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By Frank Jack Daniel
BHIWADI, India Aug 8 A siren rang out in the
cable factory in northern India when there was a power blackout
in half the country last week, but its computer screens didn't
even blink as $180,000 worth of batteries seamlessly took over
the machines winding the thick coils on the shop floor.
A few moments later, in a back room of the cavernous plant
in the scruffy Bhiwadi industrial park near New Delhi, mechanic
Gaurav Bhatia fired up a shipping container-sized diesel
generator that ensured continued electricity.
It was the second time in 36 hours that power supply to vast
swathes of India was halted.
In factories, offices, apartment blocks and malls across the
north of the country last Monday and Tuesday, similar
generators coughed into life, making what were perhaps the
largest blackouts in history irritating and costly events, but
Indian cities and their companies are well prepared to keep
business moving during power cuts because they always have to
cope with unreliable supplies, not just during once-in-a-decade
spasms on the grid.
Last week's shutdowns were not routine power rationing, the
kind that is enforced every day in the summer and forces Kei
Industries -- one of India's leading electrical equipment
manufacturers -- to generate energy on site for several hours
with rudimentary engines.
Both times it was a major grid failure. Three of India's
five transmission grids collapsed on Tuesday, cutting power to
states where some 670 million people live, more than half of the
country's population. That blackout, one of the world's worst,
followed a similar breakdown across the north the previous day.
"We have fuel for about 10 hours on site, but when we heard
that (it was a major failure), we called our boss and asked for
more supplies," said Bhatia, speaking above the mechanised roar
of cable spinners.
The World Bank estimates that two-thirds of Indian companies
have back-up or independent power supplies. Added to about a
third of the 1.2 billion population that never has electricity,
this means total grid failure in India is less of a disaster
than in the United States or Europe.
This off-grid system is effective, but it hits companies'
bottom lines and is a major pollutant. It is so wasteful of
imported oil that the 10 percent shortfall in grid power at peak
hours is a significant contributor to a yawning trade deficit.
"We cannot rely on diesel to serve the needs of day-to-day
operations of small, medium and large businesses, it will drain
this country and we will find ourselves back in 1991," said Amit
Sinha of management consultant Bain & Co's utilities practice in
India. He was referring to the year when India almost ran out of
foreign exchange reserves because of a balance of payments
Diesel demand jumped during last week's power cuts by as
much as 25 percent in some states, according to state-run
refiner Bharat Petroleum Corp.
The Indian captive power producers association estimates
about 15 percent of the country's 205,000 MW generation capacity
is from on-site plants of 1 MW or over, including coal, diesel
and other sources. Bain estimates another 40,000 MW comes from
small back-up generators.
On a normal day, consumers on the periphery of Delhi can
expect between 2 and 6 hours without mains electricity, time
when they rely on diesel-fired back-up systems to generate power
at twice the cost of mains power.
Kei Industries' Chairman Anil Gupta feels lucky. He suffers
cuts just four hours a day and only in the summer months when
the Rajasthan state electricity board gives priority to
irrigating farms. He says the board is courteous enough to warn
the industrial estate by e-mail before cutting supplies.
"Effectively it is rationing," said Gupta, who estimates his
company would grow 5 percent more each year with regular power.
The 44-year-old company can take no chances. A few seconds'
hiccup to the 24-hour-a-day extrusion process could mean
kilometres of copper cable being scrapped and five hours of
shutdown. Fluctuations cause bumps on the cable's insulation.
So they have nine back-up diesel motors generating 7.5 MW of
power on site and have invested in uninterruptible power supply
(UPS) technology - banks of high-maintenance batteries connected
to computers that ensure power is not lost for even a fraction
of a second. They pass the running costs on to customers.
"It effects our cost competitiveness," Gupta said. "We slip
on deliveries, manpower costs, wasted labour and idle machines."
Kei can only generate power for three quarters of operations
when the factories go off-grid. Non-core processes are shut, and
machine operators switch to doing maintenance or training. That
way, core processes are protected, Kei president S. L. Kakkar
"We are very careful. No customer will give you an order if
you don't have the back-up," said Kakkar, whose plain office has
a bird's-eye view of Kei's newest plant. "Any customer visiting,
the first thing they want to see is the UPS."
Mumbai's stock market was unfazed by last week's blackouts
because investors know India's companies can cope with long
outages. Unsurprisingly, Cummins and Greaves Cotton
, two companies that make diesel generators, saw their
stock values jump.
Kei also seems to have a bright future -- its shares soared
10 percent the day after the Tuesday blackout.
Somewhat ironically, Kei sells high-tension transmission
cables to the national grid, which has been rapidly modernising
in recent years with the help of billions of dollars of loans
from the World Bank and the Asian Development Bank.
The company looks like a winner in India's industrial
revolution, churning out thick cables to power the factories
that are fast replacing farmers driving camels on the road from
Delhi to Rajasthan.
But, while he is hopeful about improvements in India's power
supply, Kakkar says he doesn't see companies weaning themselves
off back-ups and batteries in the near future.
Maintenance manager Sadhu Ram, just back from nine years
working on cables for a different company in Oman, said the
situation was characteristic of his home country.
"This is big business here. Most companies rely on the
backup systems. Otherwise they can't survive," he said pointing
to the computers and battery UPS. "In the Gulf our plants had
none of this, power cuts were so rare."
(Editing by John Chalmers and Raju Gopalakrishnan)