It is not only fossil fuel supply that has been the issue faced by the power sector, biofuel management has also become a major concern for the industry as there is dearth of individuals or entrepreneurs who can manage this, says Nasir Mulani, Managing Director, Citec Engineering India Pvt Ltd, in an interaction with Pradeep Pandey.
In the past five or six years, power sector project development has gone through a tremendous change in terms of technology applications from inception to execution. A major part is being out sourced for services and consultancies to the sector specialists. However, project developers still face problems of project delays and cost escalation. As a consultant, how do you see the situation?
You are right; we are witnessing delay in projects that ultimately result into cost escalation. But, this is mainly due to common problems faced by the projects such as fuel, land and regulatory issues, which take their own time to get resolved. In that sense, consultants can't help much here. However, I think the case is not similar for public and private projects. Projects owned by the public utilities are huge and they are less impacted as compared to the private ones. Given the situation, my observation is that private players are much keen on turnkey solutions, where the chance of cost overrun is less if fuel and other clearances are at place.
How does the turnkey solution work?
As an example, we are completely designing a solution called modularised solution for projects. Now what does this mean? For example, for a biomass project; we develop almost 30 to 35 different modules, which are installed in a power plant. We completely fabricate these modules in factories; we take all modules to the site and just assemble them. We have tried the concept for a number of plants as of now, on a smaller scale from 4 MW to 12 MW capacity. These plants are operational and are running fabulous! The overall time of the project is around 13 to 14 months from the date of inception of design and there is a tremendous amount of standardisation.
What kinds of inquiries do you receive for project development solutions?
We have been getting mostly brownfield projects, wherein the client expect us to use the present prime mover and modernise the system or they have additional space to develop their new capacity. There are even cases where our customer provides us with an old radiator and cooling towers and tells us to use some part of it with the new one or or they have a plant which has to be shifted completely to a new location. We manage these kind of projects with our OEMs, who are also our power strategic partners for many years. If you talk about greenfield projects, land acquisition has been a critical challenge that takes a lot of time to get resolved, while the brownfield projects get going very easier.
You spoke about biomass plants. What fuel ingredients are being used mainly these days, and which one is the most viable in terms of supply?
Mainly in India we get rice husk, sugar cane bagasse, tree chips, etc. The issue is that how and who can make it available at one place at a given time, so collection is the major task. We have been discussing the same with one of our active client, which has five such plants and we are actually dealing with them at present. Such kind of issues has become so prevalent, it can be found even in a state like Punjab, which has huge agricultural outputs. Husk is abundantly available but yet the problem is that it needs individuals or entrepreneurs who can manage it all and supply it to you as per the requirement. This has been the common challenge faced by the biomass plants.
Is this kind a challenge across the country, or is limited to regions?
Yes, the problem can be found across the country. Collection is the biggest issue that we too are facing as of now. We get a lot of customers who are interested to build up such Biomass plants and also investors are available for it. Not only within India but we also met some people from Sri Lanka and Malaysia who have shown interest to take up projects here, but then again we are stuck with these problems at collection points. Being an engineering consultant, we can offer solutions like assistance in detailed fuel analysis, design of fuel handling systems within the plant, etc. But we cannot control these external factors like availability and arrangement of raw material.
Coming to finances, how was your performance last year and what are your expectations for this year?
We have reached our budgeted EBITDA so finances are not a problem. We do not see problems with respect to business coming ahead either. Citec Group has a target to double the turnover by 2015 and the maximum growth is expected from India. We have to grow twice by 2015. Our headcount is estimated to rise from 400 to 800. We are also positive about some Indian acquisition in the near future. We have a lot of competence in power but we have managed to use the same skill sets for doing jobs in oil and gas as well. Oil & gas and LNG are important focus areas in Citec's growth strategy for the coming years. We have acquired M7 offshore, a Norwegian engineering company with an office in Singapore as well providing engineering and project management services to the oil and gas industry, further strengthening our competence in the segment.