—
Abid Ahmed, Country Manager—India, Aggreko Energy Rental India Pvt Ltd
Aggreko Energy Rental India is the domestic arm of
Aggreko—one of the biggest suppliers of rental power
globally.
Abid Ahmed, in an exclusive interaction with
Venugopal Pillai, discusses the brisk growth of Aggreko in
India since its inception in 2009. Abid Ahmed explains why
rental solutions are the best mode of procuring temporary
power, and notes that industrial clients are getting
increasingly responsive to this cost-effective and flexible
solution, especially when it comes to sourcing quality power
at short notice.
How has Aggreko grown in India since its entry around two years ago? How did the
acquisition of the rental power business of Cummins help Aggreko build a base
quickly?
Ever since Aggreko entered the Indian market in 2009 with the purchase of the
Cummins India power rental business, Aggreko has been building a strong foothold
in the country. With a huge potential for rental power and temperature control in the
country, various companies and government bodies are utilising the benefits of
Aggreko's rental power solutions.
Tapping into our quick turnaround track record, turnkey and customized power
solutions and globally acclaimed project management expertise, we have won
mandates for facilities like the Bharat Oman Refineries Ltd, Polyplex Corporation
Ltd, Amara Raja Batteries Ltd and Kaveri Gas Power Ltd.
Our customers are choosing to work with us due to the reliability of our solutions
and our response time which has made Aggreko the preferred choice for power
rental requirements in India. Facilitating flexible power packages specifically
tailored to suit individual needs further highlights the value and expertise that
Aggreko brings to its customers.
India, as we perceive, is still new to the concept of rental power. What business
challenges do you face whilst dealing with this mindset?
India's rapidly developing economy is fuelling a constant need for fresh supplies of
power in all its forms. Rental power is an extensive potential benefit to the country
because of its flexibility and rapid availability, as well as its positive impact on the
cash flow of rental power customers. The benefits of rental power make it a
practical solution that provides relief in quick time, as compared to permanent
power plants that require long lead times.
One of the most frequent reasons for choosing a rental
solution is timing. This fast delivery is critical to many users,
especially if there has been an unplanned power outage and
reliable power is of paramount importance. Long lead times can
be a serious problem for companies purchasing permanent
equipment. It is at times like these when power rentals are the
more practical answer.
When Tata Chemicals, a division of the giant Tata Group and
India's leading producer of inorganic fertilizer and soda ash,
faced disruption to production at its facility in Gujarat, India,
due to a fire that damaged the company's power generation
facility, they required power at short notice.
Tata Chemicals required a reliable 5 mw power supply to be
made available at very short notice. Aggreko quickly
mobilized a complete power package comprising of five
1,250kVA generators plus a transformer, fuel tanks and
ancillary equipment. In addition, Aggreko provided engineers
on site for the duration of the contract to operate and
maintain the equipment and ensure 24-hour availability of
power. The additional power allowed the customer to
maintain production during the emergency period and
minimized any financial losses.
Another benefit of renting power equipment is the flexibility
it offers, as rentals allow the customer the freedom to
increase or decrease the amount of power generating
capacity according to need. In addition, there is the extensive
range of technical support services provided by the rental
company which ranges from advice and design through to
replacing faulty equipment and even operating and
maintaining the equipment.
Our process of providing all-around power solutions for a
customer of projects specific requirement include the
timely and effective provision of the equipment,
mobilization, installation, operation, servicing and
maintenance of the plant. This service for all our customers
enables us to offer them turnkey solutions according to
their individual requirement.
Which sectors do you consider as Aggreko's biggest growth
drivers in India? Given that projects investment (setting up of new
capacity in the industrial sector) is a significant activity in India,
how do you gauge the prospects for Aggreko's rental power?
We are focused on providing temporary power solutions for
industries such as manufacturing, oil & gas, shipping, process
industries, mining and construction, as well as for major sporting
events. Increasingly renting power equipment for large and small
projects is becoming popular in various industries as it represents
quick delivery and avoids the need for large capital expenditure. In
cost terms, the financial benefits of a temporary rental solution
are that the system's regular and predictable costs are factored
into the business plan of the project in hand. Then, when the
project is finished, there is no need for the user to arrange for the
removal and storage of the power equipment as this is carried out
by the rental company.
We are keen to support the rapid growth of India by assisting
in overcoming capacity constraints by providing multimegawatt
power projects and a full range of services including
power system design, commissioning, operations, and
maintenance and fuel deliveries. We want to be recognized as
the only reliable temporary power suppliers across India.
Aggreko recently won a power solution contract from Bharat
Oman Refineries. Tell us about major orders that Aggreko has
landed in India.
Yes, we have been awarded a prestigious contract by Bharat
Oman Refineries Ltd (BORL) to provide them a 53-mw power
package. The contract was for commissioning power to the 6
million tpa grassroots refinery at Bina located in Madhya
Pradesh enabling BORL to commence its operations on
schedule. The most important challenge faced by Aggreko was
restrictions on land availability to locate a single power plant.
To overcome this challenge, Aggreko designed a unique solution
to provide power at three different locations within the refinery
in different phases over a period of three months.
Another very important project handled by us was to supply
6.6 mw of power to Kaveri Gas Power Ltd making this the largest
gas power contract in India for Aggreko. This was our first gasbased
multi-megawatt project in India.
We also provided a 8-mw power package to Polyplex Corporation
Ltd for continued production of one portion of their manufacturing
plant located at Bazpur, Uttarakhand. The contract was initially
awarded for a period of three months which was further extended
by another two months given the good service and a reliable power
package provided by Aggreko.
We learn that Aggreko had plans of setting up plants/depots in
several major cities. What is the latest on this front?
We have already two operational service centers in Delhi and
Pune, serving north and west India respectively. Chennai will
soon be operational in couple of months. Going forward we plan
to open service operations in other regions to become closer to
our customers and cater them more efficiently. Our goal is to
provide service to our customers across the country and to be
the only rental power supplier who can offer 24/7 service
support anywhere in India, even at a short notice.
Aggreko has provided turnkey power packages for customers
in a variety of industries, including ABB, BG Group,
ConocoPhillips, Fluor, IBM, Samsung, Shell and Tata Chemicals.
Along with providing power for industrial uses, we are also the
first choice in power rental for major sporting events. In the
past two years, we have delivered temporary power to mega
events and projects across the globe. Aggreko was the official
supplier of temporary power for the London Olympics, the 2010
Asian Games and the FIFA World Cup.
As a global company entering India, how do you cope with
competition from local players?
We are a global leader in power rentals which operates on a
truly international basis. In addition to supporting local
market through our depots, we also operate an international
power project division. This has the capability to mobilize and
operate temporary power plants up to several hundred
megawatts in order to maintain or extend production levels.
Many Indian companies are utilizing the power rental
services of Aggreko to overcome the technical and financial
problems caused by temporary unreliable power supplies
from other sources.
For temporary power rental projects in India, Aggreko offers
the full range of electric power generation equipment and
services that include: power system design, generators,
controls, transformers, fuel tanks, cables, switchgear,
distribution systems and load-banks. Also included are a wide
range of back-up services that include commissioning,
operations and maintenance, spare and fuel deliveries.
Aggreko has vast experience in providing support to a number of
industries around the globe. We deliver high reliable and
innovative temporary power solutions to our customers. Aggreko
offers more than just rental of diesel generator equipment, we
provide a turn-key, tailor-made solution that helps our customers
to maximize their outputs and reduce business risks.
We perceive that gensets are marketed as B2C
products, implying that gensets are products that should be
"owned". How do you therefore deal with the "ownership" and
"rental" dilemma?
Power plant ownership brings with it many responsibilities and
hidden costs. Firstly there are all of the factors involved in the
capital purchase such as up-front costs, loan repayments,
interest charges and other hidden fees. In addition, the
customer needs a team of skilled engineering personnel to
operate and maintain the power generating system, spare
parts, safe storage and administration. Additionally, the
owner takes all the risk if the equipment breaks down or
needs replacing. Over time the power asset will also
depreciate in value and will therefore be worth less than the
original purchase price.
When a company rents power supply equipment, its
management team simply transfers the uncertainties and
risks of power equipment ownership to the power rental
company. Power rental companies like Aggreko can bring
relief to these owners. Firstly being the payment option; power
rentals have a guaranteed payments schedule over the agreed
term, with options to extend the rental period if required.
One of the most frequent reasons for choosing a rental
solution is timing as a power rental really can be a fasttrack
supply, thereby giving the end user the vital power
supplies needed within a short time. This fast delivery is
critical to many users especially if there has been an
unplanned power outage and reliable power is of
paramount importance. We also provide extensive range of
technical support services which ranges from advice and
design through to replacing faulty equipment and even
operating and maintaining the equipment.
Due to these reasons, renting power equipment for large
and small projects is becoming popular in various industries,
as it represents quick delivery and avoids the need for large
capital expenditure.
How do you see Aggreko's business growing in India over the
next 5-7 years, and how important will India be in your growth
plans for Asia, and perhaps worldwide?
India has the fortune of being one of the few nations which are
well-endowed with both exhaustible and renewable energy
resources. In the energy sector, India has an arduous task
ahead of providing satisfactory amounts of energy in desired
quality in various sectors as well as ensuring it is sustainable
and cost efficient. We therefore perceive India as a land of
immense opportunity.
Gas availability in India has improved over the years. Has this
reduced your inputs costs, as compared with diesel?
Utilizing gas power instead of other alternates is a huge benefit
to some of our customers. In the power generating process, fuel
is the most expensive component, comprising approximately 70
per cent of the total cost of power. Where customers have a
steady supply of natural gas available, substantial cost savings
can be made by switching to a natural-gas powered solution. In
2010, Aggreko's International Power Projects business saw the
average MW of gas-powered units on rent increase by 30 per
cent on the previous year.
As gas pipeline infrastructure improves with GAIL (India) and
other gas supplier laying the pipeline in various regions, we
believe that more and more people will use gas to produce
power and Aggreko will be there to support customer with latest
cost-effective technology to produce power with our latest gas
powered rental fleet.