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Interaction | November 2014

IPPs are not keen for BoP services

Prayasvin Patel, Chairman & Managing Director of Elecon Engineering Co Ltd, feels that IPPs, due to several issues involved in BoP contracts, are more inclined towards EPC.

With the government's push towards more power generation, how do you place the market outlook for Balance of Plant (BoP) systems?
The new government has given priority to power sector as one of its focused developmental programmes. However, due to various reasons, both IPPs and the public sector have not shown much enthusiasm on the BoP front.

There have been instances in the past where plant commissioning has been held up due to deficiencies in BoP systems. How do you find the scenario playing out currently?
One of the major deficiencies in balance of plant (BoP) system is that there was no proper qualification of the vendors. That is why only couple of vendors have successfully commissioned the plants and most of the others have run into problems without completing the contracts. Under this scenario, most of the owners have developed cold feet towards BoP vendors.

Has the BoP market been developing fast enough to meet the growing demand for power?
The BoP experience so far has not been good for independent power producers (IPP) and public sector. Therefore, many of them are either going for engineering, procurement and construction (EPC) contracts, awarding the contract to a single party or conventional way of breaking the total plant into boilers and turbine generator (BTG) package, water treatment package, coal handling plant, ash handling plant and chimney.

What are the issues and challenges that face players in the BoP space?
Interfacing of individual packages, under-cutting the price, incapability to manage the whole contract are a few of the issues.

Has the growth of renewable energy capacity and generation given a boost to the sector?
Renewable energy is an independent sector; therefore, it is unlikely to play a complimentary role with thermal/BoP business.

Have leading equipment suppliers been able to offer turnkey BoP solutions as against being restricted to standalone orders?
Leading equipment suppliers have expertise in their own field and generally do not want to carry the risk of whole of BoP scope. Therefore, no capable equipment supplier in the field of electrical, coal handling plant, chimney or water treatment is interested in taking the responsibility of BoP. Some who have taken BoP contracts have not been successful.

Analysts have opined that limited number of players in the BoP space has been a constraining factor restricting the growth of the industry. Your comments?
On the contrary, there are too many BoP players who have not been able to deliver the contract successfully. That is the reason this experiment has failed and quality equipment suppliers like us have also suffered.

- Devarajan Mahadevan

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