I N D I A ’S F I R S T POWER MAGAZINE Volume 1 •No.

2 November 1996

PowerLine

1996-11 People Making a Difference A PowerLine Profile of

Mr. Vishvjeet Kanwarpal CEO GIS-ACG Global InfraSys - Asia Consulting Group
Published: November 1996 by PowerLine

INDIA -
PAKISTAN
10 Who is ahead and why

23 Worst power plants

25 Frank talk from the PM
26 Naphtha or no naphtha

28 Interview with the Power Minister

30 Bailing out the SEBs
45 Hydro projects in pipeline
 IN T H I S ISSUE

Summary o f national and Frank talk from the Prim e M inister BBM B’
s M aj G en P K G upta 43
international news developm ents 5 at the C M s ’conference 25
A CG’
s Vishvjeet Kanwarpal 43
Naphtha or no naphtha: A discussion
on the liquid fuel policy 26

Interview with the Power Minister:

clarifications on the p rop osed
India - Pakistan: W h o is ahead in m inim um action plan 28
the pow er gam e and why? 10 New Projects:
Bailing out the SEBs: Should we
Recently announced 44
W h y the captive pow er policy is d o it and how? 30
not su cceedin g 12 Hydro Power:
ASSOCHAM-IPPAI recom m endations
Summ ary o f p rop osed projects 45
M inistry o f pow er proposes to the governm ent 32
m inim um action program m e 13

U pdate on fast track projects 13

R eport on Pow er-G en ’

96 48
Gujarat Torrent: Success story for
a change 34

Wartsila: In B rief 34
After captives, the IPPs 15
Stock Watch: N u m bers on the
NHPC: equipm ent manufacturers and
service providers 35 ABB look in g for
Cash crunch stymies plants 16
pow er professionals
Black & Veach:
Joint venture needs
C ogen trix and m ore 18
country manager 50
Larsen and Toubro:
energitools looking for country
M ore and m ore into pow er 19
manager as well 51
ICICI: G row in g role in the
ABN Amro: pow er sector 37 D irectory o f products
P ow er bankers 20
and services 52
GIPC:
P rojects o ff the C E A list 38
N ew ventures 20

Power Tariffs: Statewise rates by

B SE S’
s R V Shahi 39 consum er categories 53
Ranking of SEBs: G SE B ’
s S J C o e lh o 41 Power Demand Projections:
P L F o f thermal plants 22
By state, 1996-2001 54
U SA ID ’
s H u gh M cD e rm o tt 41
W orst pow er plants in
Power Generation:
the country R SE B ’
s P N Bhandari 42
M on th ly trends 56
M AN B&W ’
s T h om a s D o rn 42
 P E O P L E

has moved further afield from its city base

and into western Maharashtra. In fact, the

Making a Difference limit is no longer Maharashtra. Since Shahi

was determined to expand its activities, this
necessarily involved moving into other
states. For example BSES is working on
projects in Tamil Nadu, Kerala, Orissa,
Andhra Pradesh, Rajasthan and Goa. All
these activities make the com pany’ s name a
misnomer but that’ s a discrepancy Shahi and
the company can live with happily.

Shahi inspires loyalty in the new team he’ s

brought to the helm. K.H. Mankad, director
o f finance, says, “ BSES had no vision or di­
rection until Shahi came onto the scene.”
Indeed, Shahi’ s first priority on taking over
was to build up a new team. Apart from
Mankad, his other crucial appointment was
for the post o f technical director. The choice
fell on S.S. Dua, a former colleague at
N T P C who seized the opportunity to work
with a man he describes as “ an original
thinker and quick decision-maker.”

T he new team in place, Shahi could get

down to his first objective: speeding up the
commissioning o f the 500 M W thermal
power plant at Dahanu which had suffered
inordinate delays. Both units were commis­
sioned in quick succession within six
months. Shahi also convinced the board to
call in a consultant to help him chalk out
The Bombay Suburban Electric Supply Company (BSES) is already the biggest B SES’ s future strategy. This turns out to
envisage the Rs 1,500 crore BSES burgeon­
private sector power generation company in the country. Its revenues last year
ing into a Rs 8,000 crore power conglomer­
were over Rs 1,500 crores. The company wants to increase them to Rs 8,000
ate by the year 2010.
crores. The man who is providing the vision and the strategy is R.V. Shahi, its
chairman and managing director... Over ambitious? N ot if you consider
Shahi’ s reason for taking on the job in the
sleeping giant prodded and galva­ be like,”explains Shahi. “
With the govern­ first place. Shahi saw the assignment as an
nised into dynamic action. T hat’ s ment holding less than 51per cent, it has the answer to his desire to “ make a difference,
how some o f the people working in freedom to operate. But nor is it a private do something better.”H e adds, “BSES had
BSES describe the organisation under the company in the sense that it doesn’ t belong a good track record but it hadn’ t taken ad­
leadership o f R.V. Shahi, chairman and to any business house.” vantage o f the em erging opportunities.
managing director. After spending 26 years N ow we have taken the initiative, our fun­
in the public sector, Shahi seems to have Since taking over at BSES two years ago, damentals are strong and we are well-posi­
found his niche in this unusual corporate Shahi has transformed the company by giv­ tioned for growth.”
beast. ing it new ambitions and scope. From being
a distributor o f electricity to 1.6 million con­ His confidence is shared by others too. Ear­
Classified as a private sector power com ­ sumers in suburban Mumbai, BSES is now lier this year, the com pany’
s $4,100 million
pany, the largest chunk o f shareholding is an integrated power supplier whose activi­ G D R issue received an overwhelming re­
held by Indian financial institutions. “
BSES ties encompass power generation, transmis­ sponse, being oversubscribed nine times at
is what a public sector undertaking should sion, distribution and plant construction. It a time when the market was dull. (BSES is-

POWER LINE • September 1996 39

sued the green-shoe option o f a further $25
million). Since then, Shahi has made a point
o f continuing to cultivate F II’
s because, as he
says, “we don’ t believe in meeting our inves­
tors only when we need money.”
If the 51 year old Shahi is providing clear
leadership to BSES, it comes from being a
man who knows his own mind. Growing up
in northern Bihar as the son o f an agricul­
tural landowner, he was the first in his fam­
ily not to stay on the land. T he decision
stemmed from a realisation that he would
not be able to move ahead as he intended. To
do that meant abandoning family tradition
and opting for a service career. W hen he
graduated as a mechanical engineer from the
Regional Institute o f Technology in
Jamshedpur, the public sector seemed the
most attractive option.
After leaving college, Shahi spent 11 years
with Hindustan Steel working in Rourkela,
Ranchi and Delhi. Then in the 70s when the
Electricity Supply Act was amended and
N T P C was set up, he recalls being fasci­
nated at the prospect o f working with
NTPC: “ At the time, it was felt that the
power sector needed a powerful take-off
which N T P C was in a position to provide.”
H e joined as chief manager in charge o f per­
sonnel, industrial engineering and training.
H is colleagues say these responsibilities
were good training ground for honing his
“human”skills.
His next stop was the hurly-burly o f opera­
tions as general manager o f the Dadri power
project and later as executive director o f
N TPC’ s southern region. It’ s quite clear
that Shahi is particularly proud o f this stint
because he was responsible for commission­
ing two 500 M W stations and four large
KVA service stations. What delighted him at
the time was that the second 500 M W plant
was commissioned nine months ahead o f
schedule - a record for N TPC.
It was a performance which earned Shahi a
place on N T P C ’ s board as director (opera­
tions) in 1991 in charge o f 15 power stations.
Part o f his responsibility was a task that gives
nightmares and cold sweats even to the most
cheerful and placid souls in the power indus­
40
try - collecting dues from SEBs w ho’d rather
have their nails torn out than pay up. The
situation was so bad that, at one stage, the
thoroughly fed-up World Bank threatened
to suspend loans to N T P C if it didn’t suc­
ceed in collecting its dues.
“BSES had no
Shahi opted for the proverbial carrot-and-
vision or direction stick approach. T he power supply to the
more recidivist SEBs was disconnected. His
until Shahi came home state o f Bihar, incidentally, was not ex­
on the scene” empted. But those SEBs who paid promptly
through letters o f credit were given a 2.5 per
— K H Mankad cent discount. Seeing the writing on the
Director Finance, BSES wall, most SEBs chose the line o f least resist­
ance. They opted for the discount and paid
up, bringing up N T P C ’ s collections to 95
per cent.
N ot surprisingly, Shahi is a strong critic o f
SEBs, but he hastens to point out that he’ s
not criticising the people who work with
them: “ It’s the system that has brought about
this problem.”His point is that not enough
attention is being paid to the distribution
aspect o f power and unless this is toned up,
preferably by privatising it, then major in­
vestment in power generation will simply •
not take place. “ With the host o f problems
on the distribution side from transmission
losses to poor recoveries, how can investors
be sure o f any return?”he asks.
When the BSES offer came up, Shahi saw it
as an appropriate time to opt out o f the pub­
lic sector since he was convinced that PSUS
in the traditional mould, i.e. running on sub­
Shahi sees his sidies and depending on the government for
financial supports, were on the way out in
assignment as an the post-liberalised order. It is the opportu­
nities emerging from this new order that
answer to his Shahi wants to exploit for BSES.
desire to “make Though his contract is only for three years,
a difference, he says he hopes to be around to see through
his vision o f pushing BSES into the big
do something league. If anything should go w rong with
this aim, the cause is unlikely to be Shahi.
better.” With his regular ten hour working day, trav­
elling almost 15 days a month and a deter­
mined emphasis on skilful-delegation to
trusted colleagues, he has shown that he
knows what he wants. .And, so far at least,
he’s been known to get it.
POWER LINE • August 1996
 PEOPLE

SJCoelho
The biggest headache for the chairman o f the Gujarat Electricity Board is,
predictably, subsidised tariffs. S.J. Coelho, an IAS officer, says people don’ t
realise the social obligations which constrain SEBs when they criticise the
financial mess they are in. T he GEB, for instance, loses 49 paise on every
unit o f electricity supplied to farmers - and farmers form 40 per cent o f the
state’s population. But it is a reality Coelho knows he has to accept: “ Farm­
ers have to be subsidised, especially if they grow food grain because they in
turn are dependent on the government procurement price for their grain.
So if they paid the commercial tariff o f Rs 1.80 per unit, they would not be
able to live!”
O f course, the price could easily be raised to 50 paise per unit instead
o f the current 17 paise but Coelho knows that no government would dare
have farmers up in arms. “ SEBs are creatures o f the government,”he points
out. “ W e have no discretionary power and cannot distinguish between vi­
able and non-viable consumers.”The area where he can make a difference
is to cut down on costs. T hat’ s his priority, i.e. get the GEB to attain an in­
creased PLF in generation - perhaps 70 per cent even with G EB ’ s vintage
machines. As for auxiliary consumption, Coelho has already brought it down
from 10.2 per cent to 9.4 per cent but he wants to get it even lower.
• As head o f Gujarat Narmada Fertilisers, Coelho turned it around to
such an extent that when it came out with a public issue o f Rs 44 crores, it
was oversubscribed twice. Such success may be a long shot with GEB but
S 1 COELHO
Coelho is giving it his best. Chairman, Gujarat Electricity Board

Hugh McDermott
“I think we are on the cusp o f some major change and the pace will increase
dramatically in the next year. It took five years after the United States cre­
ated the opportunity for private power before it took off in a big way and I
think India is similarly poised,”says Hugh McDermott, resident advisor to
the India Private Power Development project o f the PFC.
A power specialist with a degree in power engineering from Virginia
Polytechnic and a masters in energy management, the 35 year old
McDermott was promoting reform policies in the power sector in Califor­
nia when he accepted a two-year contract with USAID India.
H e coordinates the consulting and the legal team in India for the execu­
tion o f various aspects o f the privatisation project and bridges the gap be­
tween the private developer and the centre by identifying the serious prob­
lems and putting them in the proper perspective to the MOP.
M cD erm ott’ s role is to prepare documentation, develop model PPAs,
encourage competitive bidding, promote privatised distribution and provide
technical assistance to SEBs and state governments for undertaking reforms.
This involves providing financial software models for evaluation o f private
power projects and setting up training courses for the N TPC, SEBs, etc.
M cD erm ott is optimistic. N ow that the process o f privatisation is
underway, he believes there should be no slack in the momentum. Indian
industries he points out, are paying the highest rates for power in world. If
privatisation gives them power at lower rates, M cDermott feels his role as
HUGH M c D E R M O T T
an agent in helping make it happen will have been worthwhile. Advisor, Power Finance Corporation

POWER L I N E * November 1996 41

PEOPLE

P N Bhandari
One o f the best things about an IAS career is the sheer variety o f the work.
P.N. Bhandari, o f the 1965 batch, has been collector in five districts o f
Rajasthan, principal secretary revenue, secretary irrigation and divisional
commissioner, to name just a handful o f the jobs the 55 year old head o f the
Rajasthan State Electricity Board held prior to becoming chairman o f the
board - for the second time in his career. Rajasthan incidentally went in for
competitive bidding before it became compulsory.
The RSEB is concentrating on small plants. Fourteen letters o f intent
have been issued and a captive generation scheme has been launched. It is
also going to tap the endless sunshine that beats down on the state and is in­
vesting in solar power. Explaining why Rajasthan is forging ahead o f some
other states, Bhandari says one crucial feature has been the state govern­
m ent’ s willingness to involve the opposition in its plans. “ This has been
possible because it is a very transparent process. There is no politicking.”
T he result has been the opposition being able to avoid the usual, adversarial
role and behave like a constructive partner instead.
One o f Bhandari’ s long-term goals is to make the RSEB function along
commercial lines. “ Tariff fixing is always a difficult exercise,”he says, “
with
political considerations weighing heavy, especially during elections.”The
political considerations force someone like Bhandari to buy dear and sell
cheap but he knows no organisation can survive if it functions this way. The
board loses two and a half crore rupees a day and Bhandari is determined to
P N BHANDARI
stem the flow. Preferably, one presumes, without needing a third tenure. Chairman, Rajasthan State Electricity Board

Thomas Dorn
Thomas Dorn came to India from H on g Kong where he had been handling
the China market for three years for MAN B& W o f Germany, a producer
o f diesel engines and base load diesel engines which run 24 hours a day to
produce a constant supply o f power. H e’ ll be in Delhi until next year and will
spend much o f his time travelling - his job as chief liaison representative
entails helping agents in marketing, sales and technical matters. In the proc­
ess, he has managed to pick up some Hindi. When the going gets a bit tough,
though, he gets his agents to double up as interpreters.
T he parent company, MAN, has a long history o f involvement in In­
dia. Mainly a steel constructing and engineering group, it has been build­
ing bridges here since the time o f the maharajahs. In fact in the 1980s MAN
B & W set up their own liaison office in Delhi. It installs captive power plants
at factories and industrial plants to give constant power.
Dorn and his wife (who is expecting their first baby in November) get
a lot o f visitors from home. They are all served Indian food as the couple
loves it. Dorn says the evidence is all too sadly evident in his waistline. H e
intends to keep his ties with India once he goes back in mid-1997 as he will
continue to be responsible for this region: “ It makes no sense to create all
these kinds o f business links, friendships and so on and then move away and
never com e back,”he says. “ Life in India is a sharp contrast to our life in
H on g K ong because the Chinese are far more separated from foreigners.
The very first impression I had o f India was that I saw smiling faces and when
T H O M A S DORN
I saw that I thought, ‘ Here we arrive.” Chief Liaison Representative, MAN B&W

POWER LINE •November 1996

Major General P K Gupta
Civilian life has been as dangerous for Major General P.K. Gupta as his il­
lustrious military career. Soon after becoming chairman o f the Bhakra Beas
Management Board in Punjab, he survived an attempt on his life. The
previous BBMB chairman had been killed by separatist militants and, not
surprisingly, there were no takers for the vacant post until Gupta came along
in 1989. It was a dramatic switch for an RIM C boy who had won the high­
est awards at the National Defence Academy and the Indian Military Acad­
emy but his intrepid, fearless spirit was exactly what BBMB needed.
H is first task was to complete the 400 KV transmission line from
Dengar to Bhiwani which had been trundling along for ten years at a cost
o f Rs 150 crores. Gupta had it completed in two months. Under Gupta,
plant availability has gone up to over 90 per cent and the generation cost per
unit has fallen from nine to six paise. Machine life has also improved vastly.
A recent study by BHEL showed they were almost as good as new. H ow
come? “ Through systematic, scientific and preventive maintenance by a
dedicated group o f engineers,”says Gupta. “ We overhaul and service the
machines regularly.”
Firm in his belief that “ the culture o f the organisation is the culture o f
the top man,”he often works up to 20 hours a day and is determined to de­
velop his staff’s potential to the full. “
M y job is to provide the correct envi­
ronment,”he says. “ If a capable man does not make it to the top, that means
I have failed.”Spoken like a consummately capable man who has switched
* MAJ G E N P K G U P T A
careers but remains undaunted by the new challenges. Chairman, Bhakra Beas Management Board

Vishvjeet Kanwarpal
After ten years in the United States, Vishvjeet Kanwarpal’ s desire to return
to India and make a contribution was realized. A graduate o f Massachusetts
Institute o f Technology (MIT) and former consultant in Boston with JSA/
EDS, he now heads Asia Consulting Group (ACG) in India.
Kanwarpal has led the development o f Asian and Indian power and
energy market models for his company. H e has done pioneering work in the
application o f the most advanced system dynamics modelling and analytical
tools to complex emerging power markets such as India.
“Every possible factor is taken into account to develop the strategy for
project developers, financing institutions, EPC contractors and equipment
suppliers. In a risky and evolving environment such as India, where compa­
nies have a tendency to base their strategies on ‘ hope rather than reality,’
reliable decision tools are crucial.”
T he son o f a colonel from the cavalry, Kanwarpal has travelled exten­
sively all over the world. H e is a 30 year old bachelor who puts in 16 hours
a day and has not taken a vacation in three years. When stress reaches un­
comfortable levels, he reaches out for the Bhagwad Gita or Marcus Aurelius’
Meditations.
With all that, Kanwarpal still finds the time to indulge his passion for
flying (he should get his private pilot’s license in a few months time and then
hopes to dash around in a Cessna). H e also loves scuba diving, a hobby he
picked up while studying in the UK and skiing. His more sedentary inter­
VI S HV J EE T KANWARPAL
ests include reading, particularly philosophy. Head, Asia Consulting Group

POWER LINE • November 1996 43