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dam-l ABB/Siemens in Maheshwar/Narmada Project (fwd)
Forwarded message:
From owner-irn-narmada@igc.org Tue Dec 9 01:04:28 1997
Date: Mon, 8 Dec 1997 18:59:01 -0800
Subject: ABB/Siemens in Maheshwar/Narmada Project
To: irn-narmada@igc.org
>
>ABB, Siemens may pick up stake in Maheshwar Project on Narmada River
>in Madhya Pradesh
>
>Friends
>
>It has been brought to my notice through certain industry and
>corporate media sources that Two TNCs have shown interest in picking
>up stake in the Maheshwar Project on the river Narmada in the Madhya
>Pradesh of India (upstream from the notorious Sardar Sarovar Project).
>
>These TNCs are Swiss-Swedish, ABB and German TNC, Siemens.
>Although both these TNCs are competing with each other, but
>in this project the reports suggest that both will join hands. ABB
>Limited ( a subsidiary of parent company, ABB) and Siemens India Ltd
>are likely to pick up stake in Rs.1,572-crore, 400 MW hydel
>power project being set up near Indore in Madhya Pradesh. The
>project, to be developed by S Kumars Power Corporation Limited ( an
>Indian industrial house with no previous experience in dam building)
>will achieve financial closure by December this year. Although
>negotiations are on among S Kumars, ABB and Siemens regarding sharing
>of equity, the main promoters are expected to hold a majority stake.
>(For more details about this project, see PIRG UPDATE # 5 titled,
>Large Dams:The Beginning of the End?).
>
>According to industry sources, the chances are that both the
>multinational companies would pick up a stake in the project rather
>than go for it individually, since companies are increasingly opting
>for risk sharing. Anticipating a long delay in the
>project largely due to beginning of the resistance from the
>local people who will be adversely affected by the project, I
>think that the Indian company will be keen to divide the
>potential financial risk by inviting ABB and Siemens. Sources
>feel that ABB might emerge as the turbine supplier for the
>project. The project will have ten turbines with generation
>capacities of 40 MW each. ABB is the largest supplier of turbines in
>the world, and has almost a monopolistic presence in the Indian
>turbine market. As far as the supply of generators is concerned, both
>Siemens and ABB have equal strengths and competition might crop in.
>It is also possible that ABB handles the whole generation part,
>leaving the electrical part to Siemens. The electrical section will
>consist of all components like switchgear, switch feeders, cabling
>work, transformers, substations, etc.
>
>With the recent financial crisis in Asia, although many TNCs
>have lost businesses in the short-run, for instance, ABB lost the
>controversial Bakun dam project which was shelved by the Malaysian
>government in the wake of currency crisis. But, in the long-
>term, I am of the opinion, these TNCs will be the major
>beneficiaries of the crisis as they will benefit from cheap assets,
>lower-costs of labour and production,privatisation of state
>enterprises and more concessions and guarantees to investments. In
>the case of dam building industry, the crisis is an opportunity.
>
>In the words of Goran Lindahl, CEO of ABB, " Many people are still
>very confused about the Asian situation, but we see major
>opportunities". ( Business Week, December 1, 1997). Recently ABB
>announced a cutting of 10000 jobs in Europe and started beefing
>up in Asia. Although India was not directly affected by the
>Asian financial crisis (thanks to our incomplete liberalisation
>of financial markets), ABB and Siemens have already announced
>major investments plans in India. The recent drastic depreciation of
>Indian rupee further encourages these TNCs to invest in India.
>
>Sources said that in power plants, the ideal debt equity
>ratio would be 70:30. In the case of this project, it is likely that
>the equity portion of 30 per cent is shared among S Kumars', Siemens
>and ABB. The project, which was initiated by the Madhya Pradesh State
>Electricity Board, was later taken up by the S Kumars Power
>Corporation. The project, to be commissioned by 2002, is expected to
>be India's first hydel power project in the private sector.
>The entire power generated from the project will be wheeled to the
>Madhya Pradesh power grid. The project, according to sources, will be
>of immense benefit to the industrial belt of Dewas-Indore-Pitampur in
>MP.
>
>The promoters are concerned about that the long gestation period of
>five years. This period is likely to increase
>if the resistance by the local people builds up besides, there are
>many environmental issues which can further delay in the completion
>of the project. The industry sources anticipate that the
>project promoters may also charge a higher tariff rate to compensate
>their losses due to delay in completion. The company may also charge
>a high tariff rate even up to the tune of Rs 4 / Kwhr when they sell
>it to the state electricity grid. The State Electricity Board which
>will buy power from the company, in turn, will have to sell it to
>consumers at a still higher price. I am doubtful whether
>industrial consumers will be able to afford power at this high
>rate. The state government may perhaps offer them subsidised
>rate of power otherwise the industries will threaten to move to
>other states where power is cheaper. As far as non- industrial
>consumers such as farmers and citizens are concerned, they just
>cannot afford it. It may lead to further tensions and conflicts which
>recently occured in Haryana state which increased the
>power tariff substantially for farmers and citizens as part of
>Power Restructuring Programme funded by the World Bank on the
>basis of "Orissa Model". The increase in tariffs led to intense
>protests for over two months and six people died in various clashes
>with police in the state. The farmers have decided not to pay
>any power bills.
>
>Thus, politically, I wonder how the Madhya Pradesh
>government will deal with the likely impacts of this project, not just
>on project-affected people who will be displaced by the project
>but, also the beneficiaries who cannot afford power at very high
>tariffs. It is also the challenge before the movements and groups to
>enlarge their struggle against the project by soliciting the support
>of the so-called beneficiaries of power generated from the project.
>
>I have a specific request to Swiss and German groups to monitor the
>developments especially about the involvement of ABB and Siemens.
>Please pass on information directly to Narmada Bachao Andolan in this
>regard.( Medha/Shripad, NBA, B 13, Shivam Flats,Ellora Park, Baroda,
>Gujarat 390 007. Ph/Fax: 91 265 382232).
>
>Please pass on this information to others too.
>
>Kavaljit Singh
>Public Interest Research Group
>
>
>
>
>
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>KAVALJIT SINGH
>PUBLIC INTEREST RESEARCH GROUP
>142,MAITRI APARTMENTS,
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