other means to earn more since it has already spent close to Rs 30,000 crore in setting up the first two phases of the network. The third phase will involve an additional capital investment of Rs 35,000 crore. ‘Around 30 per cent of our stores are doing better that expected’SIDDHANTA SHARMA, Director, InterGlobe RetailTo begin with, Delhi Metro plans to give station-naming rights to corporates. The first station that could be renamed is Sikanderpur in Gurgaon. The sponsor’s name will be included in the name. The Rapid Metro in Gurgaon, however, plans to go a step ahead — name a station entirely after a sponsor. The corporate will also get space at the station for advertising.The other move is to develop residential property and set up offices at metro stations. Currently, five plots have been set aside for housing. Parsvnath has started work at the Khyber Pass depot while AP Real Estate has begun work at Rithala. Other locations include Dwarka Mor, Subhash Nagar and Vishwavidyalaya stations. Delhi Metro has just kicked off the tendering process to lease out a 1.1-hectare (2.7 acre) plot at Janakpuri West station that is part of the third phase of the network to be completed in 2016. It is inviting bidders to set up a residential complex here. Like anywhere else, retail on the metro network, too, hinges on location. While the Comesum at Inderlok station is empty, the outlet on the concourse level of the Kashmere Gate station (the interchange between the red and yellow lines) is always packed. One, it is smaller, and two, it is bang in the middle of transit traffic. This could well be the way to get people to patronise Delhi Metro retail outlets. What could tilt things in favour of Delhi Metro is that India is short of basic retail and convenience stores, when compared to the West. As the Delhi Metro network almost doubles the present capacity by 2016, expect a lot more stores, and hopefully, more business. anup(dot)jayaram(at)abp(dot)inanupjayaram(at)gmail(dot)com(at)anupjayaram (This story was published in BW | Businessworld Issue Dated 20-05-2013)
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We did not have electricity in our village until this plant came up,”says Ramashish Ram, a member of the panchayat in Tamkuha village in Bihar’s West Champaran district. He is referring to the Husk Power Systems (HPS) plant that supplies electricity to the village using rice husk as feed. Husk Power, which started out in 2007, today has 24 projects across the state providing uninterrupted power to 80 villages.Up north in Uttarakhand, Avani Bio Energy taps the abundantly available pine needles to produce power. Avani uses the gasification technology developed by its founder Rajnish Jain. It began with a 9 kw project in the state in 2011, and has plans to set up 20 projects of 120 kw each by 2016. The first such project is just weeks away from going on stream.Welcome to the world of ‘distributed generation’ (DG), or of small and independent projects ranging from less than a kilowatt to a few megawatts, which produce and distribute power away from the government grid. “DG uses locally available fuel to produce power and distributes it locally,” explains Parimita Mohanty, head of the Centre for Distributed Generation at Teri (The Energy and Resources Institute). With its mantra of ‘think local, act local’, distributed generation is just what the doctor ordered for India’s power-starved and unlit villages where some 40 crore people — one-third of the country’s population — still do not get sufficient commercial energy, either due to a lack of grid connectivity or insufficient supply. The good thing about DG is that it can also be fed by renewable and non-renewable energy sources. “Since it might take some time before the grid reaches all the villages, distributed generation through renewable energy sources in a village or a group of villages presents an important method of supplying energy to the population,” says Alok Srivastava, joint secretary in the Ministry of New and Renewable Energy.Leading To Light A handful of DG players has made an impressive start. Take, for instance, Desi Power (Decentralised Energy Systems India Power), which started with a 50 kw, agri-waste-fired project at Baharbari in Bihar’s Araria district in 2001. Today, it generates 163 kw from four projects. “We not only brought electricity to this village but also helped its villagers in getting irrigation water and starting several micro-enterprises,” says Shailendra Nath Sharan, a director at Desi Power. Most companies in the DG space rope in specialists to set up their grids. However, Desi Power prefers to set up its own as a way to keep costs down. “We paid Rs 8 lakh to build the grid for our first project. But ever since, we have started doing it ourselves, and our cost has dropped by 50 per cent,” says Sharan.MPPL Renewable Energy, an engineering, procurement and construction company (EPC) that operates a biomass-based 4.5 mw unit at Malavalli in Mandya district of Karnataka, has plans to install projects of 20 mw each in Punjab and Tamil Nadu. In Punjab, it will set up a 12 mw project based on combustion technology and another one for 8 mw using biogas. In Tamil Nadu, it will set up seven projects, all based on biogas technology. However, instead of producing power, MPPL will use these plants for upgrading biogas for distribution as a natural gas equivalent. “We decided to change the model from electricity generation to selling gas in Tamil Nadu, since selling gas is more viable than running a power plant,” says P. Sekhar, a director at MPPL. The company is working on a bio-gasification technology with EnviTec Biogas, a company listed on the Frankfurt stock exchange. MPPL hopes to get the clearances for these nine projects over the next 9-12 months and complete them in 15-18 months after it has the final clearances. The company says that an investment of close to Rs 7 crore is required for creating a capacity of 1 mw based on combustion technology. This includes the cost of setting up a mini-grid as well. Costs, Market & Funding But how do you cover the costs that come from operating in a rural environment and also the low economies of scale? “The financial success of these projects is linked to the growth of that community and that is a tricky issue. Many of these startups are looking at ways to reduce their transaction costs. They need to work at both ends of the market — bringing down their transaction costs and creating more demand,” says Rangan Banerjee, professor at IIT Bombay. Banerjee, who has studied various aspects of distributed generation in India, says that merely lighting a bulb in a village will not light up a DG promoter’s kitchen fire.Lack of demand or failure to create enough of it is one of the reasons why Desi Power has scaled down its plans for Bihar — from 100 to 20 plants, with an average capacity of 50 kw each by the end of 2014. According to an impact assessment report by IDFC, Desi Power’s growth has been impacted by the limited development of micro-enterprises in the catchment area as well as the failure of the projected demand to materialise.Desi Power’s business model is based on creating additional demand for its projects by helping develop micro-enterprises which, in turn, create demand as well as a certain load for its projects. The company currently provides electricity to rice mills, dairy units, irrigation facilities, home and market lighting, cold storage, battery charging outlets, small agro processing units, ice factories, workshops, cinema halls and telecom towers.In fact, telecom towers are the new favourites of DG organisations as they provide the much-needed demand for power. Desi Power is renegotiating its power purchase agreement (PPA) with its dozen-odd telecom tower clients. “Many DG organisations are providing power to telecom towers as they give them their sought-after base load,” says Banerjee. Funding remains a thorny issue. “It (the rural population) is a very difficult segment to break into and funding institutions are not even coming in,” says Sekhar. “We need funds for not just setting up plants but for demand creation as well. The process is excruciatingly slow because we have to arrange for funds at both ends. This is a very challenging task,” seconds Sharan. break-page-breakOften, DG organisations have to source funds from multiple sources, apart from dipping into their own pockets. Promoters of Desi Power, for instance, pooled their money to fire their project in Orchha in Madhya Pradesh and got further help from a Dutch government programme under the UN Framework Convention on Climate Change, which was looking to earn carbon credits by participating in renewable projects. Desi Power is looking at private investors under the JV route. Similarly, MPPL Renewable Energy had to self-fund its Karnataka project; it will fund its future projects the same way. Being an EPC company, it hopes to find developers who can take over the project after its sustainability has been proved. Some DG players such as HPS and Avani Bio Energy manage to get funding from organisations such as Shell Foundation and Acumen Fund that take an active interest in rural projects. “There are just a few organisations and fewer technologies that have worked in this space. These projects have been able to deliver reliable service. Plus, the demand in the market for reliable electricity from a consumer using a candle or kerosene lamp for lighting is very high,” says Anuradha Bhavnani, programme director, India, at Shell Foundation, which provides initial risk capital to projects like HPS. The foundation has invested $2.35 million in HPS. However, Bhavnani insists that funding is only a part of the commitment that the foundation brings to the table. “We take up only one or two projects as our objective is to create pioneers in the field. Our ground funding is based on the organisations achieving certain milestones and we help at all the stages in working towards these milestones,” she says.Still, lack of financing options remains a major concern for DG promoters. Many of them might succeed in putting up their first projects but the journey thereon becomes tough. For most DG organisations, the gap between their first and second projects is very wide. For instance, MPPL Renewable Energy, which put up its first project in 2001, is yet to finalise plans for its next project.Business With PotentialPromoters, however, are not deterred. They still see distributed generation as a business with huge potential and one worth persisting with, getting the basics right before going for expansion. A good example of this is Punjab Biomass Power, promoted by Bermaco Energy and Infrastructure Leasing & Financial Services. Four years ago, it commissioned a 12 mw plant fuelled exclusively by rice straw at Ghanaur village in Punjab’s Patiala district. Its management initially concentrated entirely on ensuring that the plant performed without glitches. After a consistent performance over the past two years, Punjab Biomass Power is now working on plans to set up nine projects (in Punjab and Bihar) in the next five years. “We faced many problems in setting up our first plant. But we have learned from the experience and will be setting up the next projects in 18 months each,” says Murad Ali Baig, director at Punjab Biomass Power. “The business, theoretically, is a very profitable one, given that the cost of producing power is 30 per cent lower when compared to a conventional energy-based project and the tariffs are higher,” adds Baig. The government, too, believes that distributed generation is an environment-friendly and a quicker way to make power available to remote villages through mini-grids. But it is also aware that an ecosystem needs to be created so that distributed generation projects can be easily replicated in newer areas and can be self-sustaining as well. “Home lighting may not be able to generate enough revenue from beneficiaries. So if we combine distributed generation with livelihood and productive activities, it is possible that the beneficiaries will be able to earn enough and pay their electricity bills. We are working on some interesting financing models and also policy changes required to ensure that such distributed generation projects become viable,” says Srivastava. Currently, distributed generation gets support from government schemes such as Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) under the Ministry of Power, and the Remote Village Electrification Programme (Ministry of New and Renewable Energy). RGGVY provides 90 per cent subsidy on the capital cost of a project. A recent report extolling the RGGVY scheme said it had exceeded its target of 1 lakh villages and 1.75 crore below poverty line (BPL) households by providing electricity to 1.04 lakh villages and free connections to 1.95 crore BPL households. But such statistics can be misleading. A village is deemed electrified if the basic distribution infrastructure is made available, if public places like schools, health centres or panchayat offices get electricity along with 10 per cent of the total households. The earlier definition was worse: a village was deemed electrified if any electricity was used in the area for any purpose. Experts agree that RGGVY is not a complete solution to the electricity needs of villages. “Achieving targets does not mean that the energy is generated. What the government needs to do is constant monitoring and a performance assessment of these schemes,” says Banerjee.Entrepreneurs, too, are not unduly worried about gird-connected power to villages under RGGVY. “The supply is mostly irregular and short. Then, these are mostly single phase lines put up by the state government which will be good only for the lighting needs of households and smaller motors. With this power, running micro-enterprises and energy services, which have to be the backbone of development in these villages, will be a little tough,” says Sharan. Grid power is often associated with shortages, irregularity and inefficiency. In such a scenario, distributed generation projects hold out hope for far-flung villages of the country. chhavi(dot)tyagi(at)abp(dot)inchhavityagi(dot)bw(at)gmail(dot)com(at)chhavityagibw (This story was published in BW | Businessworld Issue Dated 20-05-2013)
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It’s being seen as a watershed development for India’s fledgling solar power industry. Since January, solar power projects, which have typically enjoyed subsidy-backed tariffs of Rs 10-15 per unit, have seen a dramatic fall in tariffs during bidding for new projects in three states. The tender floated for solar power supply by the Tamil Nadu Generation and Distribution Corporation (Tangedco) last December attracted the lowest bid of Rs 5.97 per kwh. Tangedco selected 20 solar power firms for setting up plants to generate power at Rs 6.48 per unit for the first year. From FY15 on, the tender provides for a 5 per cent escalation every 10 years. Similar was the case in Rajasthan. The state’s tender saw the lowest solar tariff bid at Rs 6.45 a unit. Four of the 23 valid bids came in below Rs 7. The story was repeated in Andhra Pradesh. For solar photovoltaic (PV) parks adding 1,000 MW being developed by APTransco, the lowest bid came in at Rs 6.52 per unit from Essel Mining, an Aditya Birla group company. Considering almost all successful solar power projects in the country so far have priced their power at a minimum of Rs 7 a unit, the three instances are a new low for solar power tariffs. Pashupathy Gopalan, CEO of SunEdison, one of the two highest bidders for Tamil Nadu’s solar power projects, says: “It (low bids) shows that solar power is entering an era where it is becoming commercially viable.” SunEdison has successfully developed a business model in North America and Europe — selling portions of completed solar farms to utilities and institutional investors once they are proven and de-risked. It is now seeking to replicate the model in emerging markets like India.Even a large developer like SunEdison has been redefining its customer as one who has never had access to electricity. It has been testing the off-grid market in India for over a year with micro-grid installations. It launched operations out of Chennai in 2010 to specifically cater to South Asia and sub-Saharan Africa, both energy-deficient markets. It has executed around 80 MW of grid-tied utility-scale projects in the country.Like Gopalan, the rest of the industry has been watching the recent goings-on with bated breath. Santosh Kamath, partner at KPMG India, agrees that plummeting solar tariffs in the three states are a pointer to grid parity. However, there are others who consider such low tariffs unsustainable because of the dodgy health of discoms or as an accelerated depreciation. Amit Kumar, director, energy, environment technology development at Teri (The Energy and Resources Institute), while agreeing that solar parity may be achieved sooner rather than later, says that the solar power story is yet to pan out. At current levels, solar power tariffs may still be a far cry from that of coal-fired power at Rs 4-Rs 4.5 a unit, but compares favourably with the Rs 7–Rs 7.50 a kwh that commercial and industrial users pay. It is already a good alternative to diesel-generated power for captive use that costs around Rs 12 a unit. It’s still early days. Solar PV power projects adding up to a 1,410 MW have been commissioned since the launch of the Jawaharlal Nehru National Solar Mission (JNNSM) in 2010. That’s a drop in the ocean compared to the overall energy shortfall of an estimated 25-35 GW. But as phase two of the solar power policy targeting 4,000 MW in capacity addition kicks off this year, the race for solar power is on despite a tentative policy environment.Learning By Trial & ErrorThe burst of activity in off-grid solutions is distinct. When Minda NexGen, a subsidiary of automotive OEM (original equipment manufacturer) Uno Minda, diversified into renewable energy-based power generation two years ago, it chose to concentrate on micro and mini grids to provide basic lighting to areas and communities away from the grid. These grids provide electricity to communities as small as 10 households. A solar micro grid typically provides basic lighting to 40 households for four-six hours daily using LED lamps. Minda’s strategy is to develop a viable business model in operating these small installations, to be handed over to rural entrepreneurs after an initial hand-holding by way of training. These rural solar entrepreneurs are responsible for operations, maintenance and revenue collection from end-consumers.Minda set up the first installation in Nagla Dhuli, an un-electrified village in Firozabad district of Uttar Pradesh, in late 2011 to showcase the concept, build on the takeaways from the model and ramp it up quickly. Praveen Bhasin, who heads the company’s power generation vertical, recounts the problems the pilot threw up and how Minda calibrated the strategy in response. Minda NexGen’s first plant was a 1.2 kw grid costing around Rs 5 lakh on a build-operate-maintain model. Each household contributed a monthly rental of Rs 150 for basic lighting (two LED lights of 1.5 watt) and a mobile charging unit. Minda tweaked the specifications for the next solar power plant it set up in Rayba, another village in the district. An AC (alternating current) plant made way for a low-voltage direct current plant, and 24 volts in place of the usual 12 volts to tackle pilferage. More importantly, the company chose a 240 watt plant to bring down costs to about Rs 1 lakh. This helped rural entrepreneurs to invest in, and operate these micro grids and recover their return on investment within four-five years. Minda NexGen has installed 33 micro grids in Rajasthan, Maharashtra, Tamil Nadu and Jharkhand — each costing a little over Rs 1 lakh. Of this, one-third comes as capital subsidy from the Ministry of New and Renewable Energy. The entrepreneur brings in the rest, financed through Kisan Credit Cards or self-help groups, making the initiative sustainable. Minda expects to roll out in 1,500 villages across the country in another three years to reach an estimated million people. Says N.K. Minda, chairman of Uno Minda Group, “Once fully scaled, this programme could substantially change rural electrification using decentralised generation and renewable energy in a manner largely unexplored so far.”Similarly, Teri has designed standardised DC solar micro grids ranging from 100 wp (watt peak, equivalent to 100 watt) to 1,000 wp, depending on whether the installation services a cluster of 20, 40 or 100 households and small village shops. break-page-breakThe entrepreneur charges the PV panels through the day, switches them on in the evening for about five hours to power two LED lights till the battery is exhausted. By collecting a fee as little as Rs 5 a day from a household or commercial customer, he can recover his investment in just about a year’s time. Teri has installed 34 such systems in the districts of Azamgarh, Rae Bareli and Jagdishpur in Uttar Pradesh, reaching around 1,400 customers. Teri’s Kumar says that an increasing number of entrepreneurs are now offering to invest more. Teri also designed bigger community-based power plants ranging from 5 kw to 10 kw for income-generating applications. In Orissa’s Mayurbhanj district, for example, where sal leaves and tamarind are a major source of income for forest dwellers, machine processing helps improve plate-making out of leaves and the quality of tamarind pulp. The power is thanks to solar multi utility (SMU) hubs at Baunshdiha and Laxmiposi villages. A typical SMU of 8 kw capacity costs about Rs 20 lakh. That kind of investment is stiff and Teri is working on a grant-based model for now, treating it as a demonstration project not expected to recoup the entire investment. However, the pilot generates revenue to meet operational expenses. Also toying with the distributed generation solar power plant idea for India’s villages is SunEdison’s Eradication of Darkness Programme, which targets lighting up 29 under-electrified villages and 14 un-electrified ones in the next year. There are more ambitious scale-up plans: to light up about 1,000 villages in just about two years’ time by taking mini grid solution to villages in clusters.The company installed a 14 kw mini grid in Guna dis-trict’s Meerwada village in Madhya Pradesh last year as a pilot for their rural electrification programme. “Technology is only a minimal part,” says Manik Jolly, director of rural solar solutions at SunEdison. “The bigger challenge is to find the right operating model that is sustainable.” As in other models, operational expenses are to be met with revenue collected from houses accessing power, while capital costs are to be supported through government subsidy and CSR (corporate social responsibility) funds. Each of the 70-odd households pays as little as Rs 50 a month in Meerwada. Yet the pilot is operationally positive. Jolly calls this the exploratory phase of SunEdison’s rural electrification programme. “We still do not have clarity on what will work,” he says, adding, “any model starts defining when revenues start coming in, and for that anchor load is crucial.”That is why SunEdison wants to promote entrepreneurship. Flour mills and milk chillers are among some of the micro businesses that will determine power consumption and bring in revenues to sustain operations. Creating Last MileOne common aspect in off-grid business models is that developers are creating quality infrastructure in remote villages, ready for use when the government grid eventually reaches them. Among other notable innovators in the space are Mera Gaon, which designs micro grids specifically for basic lighting, keeping costs down to a minimum; and Gram Power, which installed the country’s first smart micro grid that makes it possible to meter the power availed. Gram Power offers on-demand power through prepaid schemes.Clearly, affordability and customisation are the underlying strategies of all off-grid business models. They are driving the industry’s support eco-system. Even as these off-grid models proliferate, the grid-connected solar PV market is becoming entrenched. The market has followed two broad approaches: first, utility driven, involving a large ground-based project that utilities commission to meet their renewable purchase obligation at minimum cost. The second, a customer-driven route in the form of solar rooftop systems, which — despite the advantage of ease of installation — has failed to become popular. Gujarat implemented the country’s first of its kind, grid-interactive solar rooftop pilots in Gandhinagar, which are now being used as a model for rollout across five other cities in the state. The key feature of this model is that all energy generated is fed into the grid and there is no captive consumption.The Gandhinagar pilots brought forth a couple of innovations to the solar rooftop model. As availability of rooftops is always an issue, the state government made available rooftop space on public buildings. Second, in order to incentivise the lease of rooftops, project developers pay a monthly monetary ‘green incentive’ to property owners. It depends directly on the solar electricity generated from the system and fed into the grid. Most important of all, since there is no provision for net metering (meant to primarily feed the rooftop owners’ captive loads in India), the pilots followed the gross metering model. But, enabling net metering can be a game changer, says KPMG’s Kamath, for the simple reason that energy is consumed at the point of generation without requiring any infrastructural investment. Gopalan pushes for a decentralised model of power generation, saying, “Rooftop solar PV has a potential to grow up to 10 GW in India if the supporting ecosystem is developed well.” SunEdison executed the first commercial rooftop solar project in India with the installation of the 100 kw plant for Standard Chartered Bank in Chennai. The plant will generate 3 million units of electricity over 20 years. That is enough to power 40 Indian homes a year. This is the energy sale model under which the developer builds, owns, and maintains the rooftop solar PV system and sells the power generated. In addition, there is the system sale model under which plants are leased out.Now that Tamil Nadu and Karnataka are bringing in net metering for the residential solar market, more players are eying the space. Green Infra, set up by IDFC private equity, is a case in point. CEO Shivanand Nimbargi says the firm is analysing the generation cost and would be pursuing some proposals in the next six months. Clearly, the solar PV market is at a nascent stage. The government is following a tranche-by-tranche approach even as the industry clamours for more. With discoms in poor health, bankability of power purchase agreements remains a concern. There is a call for stringent enforcement of rural purchase obligations and renewable energy certificates, which certify the green attributes of generation. Reforms like ‘time of day pricing’ and exemption from grid transmission charges are needed to allow solar PVs to make the shift from an expensive energy option to a truly competitive one. bweditor(at)abp(dot)in(This story was published in BW | Businessworld Issue Dated 03-06-2013)
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A discussion thread on a famous MBA forum finds a concerned student posing a succinct and pertinent question: Why aren't there enough enthusiasts for Supply Chain Management (SCM) as compared to Finance and Marketing? His query isn’t voiced in isolation since it is only a part of the chorus of perplexed, conflicted and curious opinions on the prospect of opting for supply chain management as a career option, that populate the webpage. Even as someone with ‘vision’ elaborates on the specificities of supply chain profiles being offered at top league B-schools, explaining why the subject itself enamours few is a matter beyond his ambit of expertise, presumably.The fact that SCM isn’t quite the most appealing industry from neither a recruitment perspective nor the top tier attraction for the best B-schools in India is not news to companies such as DHL who are stalwarts in this sector. However, with the idea of ingratiating students to take up roles in the field of SCM and logistics, DHL Supply Chain, in collaboration with IIT Mumbai, launched a white paper’ contest among some of the B-schools in India and Dubai —Narsee Monjee Institute Of Management Studies (NMIMS), SP Jain, Wellingkar, BITS Pilani, among others —towards the end of February this year. “One of our initiatives was to make students aware about the complexities of the supply chain and create excitement so that we can get the best students into our industry as well,” explains Prakash Rochlani, VP, Business Development - India, South Asia and Southeast Asia at DHL Supply Chain who hopes to make this exercise an annual event and expand the circle of participating b-schools successively. The white papers presented were on the auto, retail and life sciences sectors and the winning team from S.P Jain School of Global Management, Dubai (comprising R. Sriram, Vivek Mehta, Srikanth Palle and Hari Babu), studied the current supply chain models being followed by the Indian e-commerce industry. “To understand the issues faced by the industry, we interviewed experts from the e-commerce industry and then evaluated best practices in supply chain followed across the world. Finally we conducted a survey with 250 respondents to understand customer needs and futuristic expectations,” say the members of the winning team. Their report goes on to establish how the growth in tier II and tier III cities in India for ecommerce is phenomenal and since there is still a large portion of the market still untapped the opportunity is ripe for SCM and logistics players. “Development of strategies and plans for local/international sourcing, e-procurement strategies and leveraging third party logistic partners for efficiency and profits,” is one of the chief recommendations by the students of S.P Jain when it comes to supply chain optimisation. The E-volutionary ChainAt DHL, the supply chain division is paying attention to the exponential boom in e-commerce with a “dedicated amount of sizeable investment which will go into IT for a complete e-commerce supply chain network which will be ready in the next 6-7,” says Rochlani. The e-commerce industry in India is still in a mushrooming stage. Nevertheless the revenue is targeted at Rs 25,000 crore in next three years from the current figure of Rs 5,000 crore. “Earlier SCM was manageable, but with the boom in e-commerce, businesses are growing 20-30 per cent YoY: small businesses which were 300 million dollar are now over a billion 1.5 billion in 5 years. Therefore, supply chain is no longer just about simple warehousing and transportation; there are a lot of things that get added to it such as demand planning, supply planning , inventory and order management., forecasting,” Rochlani continues. DHl’s sister concern Blue Dart has been touching millions of households in India, every month, but the company is in the process of developing a strategy on how to bring the whole end to end supply chain closer: right from warehousing to postponing customisation into the distribution centre, and improving packaging. Even with the steady mushrooming of dedicated e-commerce logistics players such as Delhivery, Chhotu.in and the relatively new ZotDot, Rochlani is militant in advocating that the “market requires a large mnc player who can bring the best of international technology.” To substantiate his point Rochlani cites the example of Flipkart: “They have invested in their own supply chain but then are experiencing a cash crunch; where do they invest in the front end or back end? We want to take care of their logistics (ideally) so that they can focus on their core competencies of front end merchandising and front end marketing and spend on that instead of training people for supply chain.”Towards the end of last year DHL made a public announcement stating how the company plans to invest close to 100 million euros in India across multiple operations from warehouse automation, training and development to transportation which would include OEMs bringing new vehicles into the market which will be GPRS enabled. “Modern retailers have peculiar demands. With GST coming in hopefully in the next 2 years will lead to a lot of consolidation in supply chain as well, says Rochlani. Earlier this year PwC published a survey report titled, Next-generation Supply Chains-Efficient, fast and tailored, which states that leading companies reap competitive advantage from managing their supply chains as a strategic asset and hence supply chains are significantly going to impact bottomlines and drive growth. Traditional supply chains will change dramatically in the next 24-36 months, Rochlani predicts which is why DHL is investing ahead of the curve in state of the art multi user distribution centres(part of the 100 million euros investment). From Curricula To CareerIn addition to a cash prize, the winners of DHL’s whitepaper contest will be offered a chance to be a part of the training programmes at DHL. The company is hiring 18 management trainees for the supply chain division, of whom about 12 have already been hired from colleges such as NITIE and Delhi College of Engineering (DCE). “With the evolution of modern retail, DHL is expanding the retail sector in a big way: creating supply chains for them is big opportunity for us and we are recruiting a lot of people — 64 per cent of the e-commerce buyers are less than 34 years old so we need younger people, fresh graduates,” explains Rochlani. At DHL, students can look for roles in their lead logistics programme(LLP) working on modernising supply chains for the first 2-3 years and then explore wider roles within the organisation. According to Vidhu Shekhar Jha, Professor in Strategy and Operations Management at Lal Bahadur Shastri Institute of Management, “Most of the business schools in India are offering an elective course on Supply Chain Management in their curriculum. Many Universities in USA, UK, Australia and Newzealand and other foreign countries are also offering Bachelors and Masters Programs in Supply Chain Management as well as many universities and Institutions in India as well as abroad give doctoral programs (Ph.D.).” While ISB and IIM Calcutta have a certificate course and advanced programme in SCM(respectively), the subject is starting to become a part of the core MBA curriculum as well, as is the case with NMIMS, Rochlani points out. While as per Jha, the corporate roles, a student specialising in SCM can look forward to range from SCM Consultant, Business Process Consultant, Enterprise Resource Planning (ERP) Consultant, in Purchasing Function, New Product Development, Global Sourcing, Inventory control, Total Quality Management processes, the students from S.P. Jain Dubai are optimistic about the opportunity to work as supply chain analysts. “The use of analytics in supply chain will drive the future of this industry. As a manager in supply chain analytics, you should be responsible for gathering data, analysing the performance and developing recommendations which support SCM planning and operations. What is essential in this role is to decipher business knowledge behind the numbers. Know-how of various statistics packages like SPSS, MiniTab will be an added advantage for managing supply chain analytics,” they believe. In India Automotive and hardware IT industry have a n evolved supply chain ; generally that is the trend world over. This is followed by the consumer industry which starts replicating these aspects into their supply chain with the healthcare industry catching up rapidly. The discussion on the MBA platform, with students to glean a clearer picture of a career in SCM calls for a stronger nexus between industry demands and the expectations of management graduates.
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A $345 million share sale in India's biggest real estate company by market value, DLF Ltd, was fully covered on 14 May' 2013, provisional data from the Bombay Stock Exchange showed. By 4:30 p.m., the single-day sale to institutional investors had received bids for 87.14 million shares. DLF had set a price band of 222 rupees to 233 rupees each for the offer. DLF, 78.58 per cent owned by its founders, is selling shares to meet the market regulator's requirement of having at least 25 per cent public shareholding, which is mandatory for Indian listed companies. Shares in DLF, which is valued by the market at $7.2 billion, closed on Tuesday at 230.25 rupees, down 0.8 per cent from the previous close.(Reuters)
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Royal Dutch Shell Plc's India arm has filed a petition in the Bombay High Court challenging the claims by the local tax authorities that a share sale to its overseas parent in 2009 was undervalued by about Rs 15,200 crore. The Anglo-Dutch oil company filed the "writ petition" in the Bombay High Court on Wednesday, 24 April 2013, a company statement said. The tax demand notice to Shell, sent earlier this year, is part of India's stepped-up enforcement of tax collections and actions against global companies in the country including Vodafone Group Plc and Nokia Oyj. "Shell has always maintained that it will continue to evaluate all options for redress available to resolve this tax dispute," the company said in a statement on Thursday, without giving details of the tax demand.(Reuters)
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Rising US shale oil production will help meet most of the world's new oil demand in the next five years, even if the global economy picks up steam, leaving little room for Opec to lift output without risking lower prices, the West's energy agency said.The prediction by the International Energy Agency (IEA) came in its closely watched semi-annual report, which analyses mid-term global oil supply and demand trends."North America has set off a supply shock that is sending ripples throughout the world," IEA Executive Director Maria van der Hoeven said on Tuesday, 14 May 2013."The good news is that this is helping to ease a market that was relatively tight for several years," she added. Oil on Tuesday traded near $103 a barrel, well below its peak of $147 in 2008.The IEA said it expected global demand to rise 8 percent on aggregate between 2012 and 2018 to reach 96.7 million barrels per day (bpd) based on a fairly optimistic assumption by the International Monetary Fund of 3 to 4.5 per cent global economic growth a year during the period.That incremental demand will be mainly met by non-Opec production, which will rise by more than 10 per cent between 2012 and 2018 to 59.31 million bpd, the IEA said, increasing its estimate of non-Opec supply in 2017 by 1 million bpd versus its previous report in October 2012.The United States will overtake Russia as the world's largest non-Opec producer as early as 2015, the IEA said.That may leave Opec, which had been long seen as the last resort for the world to meet rising demand, with output fluctuating around the current levels of 30 million bpd for the next five years.The agency cut its estimate of the demand for Opec crude in 2017 to 29.99 million bpd, down by 1.22 million bpd from its previous report six months ago.It said Opec's spare capacity will rise by over a quarter to reach 6.4 million bpd or 6.6 percent of global demand, giving an additional cushion to potential supply shocks, the report said.The adoption of US shale technology could help Russia and China boost production from unconventional reserves, but new projects may slow in other areas."Several members of the (Opec) producer group face new hurdles, notably in North and sub-Saharan Africa. The regional fallout from the 'Arab Spring' is taking a toll on investment and capacity growth," the IEA said."Downward adjustments across the (Opec) group are partly offset by substantially stronger growth in Saudi capacity than previously expected, reflecting newly announced development projects," it added.Iran's sustainable crude production capacity is likely to fall by as much as 1 million bpd to 2.38 million bpd by 2018, the lowest in many decades, due to Western sanctions, the IEA said.European Refiners At RiskThe IEA said the balance of global supply growth, until recently evenly split between Opec and non-Opec was tilting towards the latter."North America thus increases its share of supply growth both within the non-Opec group and more globally," it added.In every other aspect of the supply chain, be it demand, refining, trade or storage and transportation, the fast rise of emerging market and developing economies is striking, it said.These economies are projected to overtake advanced economies in oil product consumption from the second quarter of 2013. This lead will widen from 49 per cent of global demand in 2012 to more than 54 per cent by 2018.The IEA said that beyond the well known story of growth in Brazil, China, Russia, India, Saudi Arabia and South Africa, many African nations were also on the rise on the global oil consumption map.The IEA also predicted shifts in the global refining industry as countries such as India and Saudi Arabia build new refining capacity.The expansion of global refining capacity will outpace upstream supply growth as well as demand growth, bringing refining margins under pressure. Higher-cost refineries will face stronger competition."European refineries are at particularly high risk of closure over the forecast period," the IEA said.The IEA added that another consequence of the surge in U.S. production was a shift in natural gas pricing, which would challenging the conventional wisdom that products produced from oil will continue to dominate the market for transport fuels."Cheap and abundant natural gas has already facilitated the transition of the U.S. economy towards broader use of the fuel," the agency said. Natural gas will increase its share of road transport fuels to 2.5 per cent in 2018 from 1.4 percent in 2010, it forecast.(Reuters)
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