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India – IT firms set to ride $2-bln power reform

Ketan Bondre and Bharghavi Nagaraju
MUMBAI (Reuters) – Technology firms are set to cash in on the government’s push to reform the country’s power distribution network, as India lines up over $2 billion to help cap energy losses through use of IT, industry players said.

The federal government has launched a $10.86-billion (500 billion rupees) plan to cut power distribution losses in the country, with a fifth of the funds devoted to using information technology (IT) at state-run distribution companies.

“It’s a massive opportunity. As a business opportunity IT companies are excited,” said Rajdeep Sehrawat, Vice President, of IT body National Association of Software and Services Companies (NASSCOM).

Several Indian IT firms have eyed state-funded projects to help tide over the global economic slowdown, which had put the brakes on the sector’s scorching pace of growth as their core overseas clients slashed technology spending.

“This is the next wave. In the next 3-4 years the utilities will spend a lot of money, they don’t have a choice and the government is providing them a lot of money,” said Vilas Kanyal, business unit head at software firm Mastek, which is foraying into offering IT consulting for utilities.

THE OPPORTUNITY

Under the power reforms scheme – Restructured Accelerated Power Development and Reforms Programme (R-APDRP) – many domestic and global IT firms have been empanelled to serve as consultants or act as implementation agencies to distribution companies.

For a list of the IT consultants and implementation agencies, click here – (here).
States like West Bengal and Rajasthan have already awarded IT projects, while others including Madhya Pradesh and Maharashtra are in the process of doing so, government officials said.

India’s Tata Consultancy Services (TCS) bagged a 1.93-billion-rupee project in West Bengal covering 62 towns, said Moloy Dey, chairman, West Bengal State Electricity Board.

TCS has also been selected as lowest bidder for a project worth 2.93 billion rupees in Madhya Pradesh, while HCL Infosystems won a project in Rajasthan worth 5.29 billion rupees covering the entire state.

Under R-APDRP, IT work will involve setting up data centres, disaster recovery back-ups, GIS mapping, and entail applications for reading meters, billing and collection, energy accounting and auditing and consumer grievance redressal.

“About 30-plus distribution companies have identified IT consultants for R-APDRP,” said a federal power ministry official who declined to be named.

Typically, IT implementation projects could be worth about 1-6 billion rupees while IT consultants could earn a fraction of that range, industry players said.

THE CHALLENGE

State-run power distribution utilities are trying to improve their operations, but the process is hampered by extremely low levels of efficiency, said a recent report from India Infoline.
About 30 percent of the total power produced in India is lost in transmission and distribution each year due to pilferage and technical snags, compelling the federal government to invest in using IT to first identify the losses.

“Several large discoms (distribution companies) continue to report losses of over 30 percent, and some even as high as 50 percent,” McKinsey said in a report.

The sector needs to cut losses to 15 percent in five years under R-APDRP with IT and non-IT initiatives together, said Devtosh Chaturvedi, vice president of Feedback Ventures which, along with Mastek, is an empanelled IT consultant.

“The challenge is now going to be — can IT companies provide solutions for an integrated distribution system, given the antiquated systems (of discoms), the crowd and the volume,” NASSCOM’s Sehrawat added.

(Additional reporting by Niladri Bhattacharya; Editing by Sunil Nair)

(For more news on Reuters Money visit http://www.reutersmoney.in)

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October 20, 2009 - Posted by | Uncategorized |

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