In an exclusive interview, Anant Geete, Union Minister, Ministry of Heavy Industries and Public Enterprises, says that his ministry has plans to revive BHEL and the electrical equipment sector.
Your ministry has prepared and submitted the ¨Make in India¨ proposal to the government of India recently. Tell us about the same...
With reference to heavy industries ministry, we have submitted two proposals to the finance ministry. To start with, we have submitted Electric Mobility Mission, under which, we are proposing to invest Rs 14,000 crore in this mission till 2022. The finance ministry has given ¨in-principle¨ approval to the mission as of now. The finance ministry has agreed to give Rs 1,000 crore in the first phase starting from 2014-15. This mission will start from coming April. Through this mission, we will be implementing electric powered battery-operated public transportation systems in major urban cities in India. The mission will start from Delhi and then gradually lead to other metropolitan cities. We will be converting most of the buses in Delhi to be run on electric power.
What about your second proposal?
The second proposal was mainly towards engineering and textiles where we have already received Rs 680 crore towards encouraging research and development centres across India. This scheme will main focus on small and medium scale enterprises who do not have capital cost to put in R&D activities. In this scheme, Rs 480 crore grants will be from government of India and the rest amount will be from SMEs. For heavy engineering we will be setting up the first R&D centre under this scheme in Ludhiana. We are yet to identify R&D centres for the electrical equipment sector. We are in process and will soon finalise it.
Is your ministry taking some drastic steps to revive BHEL´s financial stability since we have witnessed that the company (on the performance side) is not well placed in the capital market?
In fact, this is our prime focus to revive BHEL completely. The prime reason for downward performance of BHEL was mainly due to low offtake of thermal-based and gas-based power projects due to coal and gas availability as well as imports from China. That is why we have written a letter to the finance ministry about doubling the basic import duty on power generation equipment. To be precise, we have requested the duty to be raised to 10 per cent from 5 per cent and the countervailing duty to be brought to ´nil.´
Meanwhile, when we did the internal assessment of what has gone wrong with BHEL, we noticed that the capacity utilisation of BHEL was 10,000 MW but expanded to 20,000 MW. However, despite expanding the capacity to 20,000 MW, BHEL has received orders only for 10,000 MW. This was mainly due to slow project execution and basically fuel supply. But since the coal auction will be over by March, we are expecting more power projects on the floor in at least next six months due to which full capacity utilisation will take place in BHEL´s units.
But don´t you think that it´s time for BHEL to diversify into other sectors too?
We are also likely to do expansion of BHEL through diversification, in which, we have already taken a major initiative by setting up a solar cells manufacturing unit in Gondia, Bhandara, Maharashtra. I was mainly emphasising on diversification because when I had visited BHEL´s Tiruchy plant the unit only manufacture turbines and allied products for power industry. Meanwhile, the ministry has directed BHEL to manufacture seamless pipes for others too which will boost revenue for the company. The decision to manufacture seamless pipes in full force was due to give competition to Chinese importers. Since the market has been captured by Chinese players, our ministry is pushing BHEL to produce it here in India which will be available for Indian power companies. We also like BHEL to consider work orders for outside countries. In this process, BHEL has already bagged two contracts.
To encourage the solar sector, what are the initiatives being taken by your ministry?
For this sector in particular, we have already asked Central public sector enterprises to contribute in a big way to achieve the target set by the power ministry. Meanwhile, in Sambhar In Rajasthan we will be implementing a 1,000 MW solar power project, which will cost around Rs 6,500 crore. In total, we will be setting-up 4,000 MW of solar power projects in the State of which for 1,000 MW memorandum of understanding (MoU) has been already signed between BHEL, Solar Energy Corporation of India (SECI), Sambhar Salt Ltd (SSL) PGCIL, Satluj Jal Vidyut Nigam (SJVNL) and Rajasthan Electronics & Instruments Limited (REIL). The project will come up on surplus land available with SSL in Sambhar. The equipment will be supplied by BHEL, power evacuation infrastructure will be put up by PGICL, and sale of electricity would be done by SECI, operation and maintenance by REIL and project management by SJVNL. The project will be developed in different phases in seven to eight years.
High rate of capital cost is an impediment to capital goods manufacturers. How is the ministry addressing this issue to the finance ministry?
I may not like to divulge the details on low cost financing to the capital goods sector as the proposal is with the finance minister. But hopefully, in this upcoming budget, our proposal may get some consideration.
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