Icmi2016 Ebook

Energy Infrastructure and Transportation
“Challenges and Way Forward”
Conference Proceedings
International Conference on Management of Infrastructure - 2016
Challenges and Way Forward
Conference Proceedings of
International Conference on Management of
Infrastructure (ICMI) 2016
4th to 6th of February, 2016
Editorial Team
Editor: Tarun Dhingra, Ph.D.
Co-Editors
A. Lakshman Rao, Ph.D.
Avishek Ghoshal
Geo Jos Fernandez, Ph.D.
Hiranmoy Roy, Ph.D.
M. Yaqoot, Ph.D.
N. Bhanu Prakash
Narendra Nath Dalei, Ph.D.
P. C. Bahuguna, Ph.D.
T. Joji Rao, Ph.D.
Organised by
College of Management & Economics Studies

University of Petroleum & Energy Studies
Dehradun
i
First Impression: 2016

© College of Management & Economics Studies, University of Petroleum & Energy
Studies, Dehradun

ISBN: 978-194343889-1
No part of this publication may be reproduced or transmitted in any form by any means,
electronic or mechanical, including photocopy, recording, or any information storage and
retrieval system, without permission in writing from the copyright owners.
DISCLAIMER
The authors are solely responsible for the contents of the papers compiled in this volume. The
publishers or editors do not take any responsibility for the same in any manner. Errors, if any, are
purely unintentional and readers are requested to communicate such errors to the editors to avoid
discrepancies in future.
ii
Foreword
Infrastructure and economic growth go hand in hand, years of underinvestment in infrastructure

have left the country with poorly operational transit systems and power grids that have further
endangered its slowing economy. Growing economy and burgeoning trade are putting pressure
on India's inefficient ports, and rapid urbanization is straining the country's unreliable electricity
and water networks. According to The Global Competitiveness Report 2015-16; India ranks 55th
in the world in terms of infrastructure. According to World Bank data; from 1990 to 2015 only
813 infrastructure projects by primary sector have reached financial closure and 34 projects have
been cancelled accounting to waste of 5% of total investment. Infrastructure and energy are two
sectors that have received the most attention over the years and Greenfield investment has
dominated the mode of PPP investment in infrastructure sector. The Government of India plans
to award 100 highway projects under the Public-Private Partnership (PPP) mode in 2016, with
expectations that recent amendments in regulations would revive investor sentiments in PPP
projects in the infrastructure sector. According to Industry sources Indian infrastructure sector is
poised to grow by 7%-8% in the present financial year. To meet the infrastructure investment
gap the country needs $1 trillion fresh investment in the concerned sector by the end of 2017.
The proposed 100 smart cities project and The Real Estate (Regulation and Development) Bill
will also boost the growth of Indian Infrastructure and construction industry. Moreover the
proposed amended land bill that is all set to acquire open forest and scrub area for setting up
manufacturing hubs (a total area of 1 lakh square kilometers are required) is expected to provide
an added boost to the infrastructure sector. But challenges in meeting the above targets remain.
Response systems must be organized so that they can act in synergy and maintain the
functionality of the region’s infrastructure towards global issues of climate change. In the first
half of 2014, India had received $12 billion worth FDIs, thus more than doubling the kitty and in
2015 FDI in India has grown exponentially. The world is finding India as an important
alternative, when others aren’t doing well, thanks to the strong economic fundamentals of the
country and its huge untapped potential. If indeed the country has caught global investors’
attention, the next big question is can the country sustain the performance, going ahead also,
especially when the global economy comes out of the woods?
iii
In the light of the above issues, we are conducting our 4th International Conference on
Management of Infrastructure (ICMI)-2016 which is our annual event to deliberate upon the
issues of Emery, Infrastructure and Transportation (EIT) in this conference and come out with a
volume highlighting the issues, solutions and way forward. We have received a good number of
papers in the broad areas of Energy, Infrastructure and Transportation from research scholars and
professionals from across the different parts of the country. In this volume, Chapter one of this
edited volume deals with the Energy sector. In chapter two the authors deal with the issues
relating to infrastructure sector and the way forward. Chapter three deals with the dynamics of
transportation in Indian context. Some of the important topics of EIT covered in this edited
volume are – Issues of generation, transmission, distribution in power sector, power- tariff, fuel
issues, solar energy, issues in oil and gas sector, down-stream, mid-stream and up-stream, pricing
of oil and gas, market, pipeline engineering, road sector, greenfield airports, ports, tourism, rural
infrastructure, PPP, project delays, project implementation, project performance, managerial
training needs, global warming and environmental problems, FDI in infrastructure, supply chain
issues, overall regulatory issues, and customer satisfaction in EIT sector etc.
I hope this edited volume which covers the deliberations of ICMI-2016, will be of immense
importance and usefulness to the industry, professional, researchers, academia, bureaucrats and
policy makers.
Dr. Anirban Sengupta

Dean, College of Management & Economics Studies
iv
Message from the desk of Vice-Chancellor
Dr. Shrihari Honwad

Vice-Chancellor
I am pleased to know that the College of Management & Economics Studies (CoMES) is holding
an International Conference on Management of Infrastructure. An International Conference
signifies the development at the level of the academic contributions of a College and is a telling
comment on peer acceptance of its knowledge workers across the boundaries of institutions. This
conference addresses the opportunities and challenges involved in Energy, Infrastructure, &
Transportation (EIT) segments, which have become critical to Nation Building. In the wake of
new impetus nationwide on renewable energy, smart cities and bullet trains, this conference
represents focus of UPES as Nation Builders University.
I congratulate the team Dr Sengupta and Dr. Tarun Dhingra and colleagues from CoMES for
consistently putting together a grand show once again and inviting research scholars as well as
industry associates from all the parts of the world to contribute in this academic endeavour.
I extend my best wishes to all participants, invited dignitaries, and conference organizers and
hope that they make the most of the networking opportunity in a community representing
professional pride and make the conference a grand success.
v
Message from the desk of Dean
Dr. Anirban Sengupta

Professor and Dean
The linkage of energy with infrastructure is multifaceted and it is an empirically established

relationship. Researchers have suggested that better the cutting-edge, practical and application-
based research available in the area of energy & infrastructure, higher are the chances of
comprehensive policy formulation for the same. Although a number of research efforts appear on
different platforms covering different facets of the same area and sectors, but we believe there
was no dedicated platform for it. Hence, International Conference on Management of
Infrastructure (ICMI) was established in 2012.
The previous ICMI’s have drawn attention of professionals, research community, policy makers
across the globe and continuing the trend, College of Management & Economics Studies is ready
to host “ICMI - 2016”. The response for ICMI 2016 has increased when compared to the
previous conferences and we are sincerely thankful for all the participants and the authorities of
the institutions for their support.
I welcome you all and extend my best wishes to all participants, invited dignitaries, and wish you
all a great time, meaningful deliberations and professional networking during this conference at
UPES.
vi
Message from the desk of Convener
Dr. Tarun Dhingra

Professor and Assistant Dean (Research)
On behalf of the college of Management and Economics Studies (CoMES), UPES, it gives us
immense pleasure to welcome you to the 4th International Conference on Management of
Infrastructure (ICMI-2016) being held at knowledge acres in Dehradun.
Over the past four years ICMI has proved to be a great opportunity by providing an
interdisciplinary forum for discussion, debate and dissemination of information about the new
ways of addressing growing complexities and emerging challenges in ever changing
infrastructure sector. It has been successful in getting together Practitioners, Researchers, Policy
Planners, Regulators, Entrepreneurs, Consultants and Academicians from around the world
engaged in the sphere of Energy, Infrastructure and Transportation.
ICMI 2016 has been successful in inviting industry, regulatory and policy veterans from various
verticals of infrastructure sector for the keynote sessions. This year the conference has attempted
to deliberate on challenges pertaining to energy security, fuel linkage, risk management of
renewable sector, human resource management challenges in digitalisation arena and vision of
making in India. Special emphasis has been given to Globalization, Urbanization, &
Digitalization which has become a top priority to both policy makers and researchers. The
conference has also attempted to relook holistically into the energy policy vision 2030 in the
vii
wake of declining crude oil prices. The response of the practitioners and the response of
researchers in terms of number and quality of research papers indicate that ICMI taking
significant steps towards emerging to be a prestigious, industry need oriented and empirical
minded platform for infrastructure research.
Understanding our immediate responsibility towards contributing to the energy security

initiatives of the state of Uttarakhand in an environmentally sustainable manner, this year ICMI
2016 is pleased to collaborate with Uttarakhand Jal Vidyut Nigam Limited (UJVNL) for
providing a platform for deliberating on the challenges faced by the hydro power project
implementers in the state of Uttarakhand.
We hope that ICMI-2016 provides an excellent opportunity for exchanging ideas on various
aspects of management of infrastructure and strive towards providing the various stakeholders
with socially significant implementable strategies. We extend our heartfelt gratitude to all the
people who have contributed in making ICMI 2016 a success.
viii
Organising Committee
Chief Patron
Dr. Shrihari Honwad, Vice-Chancellor, UPES
Patron
Dr. Anirban Sengupta, Dean, CoMES, UPES
Advisory Committee
Dr. Anil Kumar Dr. Nikhil Kulshrestha

Dr. Anshuman Gupta Dr. Prasoom Dwivedi
Dr. Arvind Kumar Jain Dr. Raju Ganesh Sunder
Dr. Ashish Tripathi Dr. S. K. Pokhriyal
Dr. Atul Razdan Dr. S. P. S. Narang
Dr. Deepankar Chakrabarti Dr. T. B. Raju
Dr. Karunakar Jha Dr. V. J. Byra Reddy
Dr. Neeraj Anand
Convener
Dr. Tarun Dhingra
Co-Conveners
Dr. A. Lakshman Rao Mr. N. Bhanu Prakash

Mr. Avishek Ghoshal Dr. Narendra Nath Dalei
Dr. Geo Jos Fernandez Dr. P. C. Bahuguna
Dr. Hiranmoy Roy Dr. T. Joji Rao
Dr. M. Yaqoot
ix
Review Committee
Dr. A. Lakshman Rao Dr. Narendra Nath Dalei

Mr. Avishek Ghoshal Dr. P. C. Bahuguna
Dr. Geo Jos Fernandez Dr. Rajesh Tripathi
Dr. Hiranmoy Roy Dr. Raju Ganesh Sunder
Dr. Karunakar Jha Dr. Sumeet Gupta
Dr. M. Yaqoot Dr. T. Joji Rao
Mr. N. Bhanu Prakash Dr. Vinay Kandpal
Speakers / Session Chair Coordination Team

Dr. A. Lakshmana Rao Dr. Narendra Nath Dalei
Dr. Anshuman Gupta Dr. Prasoom Dwivedi
Mr. Avishek Ghosal Dr. Raju Ganesh Sunder
Dr. Hiranmoy Roy Dr. S. K. Pokhriyal
Dr. Karunakar Jha Dr. Sheetal Khanka
Mr. N. Bhanu Prakash
Participant cum Registration Coordination Team

Dr. Ankur Mittal Mr. N. Bhanu Prakash
Dr. Geo Jos Fernandez Mr. Naveen Chandra Pandey
Dr. Hiranmoy Roy Dr. Sumeet Gupta
Finance cum Purchase Team

Dr. Ankur Mittal Dr. Sumeet Gupta
Dr. Hiranmoy Roy
Sponsorship Team
Dr. Anil Kumar Dr. Raju Ganesh Sunder
Dr. A. Lakshman Rao Dr. Tarun Dhingra
x
Content Development team

Dr. Geo Jos Fernandez Dr. Narendra Nath Dalei
Dr. Hiranmoy Roy Dr. Raju Ganesh Sunder
Dr. M. Yaqoot
Logistics Team
Mr. Atul Rawat Mr. Manish Yagnik
Mr. Avishek Ghosal Retd. Col. Praveen Srivastava
Mr. Anjul Khanduri Mr. Vinay Chhetri
Venue Management Team

Dr. Karunakar Jha Mr. Atul Aggarwal
Dr. Sheetal Khanka Mr. Dinesh Bahuguna
Mr. Akhil Rahi
Catering Team
Dr. Binod Kumar Singh Dr. Saurabh Tiwari
Media relations Team

Mr. Arun Dhand Dr. Rajesh Tripathi
Reception Team
Dr. Anita Sengar Dr. Sheetal Khanka
Dr. Ruchi Tyagi
Student Editorial Team
Avinash Raj Nalini Kushwaha
Bhavesh Gupta Omkar Tambe
Megha Sharma Purit Rawal
xi
Volunteers
Abdur Rehman Pranav Kaila
Abhishek Anand Prateek Singh
Abizer Pindarma Priyanka Gaur
Ahmed Raza Rahul Panicker
Aishwarya Singh Rohini Pradhan
Akash Patel Rishabh Mahajan
Amit Rawat Rohit Raveendran
Anjali Anuragi Sabir M
Anshul Mittal Sagar Saxena
Aravind Yellanki Sahil Shridhar
Ashutosh Singh Sakshi Khandelwal
Asmita Semwal Samarth Thakar
Aviral Rawat Shashank Maurya
Ayush Shreshtha
Bhavdeep Kalra Shrey Sachchar
Bidisha Sharma Shubham Pansari
Disha Kothari Sumedha Pandey
Hari Prasad Suprotim De
Ishita Ranjan Tarannum Tarar
Ishu Khanna Thomas K Philip
Kanupriya Singh Tushar Mahendru
Kashish Sardana Vani Sharma
Megha Priyadarshini Vikrant Dubey
P S Prashanthi Viraljeet Singh
Parvinder Singh Sethi Vivek Gautam
Pragati Mandhyan Yashasvi Reddy
xii
Energy, Infrastructure and Transportation
Index
ENERGY
1 A Critical Study of the Disarrayed Regulatory Constituency of Energy E1
Mobilization in India : The Need For An Energy Summit/Colloquium
2 A Review of Current Safety Barrier Technique Effectiveness in the Context E 14
of Risk Assessment
3 A Visualized approach to manage risks Off-Shore In Integrity Management E 51
System (IMS)
4 An Empirical Study on Brand Positioning of Automotive Lubricants in E 78
India
5 Asset Integrity Management of Petrochemical Process Plant in Indian E 88
Downstream Gas Industry
6 Challenges and Opportunities in Secondary Logistics in Indian Petroleum E 126
Industry
7 Crude Oil Price Shocks and their Impact on Macroeconomy E 142
8 Demand forecasting for Installation Capacity of power sector: A Cost E 153
Effective Approach
9 Derivation and Correlation of Human Involvement in Assessment of E 165
Demand Scheduling in the Process of Logistics improvement in an Oil
Refinery
10 Developing Holistic Contract Award and Project Performance framework E 172
for Indian O&G Projects
11 Developing Conceptual Framework for establishment of Natural Gas E 195
Storage for City Gas Distribution in India
12 Electricity Act 2003: Review of Select Indicators E 212
13 Electricity Tariff in India: Assessment of Support Necessary for Lifeline / E 230
Below Poverty Line (BPL) Customers based on their Cost of Service and
Management of BPL Support Requirement
14 Factors affecting developments of Indian Natural Gas market - Learning E 259
from mature markets
15 Factors Affecting Open Access in Power Distribution Sector E 277
16 Factors influencing the establishment of natural gas storage for CGD E 313
industry in India
17 Financial Analysis of Solar Energy Infrastructure in India: A study of E 328
Uttarakhand
18 Forecasting Coal Demand of India E 346
19 Go Green – By Greening the Human E 357
20 Harmonics Mitigation: An Initiative by a Power Utility to enhance E 366
Customer satisfaction &Business Sustenance
21 Household Energy Consumption Pattern in various districts of Rural E 375
Uttarakhand
ISBN: 978-194343889-1
xiii
22 Identifying Barriers to Energy Conservation in Indian Telecom Sector. E 405

23 Improving Power Transmission Capability for better Energy Security E 419
24 Indian Power Sector : Impact of Fuel Linkage Policy Reversal on IPPs in E 437
India
25 IT Strategy for Operational Excellence E 463
26 New gas price regimes and its implication on energy industries E 487
27 Role of Oxidation Inhibition & Thermal Stability for the Development of E 494
Next Generation Engine oils.
28 Socio-Economic and Environmental Impact of Salt Harvesting at Sambhar E 512
Salt Lake - A Case Study of Sinodiya Village, Rajasthan
29 Sourcing and Securing India's Energy Supplies E 534
30 Study to identify coal market opportunities in Egypt E 542
31 To optimize & excel the quality based Operation & Maintenance Practices E 554
in CHP, for smooth functioning of Coal Handling Plant O&M in 600 /
660MW Units.
INFRASTRUCTURE
1 Challenges in Service Deliver in Fuel Retailing I1
2 Changing the Indian Administrative mindset – From Bureaucracy to I 29
Buddhist Collectivism
3 CSR Perspective of Employee Satisfaction I 34
4 Digital India and Its Future ,The Potential and Challenges I 51
5 Discussion Paper on the Proposed Capital City of Andhra Pradesh: I 65
Amaravati
6 Environment concerns and Spiritual Leadership related with sustainability I 77
ideas in imaginative projects of Mexican architecture and civil engineering
students
7 Ergonomics: The key to manage aging workforce I 84
8 Factors Leading to Losses and Wastage in the Supply Chain of Fruits and I 89
Vegetables Sector in India
9 Factors that affect project success in oil and gas construction projects I 106
10 Gujarat Ports as a Critical Infrastructure for Energy Trade for India and I 127
Gujarat
11 Leanness of English Language: the cause for untapped potential in the I 137
Management Students in Central India
12 The Impact of Growth of resorts on the Sustainability of Hill Stations; With I 150
Reference to Nainital Lake Region, Uttarakhand
13 Time Management in B.O.T. Road Project through Effective I 167
Implementation of Project Management Process- A Case Study
14 Understanding the Role of Village Head in Empowering Rural I 188
Infrastructure Development through Social Media; A Case Atudy of Village
Sahawali in Western Uttar Pradesh
15 Urban Sustainability Index: Measuring Performance of 15 Metropolitan I 200
Cities of India
ISBN: 978-194343889-1
xiv
TRANSPORTATION
1 Critical analysis of hazards associated with Routine Ship Towage T1
operations: Cases of Indian Coastal Waters
2 Development of Greenfield Airports and Air Connectivity in India T 27
3 Efficiency assessment at major ports of India for the period 2007-08 to T 46
2013-14 using Data Envelopment Analysis (DEA)
4 High speed railway- challenges & options: An Indian perspective T 61
5 Identification , Characterization and Analysis of Selected Research on T 68
Transportation Public-Private Partnerships from 2007-2015
6 IFO 380 cst Bunker Fuel Price Forecasting T 88
7 Image Analysis of Microwave SAR for Semi - Automatic Detection of T 107
Ships
8 RoSeCaMERA T 120
9 Training Port Managers - A Muddled Challenge T 129
OTHERS
1 An Analysis of financial performance of HDFC Bank: An application of O1
PELARI Model
2 Bridging Digital Divides in Education: Challenges of Integrating ICTs in O 14
the Formal Learning Environments.
3 Comparison of Concentration level and stability of market share across O 34
industries
4 Simplified Stress analysis method for Fibre-Reinforced Plastic (FRP) piping O 60
ISBN: 978-194343889-1
xv
Energy
A Critical Study of the Disarrayed Regulatory Constitutency of

Energy Mobilization in India: The Need for an Energy
Summit/Colloquium
K.P. Sampath Kumar*, Dr. Tabrez Ahmad**
*Industry Fellow with UPES, Dehradun, Uttarakhand

**Director and Professor of the College of Legal Studies at UPES, Dehradun, Uttarakhand
Abstract India is to change to a negotiating India with

This study of the regulatory roof in terms of the planned execution of nuclear facilities.
Indian legislation firstly talks of the myriad This is to meet the emerging global
ministries and a slew of regulations/ acts environmental standard as an unintended
under which the aegis of energy planning is effect. The goal towards energy planned
taking place. The energy position in India cities or even states to utilize the available
requires to be much ameliorated to be at natural Resources city wise or even state wise
tandem with the great expectations of the – Is an action oriented program which
“Make India” program. Its present position necessities dialogue on regulatory
under the PMO is that of a priority need. integration in the country
The scene in the USA, Japan and Europe and The article concludes with a recommendation
the comparative legacy of planned energy of the pressing need for an energy summit
strategy is eulogized as role models in with stakeholders being all the ministries,
regulatory integration. The Japanese private players in industry which can jettison
integrative technologies both renewable and commercial developmental economics and
nonrenewable are brought to light to international technology providers.
emphasize its practical application. The latest
forays of the PM in Japan are mentioned here. Keywords
Coterminous and interrelated is the Energy planning, Energy summit, Integrative
developments at the Paris convention on technologies, Renewable and Non-
climate. India’s position on energy being Renewable resources
Coal based is underscored. At the Paris
convention the present nonchalant position of
E1
Introduction blamed but little is talked about how one can

Energy is critical to any nation’s mitigate the situation from the demand side.
development. In India’s case it is an Supply side is there for all to see but is there
understatement that shortage prevails. The a husbanding of resources at the consumption
purported consumption of energy is around end? How does India get to resolve its Power
600 million tons of oil equivalenti (mtoe) in crisis? The present quartet of the energy
which coal remains as the staple energy scenario is 67% from thermal sources Oil and
provider and despite of its production of 500 Gas, 19 % from Hydropower, 12 percent
million tons in the 2012-2013 shortage from renewables and 2 percent from Nuclear
prevails. It is not to mention our powerii.
overwhelming dependence on crude oil
The arrival of the smart cities
imports and the unenviable distinction of
A smart city as such is sum and substance
being the fourth largest importer in the world.
“Smart grids” with an overall systems
Not to mention the rather slow reforms in the
management complete with integrated
Oil and Gas sector with two of our state
controls and automation and new
owned companies OIL and ONGC showing
technologies. Being a forerunner of a power
paltry discoveries. The Ministry of Petroleum
grid it also dovetails a need for energy
and Natural Gas (MoPNG) making a rather
systems based on strategic availability of
belated opening of its O & G sector to foreign
natural resources. As an unintended
investors which has met with lukewarm
consequence the smart phenomena becomes
interest.
an enabler for optimal regulatory
The mechanics of the natural gas is no management of natural resource taking into
different since most thermal sources for account the supply chain.
power in India come from either Coal or Gas.
The Indian prolificacy in energy controls
Natural gas imports which are somewhat
It is not entirely without substance to say that
cheaper than crude oil and environment
in the Indian subcontinent wastage in terms
friendly are dependent on transcontinental
of all types of resources come very naturally
pipe line transmission from sources such as
where a government merely taxes both
Myanmar, Iran and Turkmenistan not
directly and indirectly to the hilt but without
withstanding distant Russian sources.
any accountability of how these mobilized
Admittedly poor infrastructure is to be
E2
monies are effectively utilized. The CAG is However what has been left behind really is
only a recent phenomenon that actually is the proper husbanding of scarce resource
going into the profligacy of Indian public available at your very door step in terms of
sector industries. The hype that accompanies Macro – entire states and Micro entire cities.
the yearly accounting systems of many of our The myopia is somewhat baffling that you
public sector industries in the energy industry have for instance a visible hydropower
is bereft of any indication of dealing with the source within a state such as Uttarakhand
chronic shortages. All of the balance sheets which has the option of say not skewing its
show that the state oil giants in India are dependence on a basket of thermal based
making magnificent progress. To what end generation of power. On the one hand we talk
and by which standard? The shortage prevails about conservation but totally forget the
where is the scene to rejoice? ONGC should strategic use of natural resources on its most
have been foraying into the Oil and Gas economic platforms of supply chain
industry globally in the Middle East, Africa efficiency.
and South America and won production
The energy planned city or state
sharing contracts to fill into the petroleum
The geographic location of “Natural resource
gap in the country. An economy can only
availability” must logically be the base for
survive and definitely not grow with such
energy planning. In this context a typical plan
inbuilt inefficiencies.
for a city among others has been produced by
In the consumption side the one exception is redoubtable names in the field of energy
the Energy Conservation Act in India which namely Nippon Oil, Toshiba and Panasonic
set up a whole banister of measures including Corporation in an expose at Doha, Qatar a
an entire satrap of five star ratings for less couple of years back. Some of which is
consumption of energy complete with reproduced pictorially as under:
enforcement and penalty mechanisms.
E3
Figure 1 -Toshiba Corporation Concept of a smart grid
Figure 2- Nippon Oil: Energy Network of a low carbon society
E4
The second inclusion above is one instance competence, continental shelf for
how one could sweeten the whole concept of offshore operations,
a smart grid to being also ecofriendly.
A. Administrative Control by the
In a recent foray made by the PM Narendra
Ministry Of Petroleum and Natural
Modi and Japans PM Shinzo Abeiii are both
Gas through Regulatory board under
in the process of concluding a Civil a
MOPNG discussion and issues on:
Nuclear reactor deal of which Japan is a
technological leader. This comes as a 1. Exploration and exploitation
culmination of nearly five years of protracted of petroleum resources,
negotiations. With almost incalculable including natural gas.
deposit of Thorium in India which can be 2. Production, supply
converted to Uranium apart from the nuclear distribution, marketing and
safe guards for conversion to the Nuclear pricing of petroleum
fuel it cannot be understood why the including natural gas and
country’s portfolio is less than 2 % of the petroleum products.
overall power pie despite decades of 3. Oil refineries, including lube
development of civil nuclear history in plants.
India? 4. Additives for petroleum and
petroleum products.
The myriad organization and law prevailing
over the energy sector 5. Lube blending and greases.
The problem with the energy management in
6. Planning, development and
India is that the whole approach is
control of, and assistance to
fragmented rather than engineered on a
all industries dealt with by the
planned manner. Look for instance the
Ministry.
number of heads that regulatory bodies work
7. All attached or subordinate
in the entire energy industry:
offices or other organizations
 Petroleum and Gasiv: Hydrocarbon concerned with any of the
industry including deregulating subject specified in this list.
O&G, Oil price setting, NELP, Fiscal 8. Planning, development and
policy, FDI, State control, Legislative regulation of oilfield services.
E5
9. Public sector projects failing vii. Kerosene (Restriction on use

under the subjects included in this and fixation of price) Order,
list, Engineers India limited and 1993.
IBP Company together with its viii. Kerosene (Fixation of Ceiling
subsidiaries. prices) Order, 1970.
ix. Paraffin Wax (supply,
B. A slew of Bare Laws and their
Distribution and Price
interpretation, case laws, operate for
Fixation) Order, 1972.
its enforcement are mentioned as
x. Light Diesel Oil (Fixation of
under:
Ceiling Price) Order, 1973,
xi. Furnace Oil (Fixation of
i. The petroleum and natural gas
Ceiling Price and
regulatory board Act no 19 of
Distribution) Order, 1974.
2006, Acts, rules regulations
xii. Domestic Gas Pvt Ltd. and
and policies
parcel Investment private ltd.
ii. Petroleum Act, 1934 (30-
takeover of Management Act,
1934) and the rules made
1979.
there under.
xiii. Lubricating Oils & Greases
iii. The Oilfields (Regulation and
(Processing, Supply and
Development) Act 1948 (53
Distribution) Regulation
of 1948).
Order 1987.
iv. The Oil Industry
xiv. Liquefied Petroleum Gas
(Development) Act, 1974 (47
(Regulation of supply and
of 1974) and Rules 1975.
Distribution) Order, 1993.
v. The Petroleum pipelines
xv. Motor Spirit and High Speed
(Acquisition of Right of User
Diesel (Prevention of
in land) Act, 1962 (50 of
Malpractices in Supply and
1962).
Distribution) Order, 1990s
vi. The Petroleum pipelines
(Acquisition of Right of User
in land) Act, 1963.
E6
 Petroleum and Gas Transactions1: Power, planning and policy, State

Regulatory body Directorate general Electricity boards, electricity
of Hydrocarbons and its authority under Electricity supply act
administration, Regulations, taxation, 2003, Energy Conservation Act, 2001
and business modus, Oil & Gas Major policies: Tariff, Guidelines of
Taxation, Types of contractual Procurement, Rural electrification,
agreements, and interpretation of New Hydro policies, Ultra mega
sections in the contracts and dispute power projects, Development of
resolutions thereon. Regulatory merchant power plants and public –
issues, risk analysis. ONGC, private partnerships in transmission.
PETRONET, INDIAN OIL and other
Fossil fuels, thermal power: Fossil
organizations their structure and
fuels coal its mining administration
operations
and distribution. Coal Regulatory
Authority is to be set up shortly. A
 Petroleum And Gas Transportation:
move which would lead to the setting
Pipelines in the Petroleum and gas
up of a regulator empowered with
industry. Assets safety and integrity
deciding coal prices, production and
in the Oil and gas industry. Policy for
supply of the dry fuel and allocation.
Development of Natural Gas
The cancellation of blocks and
Pipelines and City or Local Natural
mining operations has already
Gas Distribution Oil Industry safety
occurred through the aegis of the
Directorate (OISD) standards2
Supreme Court decision and
converted to law.
 Electric Power Generation And
Distribution: Introduction to Power  Atomic Energy, Renewable Energy:
generation and distribution, Power
Atomic energy3: Atomic energy,
sector business regulation.
atomic energy Act 1962, Atomic
Regulatory institutions: Ministry of
energy regulatory board, Department
1
http://www.dghindia.org/
3
http://dae.nic.in/?q=node/394
2
http://www.oisd.gov.in/
E7
of Atomic Energy (DAE), Atomic and Renewable energy. Yet at the Center
energy commission, nuclear power each Ministry’s listed above are pretty much
nuclear safety, disposal of hazardous conducting their own affairs with their
waste, penchant for subsidies at either counter
purposes with each other or weak willed. The
Renewable Energy4: Ministry of New
subsidy measures historically have never
and Renewable energy Main stream
been never successful in the long term and
and their commercialization namely
never reached the intended target
Wind power, Hydropower, Solar,
substantially. The point here is that
Biomass, Biofuel, Geothermal:
purposeful mix in the spectrum of energy
administration by the Ministry of
sources generate commercialization and
New and Renewable Energy,
brings into play the market forces and
administration and subsidies,
consequently price reduction through mass
Guidelines and other notifications,
production, systems efficiency and
Result framework documents (RFD),
standardization. An almost childish
Policies: Strategic plans for New and
unsustainable operation in subsidies render
Renewable Energy sector for the
the whole aspect of energy mobilization into
years 2011-2017, National policy on
becoming dotard. Free subsidy is never
Bio fuels, Renewable power policies-
sustainable but market supply demand based
program wise.
economics breeds innovative capacity and
continuity of operations.
Can there be a unified command and The western experience

control in the energy sector? The United States in particular has based its
A crying need for centralizing energy sources strategic prioritization in a unified secretary
is the order of the day to recognize and of energy 5under the federal government and
calibrate the diverse natural resources laid the foundations of strategic planning for
available in the country. Although as first the entire sector. The unified command and
attempt there has been a partial integration at control has been so founded that the United
the level of Ministry of State for Power, Coal States is now enabled to think on the basis of
4 5
http://www.mnre.gov.in/ http://www.energy.gov/science-innovation/energy-
sources
E8
a) Long Term Comprehensive Strategy b) ,Economic competitiveness, Energy security,

Environmentally friendly technologies c) Job creation & Environmental protection.
increase supplies, d) encourage cleaner more The planks on their policy are 25 % left to
efficient energy use and e) raising living open competition as to source of supplier,
standards. So much so now the emphasis is Common position on rules for the internal
among other things impact of energy prices market on Natural Gas, Energy security,
at the level of Macroeconomics, GDP, community coordination and Environment
families, communities and business, protection. The European integrative effort
sustaining nations health & environment, is typical of a similar effort in India and its
increasing energy conservation & efficiency federal structure and the mechanics of Center
increasing domestic energy supplies and a state relationship. India needs to draw
comprehensive delivery system / regulations lessons from Europe with a similar diversity
etc. etc. The systems so unified is therefor in languages and cultures across the nation.
able to function as an uniform prioritized
chain of command both internally as well as The Far East influence
when they have International forays in Japan 6is the leading contender for energy
energy politics and increasing energy conservation. In all fields principally
security relations. The energy systems in the transport the Japanese have shown to be
USA are the phenomena of the great frontier masters in building pollution free and fuel
ship for nations on the march to affluence. efficient vehicles. It is commonly observed
This may well be the role model of energy that their standardization and energy audit
resource mobilization for the rest of the world have reached a different level of
and in particular for populous India. technological expertise. Energy audits and
use of nuclear energy and efficiency has been
The European commission on the other hand their key to reduce dependence on costly
has been for the last few decades thinking fossil fuel imports. However as a fly in the
more about unification of its Economic ointment is that the Japanese has seen the
integration, Single European market effect of the Pearl Harbor attack and the
http://www.meti.go.jp/english/policy/energy_environ
ment/
E9
retaliatory “Hiroshima and Nagasaki” operations of integration calls for a holistic

bombing. This is their constraining influence thinking on all sectors of the energy sources
as between civil nuclear engagement and the both imported and indigenous. This at its
nuclear holocaust. India has no less an base calls for a complete unitization on a
imperative considering also that two of its broad based energy spectrum for studying the
neighbors are nuclear armed with missile National/ State and City wise planning audit
delivery systems to match. At the same time on a professional basis. It is not possible for
it has to keep the uneasy peace in terms of the a country to operate based on a knee jerk
nuclear wastes that play spoil sport to its reaction on shortage of energy. With the
peaceful use for civil nuclear energy. This is onset of a productive India it is not possible
a subject of negotiation with the rest of a to conduct its affairs piece meal. This calls
world in Geopolitics but the imperative of for compatibility and application studies in
using available thorium as a starting material this country taking into account varied types
is a must for the country. of technologies.
The geopolitical scenario

The time for a paradigm shift from plural to
Mention must be made here of the
singular command and control?
international scenario starting from the Paris
India most certainly has the need for a convention on Climate in which the
strategic shift. Under the program of developed countries tend to take a view
“Minimum government maximum incompatible to India’s present levels of
Governance” at present it is said that Coal production and dependence on Non green
and Nuclear have the direct attention of the sources. On the other hand India has also
PM’s office. But this is not to say that the made its presence felt as an emerging super
shift vouchsafes the complete shift in attitude power to be negotiated with considering its
or even planned strategic thinking. Think large consumer base. The time is therefore
tank operations on a joint energy command ripe to negotiate on technologies such as
basis demands a higher level if not different Nuclear without laches such as liability and
set off competences. Viable options both at nuclear sensitivity to the proliferation of
the State level (Macro) and the city level weapons of mass destruction. A centralized
(Micro) have to be cogitated with care. The Ministry of Energy armed with consolidated
E 10
consumption information will be able to not The Dilemma considering our fractured
only think on planning but also strategies on regulatory system showing dissipation and
a quid pro quo basis with the “Powers that lack of integration suffers a similar
be”. It is wondered whether the Government conundrum. In the effective utilization of the
of India has any unified policy on the energy entire spectrum of Energy sources - an
sector to bring about that level of decision absence of priorities and direction as to where
making. At present at least it seems we want to go to is an apt description of the
fragmented. outcome of our state of affairs. A typical
recipe for an Energy summit could contain
An action plan
the following ingredients:
An energy summit is in order. Conferences
1) Joint session of all the central
such as on Infrastructure development is
ministries connected with energy
Important in terms of specifying the need for
under one roof with the possibility
investment. But without a planned overall
of the PM’s august presence.
strategy on energy taking into the account the
Needless to add that the PMO’s in
maximization of the nation’s natural resource
particular have been in the
and the minimization of foreign dependence
forefront of International energy
is like the proverbial statement of the
negotiation. Initiatives have been
Cheshire cat (Alice in Wonderland) and his
on for the last year or two.
highly existential conversation between him
2) A think tank on integration both
and Alice.
foreign and local. Such foreign
“Alice: Would you tell me, please, which sources including the USA can
way I ought to go from here? bring in their inputs on the
The Cheshire Cat: That depends a good deal advantages of a united command
on where you want to get to. and control in the energy sector.
Alice: I don't much care where. The Secretary of energy in the
The Cheshire Cat: Then it doesn't much USA, Japans NEDO (New
matter which way you go. Energy and Industrial technology
Alice: ...So long as I get somewhere. Development organization) and
The Cheshire Cat: Oh, you're sure to do that, European commission experts
if only you walk long enoughv seem suitable candidates for the
E 11
learning experience. Not to The summit should work through an agenda

mention here are the management which should culminate into a kind of
experts in the field of Energy. declaration into stated objectives which could
be later translated into an action plan for
3) A suitable slew of academics
government regulation and parliamentary
from such venerable thought
debate. The need for such a stimuli is
leaders on energy mobilization
imaginable considering that in India as is
such as the University of Texas,
anywhere there would be a natural reticence
MIT , Stanford among others in
while one even cogitates about dissolving the
the University of California series
long standing independent mandates of
in the west coast of USA that are
entrenched ministries. The nation of course
doing seminal research on the
needs to work out its own priorities
various energy resources.,
regardless of such mundane considerations.
4) The Technology providers for
Twenty first century technological India
both renewable and renewable
cannot sit back on an energy deficit which is
sources both from the USA,
key to its emergence as a super power. The
Europe and Far East. This may be
office of the PM in a dispassionate stand
a big draw for those countries
alone manner would in all probability
with commercial interest such as
welcome such an initiative and work out its
Japan who are in the forefront of
avowed policy of “Minimum Government
selling power technologies which
Maximum Governance”. Also buttressing
are ‘In situ’ to the local
the recommendation towards a summit is to
availability of natural resources
address a pressing issue of husbanding the
and in addition integrative of the
nation’s energy resources in the regulatory
viable spectrum of energy sources
front in the most holistically strategic and
(Renewable and Nonrenewable).
efficient manner.
Not to forget the other
technological source of skills in References
Europe /USA/UK and last but not http://www.dghindia.org/
least our own indigenous http://www.oisd.gov.in/

industry. http://dae.nic.in/?q=node/394
E 12
http://www.mnre.gov.in/
http://www.energy.gov/science-innovation/energy-
sources
ment/
Resolving India power crisis as in

http://economictimes.indiatimes.com/new-
sections/energy/resolving-indias-power-
crisis/lifenologyshow/46757622.cms (Last read)
Hindustan times/ UTTARAKHAND ISSUE December

13th 2015 Issue
http://petroleum.nic.in/orgacti.htm
ment/
i
Resolving India power crisis as in
http://economictimes.indiatimes.com/new-
sections/energy/resolving-indias-power-
crisis/lifenologyshow/46757622.cms ( Last read)
ii
Supra
iii
Hindustan times/ UTTARAKHAND ISSUE
December 13th 2015 Issue
iv
http://petroleum.nic.in/orgacti.htm
v
Lewis Carrols “Alice in Wonderland”
http://www.goodreads.com/quotes/449586-alice-
would-you-tell-me-please-which-way-i-ought ( last
read)
E 13
A Review of Current Safety Barrier Technique Effectiveness in the

Context of Risk Assessment
Prashanth Ignatius* , Boardman Benjamin** , Sunder Raju Ganesh***
* Senior Process Safety Engineer – Al Hosn Gas, Abu Dhabi; Part time Ph.D scholar,UPES
** HSE Systems Manager – Al Hosn Gas
*** Professor and Head (Centre for Continuing Education), UPES
Abstract in the most heavily utilized barrier evaluation

techniquies. Research on available barrier
The oil and gas industry relies upon barriers
techniques was conducted via searching for
to mitigate risk and increase safety in
the historical material available on barrier
operations. Barrier analysis helps to identify
types and applications as pertaining to the oil
missing or ill designed barriers and their
and gas industry, or industries similar in
influence on risk management. In this paper,
hazard mitigation approach such as the
various barrier analysis techniques and their
chemical arena. Contexts were most heavily
impact on risk management are reviewed.
weighted for works published after 2010,
The objective of this review is to study the
works published specifically for upstreeam
current developments in barrier analysis
oil and gas activity, and works that resounded
techniques and eventually identify gaps
a problem/solution framework.
which could form the basis for building
future models. The review of various models The research for this work reveals a
is undertaken by establishing common confirmation of the hypothesis, as no single
themes and using them as a criterion for barrier evaluation technique is complete as a
comparison. sole analysis method. The data provides
evidence that there is room for further
The research conducted for this paper was
development in barrier analysis techniques,
done from the expertise and perspective of a
which implies there will be higher risk in
safety professional in the oil and gas industry,
barrier safety until such technique evolves.
as well as from a doctoral perspective as a
student in safety studies. The exposure
gained as a professional and student exposed
to hazard mitigation has revealed a clear gap
E 14
Keywords Search results using keywords and phrases:

oil and gas safety barrier evaluation
Safety barriers, Frameworks review, Risk
techniques - 2,627
models, Risk assessment, Barrier
safety barrier quantitative, qualitative
effectiveness evaluation oil and gas - 845
Research risk assessment barrier effectiveness

upstream - 1,530
The research conducted for this paper was risk assessment barrier effectiveness oil and
done from the expertise and perspective of a gas - 2,552
safety professional in the oil and gas industry, modified bow tie risk assessment oil and gas
- 110
as well as from a doctoral perspective as a
student in safety studies. The exposure modified bow tie risk assessment upstream -
42
gained as a professional and student exposed
barrier bow-tie assessment oil gas - 153
to hazard mitigation has revealed a clear gap
in the most heavily utilized barrier evaluation Elsevier – a repository for medical, technical,
and scientific journals
techniquies. Research on available barrier
Search results using keywords and phrases:
techniques was conducted via searching for
the historical material available on barrier
techniques - 1,503
types and applications as pertaining to the oil
safety barrier quantitative, qualitative
and gas industry, or industries similar in evaluation oil and gas - 373
hazard mitigation approach such as the
risk assessment barrier effectiveness
chemical arena. Contexts were most heavily upstream - 1,568
weighted for works published after 2010, risk assessment barrier effectiveness oil and
works published specifically for upstream oil gas - 1,474
and gas activity, and works that resounded a modified bow tie risk assessment oil and gas,
9
problem/solution framework.
modified bow tie risk assessment upstream -
Specific databases were relied upon for 5
finding credible reference. These include: barrier bow-tie assessment oil gas - 23
Science Direct– a repository for scientific SpringerLink – a repository for technical and
scientific journals
journals
E 15
oil and gas safety barrier evaluation The International Association of Oil & Gas
techniques - 944
Producers – an organization that supports
safety barrier quantitative, qualitative prosperity and knowledge sharing in the
evaluation oil and gas - 231
upstream oil and gas community
upstream - 807 Journal of Loss Prevention – a peer-reviewed
risk assessment barrier effectiveness oil and journal that supports loss prevention and
gas - 864
hazard mitigation
modified bow tie risk assessment oil and gas
-7 Journal of Hazardous Materials – a peer-
modified bow tie risk assessment upstream - reviewed journal that supports advancements
4 in hazard safety and rsk mitigation
barrier bow-tie assessment oil gas - 19
(American) Journal of Applied Science – a
Google Scholar – a source for broad
searching on scholarly articles and texts peer-reviewed research journal that supports
advancements in applied science across
various industries
techniques – 16,700 Search criteria results above were obtained
safety barrier quantitative, qualitative by restricting results to showing articles from
evaluation oil and gas – 17,300
scholarly sources, and restricted the time to
2010 and later. Where results were limited,
upstream – 17,400
the date range was expanded to 2000 and later
risk assessment barrier effectiveness oil and
gas – 16,900 in subsequent searches. Additional
modifications to these parameters were made
modified bow tie risk assessment oil and gas
– 4,620 to consider conference speeches, university
modified bow tie risk assessment upstream – studies, and specific models (ARAMIS,
2,350 BBN, BORA, etc.). Links and references
barrier bow-tie assessment oil gas - 968 from The International Association of Oil &
Specific journals and sources were relied Gas Producers were also considered valid for
upon for relevant reference. These include: non-academic industry reference where
appropriate.
E 16
Having multiple barriers in place to minimize

risk is one side of the solution; choosing the
Introduction
appropriate barriers and ensuring they are
The purpose of this paper is to consider the
optimized for success is another aspect of the
evaluation of barriers to prevent hazards from
solution that must be considered. This paper
occurring, particularly in the oil and gas
will review common barrier analysis
industry. The barrier approach is used to
techniques that are meant to help evaluate the
contain and prevent hazards in drilling
effectiveness, applicability, or inadequacy of
operations. Failed barrier performance has
barriers. The goal of this discussion is to
great implications for the safety of
contextualize the gaps in each approach, and
individuals, health of the environment, and
to challenge these commonly used methods
economic performance of organizations.
as being incomplete in isolated use.
According to the World Offshore Accident
Dataset (WOAD), a report reiterated in 2012 The following will introduce further context
cited 6183 records reported for accidents and for this discussion. The first section will
near-misses from 1970 to 2009 in the review the reasons for barrier analysis and
upstream industry (Christou, Konstantinidou; will introduce the bow-tie framework as the
2012). Barriers are meant to minimize the foundation for understanding other barrier
chances of near-misses and accidencts fom analysis techniques. The second section will
becoming recordable incidents, and are review common barrier evaluation methods.
ultimately meant to keep people and assets The third section will offer a comparison of
safe. Many incidents with reported fatalities the methods presented, and the fourth section
involved failed barriers as a direct cause of will produce a conclusion regarding the
events (The International Association of Oil effectiveness of these long-used methods.
& Gas Producers, 2014). The International

Association of Oil & Gas Producers Background - Bow-Tie and Barrier
(IOGP)supports the approach that one of the Classifications
most significant ways to avoid or minimize Barriers are intended to inhibit a hazard from
the risk of accidents occuring is through harming people or assets. Trost and Nertney
multi-barrier applications in the upstream (1995) expressed barrier functionality in the
industry. context of prevention, control or
E 17
minimization. The safety function describes or accidents (Gustafson, 2014). Barrier scope
the objective function by answering "what is” may vary from a single technical unit or
required to assure and / or promote safety. human action, to a complex socio-technical
The safety barrier describes the execution of system. This discussion will be related to the
the objective function, and represents "how" purpose of barriers and their functionality in
to implement safety functions (Andersen et the context of hazard safety in the oil and gas
al, 2004). industry.
Barriers can be proactive or reactive, and can Visualizing barriers and inadequaces via a
be simplistic or highly intricate. Safety bow-tie framework
barriers have been classified as physical
The oil and gas industry has developed a
and/or non-physical means planned to
bow-tie framework along with the related
prevent, control, or mitigate undesired events
multi barrier approach to effectively visualize should be considered with a two-part risk
the management of barriers (Flitchy, Jose, & assessment. The first part should consist of a
Arango, March 2014). Such approach helps frequency assessment to understand how
to identify missing or ill designed barriers frequently the barrier prevents the occurrence
and their influence on risk management of the event as intended. The second part
(Jacinto & Silva, 2010).The concept of using should consist of a consequence assessment
a safety barrier is closely related to the to understand how effectively the barrier
Energy Model (Figure 1Figure 1)which responds to and mitigates the negative
refers to the “barrier” as an intermediary consequences of an event after it occurs. In
between the hazard and the victim(Haddon, order to conduct this assessment, existing
1980). barriers must be clearly identified.
Developing a bow-tie framework is one
Evaluating the effectiveness of barriers
commonly used method for identifying
In principle, a barrier has a role in preventing preventative and reactive barriers in a safety
the occurrence and / or consequences of an system. This framework will be reviewed in
undesired event or accident (Sklet, 2006). the following section.
Therefore, the effectiveness of a barrier is
critical to evaluate in its application and
E 18
Cheese Model shows how a multi-barrier

approach mitigates the limitations of any one
barrier through the layering of barrier
applications. This layering of barriers helps
to minimize the chance of hazards occurring
due to the imperfections of any single barrier.
The bow-tie framework is similar to the

Swiss Cheese Model in that it evaluates
Figure 1: Energy model (Haddon, 1980) barriers for prevention, but it differs in that it
expands to evaluate the consequences and
Bow-Tie Framework
post-incident barriers as well. The bow-tie
Barriers are typically contextualized through model centers around a central “critical
a bow-tie framework. The bow-tie model event” or “top event” which is linked to a
originated from the Swiss Cheese Model corresponding fault tree on the left and a
(Reason, 2000). As described by the corresponding event tree is linked to the
International Association of Oil & Gas right. A typical bow-tie is presented in
Producers (IAOGP) in 2008, the Swiss Figure 3:
E 19
Figure 2: Swiss cheese framework (IAOGP, 2008)
Figure 3: Typical bow-tie (original visual adapted from RasGas Company Limited,
2013&Pitblado and Nelson, 2013)
As noted, bow-tie frameworks can be linked barriers to the right of the top event are
visualized as a set of fault trees. Such fault conversely linked to mitigation of the
trees are linked to barriers to the left of the consequence effects.
top event; these barriers are meant to prevent
In the bow-tie visual, risk presents when
threat occurrence. A set of event trees and
threats are able to pass through the prevention
E 20
barriers to reach the top event. The top event Barrier Classifications
in process safety parlance relates to a loss of
Barrier classifications as introduced by Sklet
containment or loss of control. The
(2006) include a combination of concepts for
succession path from top event to
passive barrier systems (Hale, 2003) and
consequence effects are controlled by
active technical barriers systems (IEC 61511,
mitigation barriers. Events occurring to the
2002). Figure 4represents the flow chart of
right of the top event are consequences of
barrier classification developed by Sklet,
failed mitigation barriers after the top event
(2006).
has been initiated, such as subsequent
damage and explosion. The barriers Passive physical barriers are those that are
considered in the bow-tie can be hardware existing from the time of installation without
controls, administrative controls and the need for activation, such as bunds, fences
procedural controls. Barrier decay or firewalls (Reuvid, 2012). Passive physical
mechanisms are typically in place to maintain barriers are considered almost fail-safe in
the integrity of barrier performance; these are commencement and are desirable as they are
referred to as “escalation factor controls” as purposeful when needed and are correlated
shown in Figure 3 (Risk Support, 2007). with low complexity (Trbojevic, 2008).
Figure 4: Barrier classification (Sklet, 2006)
E 21
Passive human or operational barriers are sections will examine barrier effectiveness
those, which are present and may be activated evaluations. The bow-tie framework will be
during critical activities. An example of a the baseline comparison for evaluating other
passive human barrier is safe design feature barrier evaluation approaches.
at the time of construction that allows for
adequate separation distances between Evaluating Barrier Effectiveness
process units. Such a barrier can have Approaches
significant effectiveness in preventing both The function of a barrier is to prevent,
hazard prevention and in hazard perpetuation control, or minimize the occurrence of a
(Mannan, Richardson; 2015). hazardous event. A combination of barriers
and controls are used to accomplish this
Active human or operational barriers may be
purpose. While evaluating the effectiveness
in continuous operation mode. An example of
of the barriers, it is important to consider the
active human barriers may be manual
relevance of a barrier and the overall
processes or responses as part of work
objective of the barrier assessment. Such
procedures or as a result of personal
considerations can be made in the view of
expertise. Active human barriers are
risk assessment including left and right hand
activated on demand, such as through third
side of the bow-tie.
party control of work (Sklet, 2006) or
through critical decision making in a time of The following will evaluate select barrier
crisis or identification of a potential hazard. evaluation methods available. First, in
section 2.1 the Barrier Inefficiency Method
Active technical barriers are linked to safety
will be reviewed. Then, section 2.2 considers
instrumented functions. An example of a
the Accidental Risk Assessment
safety instrumented function is a pressure
Methodology for Industries (ARAMIS)
relief system. A pressure relief system
approach. In section 2.3, the Advanced
prevents uncontrolled rupture, which is a risk
Safety Barrier Method will be highlighted.
in high-pressure environments. Such a
Section 2.4 will discuss the Bayesian Belief
system is activated on demand due to process
Network (BBN), a real-time risk assessment
digressions or specific trigger events. It is
model. The subsequent topic will be specific
important to understand that barrier types
to analyzing barriers related to the prevention
transcend into different areas. The following
E 22
of hydrocarbon release via the Barrier and energy source, barriers placed on the
Operational Risk Analysis of hydrocarbon impacting person/objects, and barriers placed
releases (BORA) method, as hydrocarbon between the energy sources and impacting
release is an issue that is of critical concern in person/object.
the oil and gas industry. The final method to
Execution
be discussed is a recently developed Six Step
KPI Method purposed for methodically Barrier ineffectiveness was defined and
identifying critical barriers and developing classified (Trost and Nertney, 1995) to
strategy for ongoing evaluation of those key identify the ineffective barrier groups. The
barriers. categories of Barrier ineffectiveness crafted
by Trost and Nertney are shown in Figure 5.
Barrier Inefficiency Method
The first category of ineffective barriers is
The barrier inefficiency model is a visualized as theoretical barriers. These were
classification-based approach to categorize the barriers that are screened after conceptual
barrier inefficiencies. It is appropriately level. These barriers were not considered to
considered a preliminary screening method to be worthy of implementation due to technical
evaluate high-level barrier applications. It is
or economic conditions. The second category
a model which is generic, and is not specific of impractical barriers is related to the
enough to review preventative or mitigating inherent failure of the barriers. The third
barriers. The following will review the category of barriers is referred as unused
context, execution, and limitations of the barriers. These barriers are designed and built
barrier inefficiency method. correctly but failed during implementation.
Context The failure of these barriers can be attributed

to task performance or worker error.
Barrier functionality has been described in
three terms: prevention, control or
minimization. The barrier inefficiency
method is an approach consisting of a list of
questions to identify the effectiveness of
barriers in an application (Haddon, 1980).
This approach regards barriers placed on the
E 23
the evaluation of barrier ineffectiveness, it is

important to factor the inherent failure of the
barrier even if the source of failure is
seemingly unpredictable. The bow-tie model
assumes minimized risk through barrier
layering to account for barrier failure, while
the barrier ineffectiveness model does not
Figure 5 - Barrier ineffectiveness categories
approach this level of depth. It also lacks
(Trost and Nertney, 1995)
differentiation between barrier classifications
From a technical perspective, it is important and passive versus active barrier types.
to understand and acknowledge that each
barrier cannot be considered completely Accidental Risk Assessment Methodology
effective, which is the same concept depicted for Industries (ARAMIS) barrier
by the previously mentioned Swiss Cheese evaluation technique (based on SEVESO
Model. The component of ineffectiveness II directive)
ranges from partial to total and is also a

The Accidental Risk Assessment
function of time. For example, lubricants
Methodology for Industries (ARAMIS) is a
applied to withstand an understood pipeline
barrier evaluation technique that relies upon
corrosion rate may be considered to be very
quantifying Level of Confidence
effective at the time of installation, but may
(LC),efficiency, and response time
be deemed unacceptable based on unforeseen
associated with a barrier. The focus of the
environmental changes such as variations in
ARAMIS model is on the importance of
temperature or salt content that accelerate
human influence as an external factor on
corrosion rates (Hasan, 2010).
barrier performance, which is significant as
Limitations 80% of major accidents have root causes

related to human or organizational errors
Trost and Nertney, (1995) do not clearly
(Debray & Salvi, 2006). The ARAMIS
establish the process to identify the barrier
model links an organizations’ safety
effectiveness in their classification
management system with a barrier’s
methodology apart from providing the
performance to offer a future estimate of
classification of ineffective barriers.During
barrier effectiveness. This approach does not
E 24
consider barrier interdependancy on other extended in concept to all types of barriers

non-human barriers and does not account for (Chaumette et al, 2007). The approach
risk analysis or failure of the barrier due to recommends the level of confidence criteria
technical inefficiency. The following will to be applied at the highest safety system
review the context, execution, and limitations level which encompasses all subsequent
of the ARAMIS method. systems. This is a scientific approach for
safety instrumented systems (IEC 61511,
Context
2002). However, considering this scientific
Andersen et al(2004) analyzed barrier approach for barriers such as management
strength based on three parameters. The systems and human factors / manual work
ARAMIS framework (Andersen et al, 2004) processes may result in higher levels of
was developed as result of joint research subjectivity than intended. Personnel and
under SEVESO II directive. The parameters procedural guidelines may have specific
in analyzing safety barrier strength are safety objective functions which can
defined as follows: influence the LC rating and overall ARAMIS
score.
 Level of confidence (LC)
 Levels of efficiency The efficiency of the technical barrier in the
 Response time for the safety barrier ARAMIS method is defined by the ability of
the barrier to perform the safety function for
The benefit of this approach is linking of the
a specified duration in a non-degraded mode.
safety management system to the barrier
The response time of the safety barrier is
system in order to provide a more
defined as the duration between initiation and
comprehensive future estimate of the safety
fulfillment of the safety function. Consider an
barrier effectiveness (Hourtolou & Salvi,
analogy in the drilling function; a High
2003). LC has been correlated to the
Integrity Pressure Protection System
probability of failure on demand of the safety
(HIPPS) response time shall be defined as the
function. The probability of failure on
time duration between the initiation of the
demand is well defined for Safety
systems and shutting of the well. Similarly,
Instrumented Systems, which are systems
efficiency and response time are hardware
requiring activation by an outside source
related safety barriers, and it is difficult to
such as personnel action, and has been
E 25
quantify these values for soft barriers. It is The methodology of defining the
often difficult to derive these values from an effectiveness of a barrier under the ARAMIS
operational perspective even for hardware model relies upon quantifiable metrics.
barriers. In general practice, these values are Specifically, it relies upon the Probability of
recommended by manufacturers, technical Failure on Demand (PFD) metric, which is an
guides and data sheets. equivalent for the Level of Confidence (LC)
parameter. The PFD applies to passive, active
Execution
and human intervention barrier types.
The ARAMIS evaluation technique
This approach introduces a key factor in the
stipulates criteria for the identification of
evaluation of a barriers’ LC rating; the
safety barriers. The following are the 2
efficiency of safety management personnel is
critical criterions:
also part of the evaluation for barrier
a. Safety barriers must be independent. effectiveness (Hourtolou & Salvi, 2003). The
This does not account for redundant efficiency of safety management personnel at
safety barriers such as 2-o-o-3 or 1-o- an organizational level is related to
o-2 fire / gas detectors. The logical maintenance protocol, adequacy and
extension of this statement defines relevance of procedures with respect to
that barriers shall not account for regulation, as well as training and safety
common cause failures attributed to culture (Andersen, Duijm, et al; 2004). The
the criteria of independency. objective of this process is to evaluate Safety
b. The identified barriers must be Management Efficiency Index. The index
proven in concept. This means that considers 10 structural factors. The needed
only modeled safety barriers can be maintenance of these factors provide a rating
accounted in the evaluation. In the for measuring the confidence for lifecycle
current era of technological management of the safety barriers. The
evolution, this is a constraint for un- structural factors on the index ensure the
established or unproven barriers. effective safety function of the barrier across
its lifecycle which is illustrated in Figure 6.
E 26
Figure 6 : Structural elements of the safety management organization across the barrier lifecycle
(Andersen et al, 2004)
The model acknowledges the contribution of 1. Learning and willingness to

safety culture in the evaluation of safety report
management. Therefore, the 10 structural 2. Safety prioritization, rules and
elements of organization safety are evaluated compliance
against eight (8) cultural factors which define 3. Leadership involvement and
the safety culture of the organization. The commitment
cultural factors are listed below: 4. Risk and human performance
limitation perception
E 27
5. Safety responsibility and factor barriers does not give an accurate estimate of
6. Bi-directional trust between the risk. Additionally, the ARAMIS method
management and employees lacks consideration for interdependent
7. Work team atmosphere and barriers and is applicable for barriers that
support have historical presence which omits
8. Motivation, influence and application for new barrier technologies.
involvement Next, the following barrier evaluation
method to consider is titled advanced safety
The evaluation of the 10 structural elements
barrier management, a method which
is performed through an audit and the safety
considers barriers individually and also
culture factors are estimated through a
considers personnel factors albeit without a
questionnaire based investigation technique.
survey approach.
Surveys from relevant technical experts are
Advanced Safety Barrier Management –
conducted to evaluate the effect of safety
Human & Organizational aspects
management efficiency to predict the future
state of the safety barriers. Based on these The advanced safety barrier management
inputs, a quantitative rating is determined for approach considers human and
safety culture and structural elements of the organizational aspects of barrier
safety management organization. These two performance. This method evaluates barriers
ratings are further combined into an LC for on an individual level, and it combines
the identified safety barrier. attributes of the bow-tie model with the
success pathways approach. This
Limitations
combination allows one to consider the ways
Due to the comprehensive nature of this persons and business operationsimpact
survey and rating exercise, it may require barriers simultaneously with baseline barrier
enormous efforts to complete this exercise effectiveness. The advanced safety barrier
for all the barriers identified in a bow-tie management approach does not support
exercise. The process prescribes for this single fail point analysis and requires barriers
approach to a list of representative barriers with historical fail data, omitting it’s
only, although it is important to note that applicability to new applications. The
evaluating only for a representative set of following will review the context, execution,
E 28
and limitations of the advanced safety barrier approach provides a framework to consider
management evaluation method. human factors and organisational factors in
barrier assessments . The execution of the
Context
advanced safety barrier management
The bow-tie framework considers approach incorporates a safety objective tree
onlyindependent barriers. In a practical along with the traditional bow-tie approach.
context, this assumption may be invalid. For
Execution
example, consider a management directive
that does not allow or accept schedule delays Organizational and human factors are to be
or cost overruns. This can cause degrading considered as overarching elements while
effects on implementing barriers if proper evaluating the effectiveness of any barrier.
time is not allowed for barrier maintenance or Despite the level of influece and impact,
if enough personnel are not dedicated to organisational factors tend to be absent or
barrier operation; this can impact subsequent under-represented in bow-tie diagrams.This
barrier functionality. Therefore, the bow-tie limitation can be overcome by
model may depict a complete system with incorporatingsafety objective trees.The tree
multiple barriers, but in realitymay be less structure provides insight to the plant
effective than the visual depicts.This is why personnel on available options to prevent the
a modified approach is considered accident path.
appropriate.
Safety objective trees are a 5 level hierarchial
Pitblado & Nelson, (2013) have proposed a tree structure. The top level refers to the
innovative approach to barrier assessment “safety objectives”, which in bow-tie
considering human and organisational factors terminology could be referred to as
by combining the bow-tie risk model with “prevention of the top event occurrence”
“success pathways”, a model typically used such as preventing loss of containment. The
in the nuclear industry. The combined second level relates to practical
realisation of the safety objective through a pressure build up due to line blockage. The
safety function such as maintaining pressure fourth level refers to those strategies and / or
limits. The following level refers to the mechanisms that are disabled which may
challenges to the safety function such as impair the safety function. The final level
E 29
provides solutions in the form of mitigating makes bow-tie integration with the safety
strategies to protect the safety function objective tree a more holistic evaluation
challenges. A typical safety objective tree method.
developed for the nuclear industry is listed
There are four inputs which are required to
below in Figure 7.
enable the critical decision making process
Using a hybrid approach of bow-tie risk (Pitblado & Nelson, 2013):
assessment along with safety objective trees
a. Current process state (achieved by
assists in integrating the barrier approach
determining process condition and plant
with an event-based assessment approach.
equipment status);
The bow-tie framework as a standalone
b. Health of barriers;
evaluation method does not provide enough
c. Health of critical functions; and
information to properly consider barrier
d. Available success pathways for the
effectiveness. Human intervention may be
accident
required to prevent event progression
towards the accident path.Corrective actions
which may include critical decision making
Figure 7: Example Safety Objective Tree (Pitblado & Nelson, 2013)
E 30
The status of any barrier status is typically converted into an incident bow-tie as in
captured through results arising from audits Figure 8. By excluding branches of the
and inspections. These are used to observe operations bow-tie, focus can be applied to
anomalies related to physical damage and incident pathways through the incident bow-
visual clues. These do not include or consider tie.
overarching organisational and human
This investigation approach assesses the
factors contributing to the barrier failure,
barrier failures and recommends new values
such as recent reorganization or on boarding
for barrier effectiveness and reliability. The
new personnel with lacking experience. The
updated risk assessment considers a reactive
BSCAT (Pitblado & Fisher, 2010)
approach to risk assessment based on the
investigation process has an increased focus
incident findings and their impact on barrier
on barrier failure and the associated root
effectiveness and reliability.
cause contributing to the failure. Using this
process, a full operations bow-tie can be
Figure 8: Conversion of operation to an incident bow-tie (Pitblado & Fisher, 2010)
E 31
Figure 9: Barrier Analysis - DNV BSCAT method (Pitblado & Fisher, 2010)
Through the BSCAT method, the investigation process. This is crucial as any
performance of each barrier is evaluated and barrier interdependancy may result in
documented. In case of failure, root cause underrepresentation of weaknesses across
failure of each barrier is identified in Figure barriers due to a single fail point. This
9. The failed barriers are further investigated method is also limiting in it’s requirement to
to identify immediate causes, basic causes have historical fail data, leaving the
and suggested improvement actions. By this evaluation to be dependant upon previously-
method, barrier effectiveness is evaluated failed barriers. The following method also
and provides early warning signs of potential considers a fault tree in its analysis, and has
major accidents in the future. emphasis on multi-barrier interdependance.
Limitations Bayesian Belief Network (BBN) in risk

modeling
The limitation of this method is that it does
not provide a structured framework or The Bayesian Belief Network (BBN) is a
algorithm to update the risk based on the model used to evaluate barrier effectiveness
failed barriers identified during the with strong consideration to multi-barrier
E 32
interdependence. This model leverages fault Context

tree mapping and does account for human
The Bayesian Belief Network (BBN) is a
and organizational influences. It is used to
dynamic integrated model (Ale et al, 2014)
define the variables and the related inter-
for risk in a real time environment, inclusive
dependencies which may not be captured in
of considerations for human and
linear and deterministic models, and as a
organisational factors. Bayesian networks
dynamic model supports ongoing changes
have been used to define the variables and the
and updates Additionally, the BBN considers
related inter-dependencies which are not be
time as an influencing factor to evaluating
captured in linear and deterministic models
barrier effectiveness. It is lacking in that it
(Hudson, 2010). This approach is used to test
does not extend consideration to post-top
whether different risk contributing elements
event barriers. The following will review the
can be integrated into a single large BBN as
context, execution, and limitations of the
illustrated in Figure10.
BBN risk model.
Figure 10 : Schematic BBN Model (Adaptation) (Ale et al, 2014)
E 33
Execution extra money is added towards the total pool

The discrete BBN model identifies the inter- of money spent for safety.
dependencies between primary and The conclusions of this model has confirmed
secondary event contributors, as well as the real time experience, which concludes
mutually exclusive prinary events that impact cost increased continuously in an effort to
barrier performance (Kabir, Sadiq & influence a lower accident probability. There
Tesfamariam; 2015). This is the is benefit to this model in that the nodes can
transformation of fault trees into Bayesian be updated continuously as new factors are
based networks through identification of disovered, making this a model that supports
functional nodes. The boolean variables from dynamic application (Wooldridge, 2003).
the fault tree (failure/ no failure) is replaced
Limitations
by the probability of failure, and the
probability of top event are computed using There are limitations for the BBN model, a
normal arithmetic. The logical relationship of few of which to be mentioned here. The first
a fault tree can very well be transformed into limitation of this model is that the
a BBN model. This in principle, means, that consequence and the impact of mitigation
only the threats and the prevention barriers in barriers (e.g. functional interdependencies
the bow-tie framework are accounted in this between the top event and the consequence
approach. Another key feature of this model being realised) are not accounted. The event
is the time dependant factor as depicted in the frequency considers only the threat barriers
dynamic risk model (Figure 11). Time is a influences and inter-dependencies. The
variable considered in evaluating the barrier second limitation is that the money spent for
effectiveness considering human and safety accounts only for personnel expenses,
mangement influences. Conditional which can be deemed elementary. In reality,
distribution of human factors/ influences safety budget is split between technical
were evaluated against the variable money systems upgrade and human influences.
spent to improve safety. At each time step, Another limitation is regarding the
the distribution of initial money is kept as a conclusions drawn through this model; they
constant. In addition to the initial money, were not derived or verified against real data..
E 34
Figure 11 : Two time intervals of the dynamic risk model
Therefore, the result of this BBN model Barrier and Operational Risk Analysis
should not be interpreted in the absolute (BORA)
context. While the BBN method is meant to
The Barrier and Operational Risk Analysis
apply to a range of barrier types and
(BORA) is an assessment of barriers to
purposes, the next barrier for consideration is
prevent and /or mitigate hydrocarbon release,
designed for a particular barrier application
which is a critical hazard consideration in the
oil and gas industry. BORA leverages a fault
E 35
tree to evaluate the technical aspects of a assessment for barrier reliability based on
barrier and it’s effectiveness. It leverages an risk factors. The execution of the BORA
8 step approach that relies upon data and method follows an eight step process, as
audit results to focus on the causes leading to described in the following section.
what would be considered a “top event” in the
Execution
bow-tie framework. This model does not
evaluate barrier interdependancy and fails to The BORA method is developed based on the
account for mitigation barriers on subsequent following steps, which will be elaborated in
to the occurance of the top event. The the succeeding section:
following will review the context, execution,
1. Develop a barrier based model
and limitations of the BORA risk model.
depicting risk occurance through
Context hydrocarbon release;
2. Evaluate performance of the safety
The BORA release method focuses on the
barriers assigned to prevent
effect of safety barriers on the overall
hydrocarbon release;
hydrocarbon release frequency while
3. Quantifyrisk based upon barrier
considering the technical, human and
performance data;
organisational factors impacting the barrier
4. Create risk diagrams;
performance. (Aven,T., et al., 2005). These
5. Assign a scoreto the factors identified
impacting factors are considered “risk
in the diagrams from Step 4;
influencing factors”, or “RIF”s, which
6. Quantifythe risk influence factors;
influence barrier failure or malfunction
7. Modify the generic input data; and
(Rausand, 2013). These RIFS are given
8. Recalculate the risk
quantitative values and are used in a risk
E 36
Figure 12: Fault Tree for a selected safety barrier (Sklet, Vinnem & Aven, 2006)
Step 1& 2: Develop a barrier based model sufficient detailed analysis of the individual
depicting risk occurance through barriers.
hydrocarbon release & Evaluate
Step 3: Quantify risk based upon barrier
performance of the safety barriers
performance data - The BORA model
assigned to prevent hydrocarbon release -
initially considers a broad range of barriers.
The BORA-release approach combines the
However, performance of individual safety
block diagrams, event trees and fault trees to
barriers need to be analysed. The fault tree
provide a clear and consistent representation
approach is undertaken to evaluate the barrier
of the various barriers systems lined up
effectiveness of technical barriers. Generic
towards preventing the release of
input data are collated from a range of
hydrocarbons. An example is shown in
sources. These include generic databases
Figure 12 from pipeline applications. Even
related to equipment failure, surveillance of
though a barrier block diagram may be
operational activities and testing of technical
considered generic, the framework enables
systems. For some of the technical systems
E 37
which require human intervention for third approach uses survey and accident
successful functioning, reliability data may investigation information for arriving at the
not be available. In this event, human scoring values.
reliability data can be sourced by means of
Step 6: Quantify the risk influence factor -
expert judgement sessions.
Weighing of risk factors are specific to the
Step 4: Create risk diagrams - Hybrid facility under consideration. Therefore,
approach of top-down and bottom-up is expert judgement has been proposed. The
undertaken to develop the risk influence weightage input related to the risk factor is to
diagrams. Top-down approach ensures that a be provided by operation personnel.
common framework for risk interacting
Step 7: Modify the generic input data - In
factors is developed. The bottom-up
this step, probabilities are adjusted as a sum
approach enables specific risk Interacting
of products of the scores, are normalised by
Factors (RIF) pertaining to the plant/facilty
the weight of the RIF (inputs considered from
under observation are properly identified and
the previous 2 steps) and are then multiplied
assessed. A constraint of 6 RIF per basic
with the genric input data. The resulting
event was established to avoid unmanagable
values are benchmarked against a range (Phigh
RIF from a facility perspective. This adapted
and Plow). This range may be defined by
framework (Kim, 2003) consists of personnel
expert judgement or by use of generic
characteristics, tasks, technical systems,
equipment reliability database (e.g, OREDA)
administrative controls and organisational
factors. Step 8: Recalculate the risk - The revised
hydrocarbon release frequency is calculated
Step 5: Assign a score to the factors
considering technical, human and
identified in the diagrams from step 4 -
organisational risk interacting factors.
Three approaches to RIF scoring were
Moreover, the final frequency considers the
proposed. The first approach requires
actual performance of the safety barriers.
individual audit of the RIF based on the risk
influence diagrams developed for the basic The approach was validated by its
event. The second approach relates to a 6 implementation in a case study (Sklet,
point performance criteria and does not Vinnem, & Aven, Barrier and operational
account for the industry average values. The risk analysis of hydrocarbon releases
E 38
(BORA-Release): Part II: Results from a case barriers and identify how layered barriers
study, 2006). Feedback from the personnel may prevent or delay a hazard. It is an
included positive response regarding approach that involves categorizing barriers
knowledge about the safety barriers to and considers barrier interdependance. While
prevent hydrocarbon releases and risk it does introduce quantified measures for
influencing factors (RIF’s) impacting the understanding barrier effectiveness, it is not a
barrier performance. dynamic approach and isn’t feasible for life-
cycle barrier evaluation.
Limitations
Figure 13: LOPA ratio (Harbawi, Razali,
The steps within the BORA model indicate
Fuzi, & Mustapha; 2010)
the term “risk” at various stages. This
terminology should be interpreted as Purpose
“frequency” as the barriers accounted in the
The LOPA safety barrier performance
model and the inter-relationship is related to
the preventive barriers towards the hazard
realisation. The BORA model is heavily
assessment is specifically aimed at
dependant upon personnel opinions and
understanding the escalation potential of a
requires expert inputs. The method also
hazard, also referred to a fired domino
focuses on hydrocarbon releas at the
scenario (Landucci, Argenti, Tugnoli, &
exclusion of other risk types. Additionally,
Cozzani, 2015). Customisation in evaluating
the BORA model does not account for the
barriers in a layered scenariois conducted as
mitigation barriers usually depicted in the
passive barriers and procedural barriers can
“right” of the bow-tie. The next barrier
not be considered as independent since they
evaluation technique is also a quantifying
may fail by a common cause such as fire
approach, and it expands beyond hydrcarbon
(NFPA, 2009) (Dowell, Dennis, &
application.
Hendershot, 2002). Therefore, the evaluation
LOPA based methodology (quantification of of safety barrier performance for escalation
safety barrier performance) framework is aimed at quantifying
availability and effectiveness via a ratio
The Layer of Protection Approach (LOPA) is
derived from these variables, as visualied in
a three step process that is meant to identify
E 39
Figure 13. In the context of escalation integrate safety barrier performance in the
prevention, it is considered that several safety escalation probability assessment.
barriers tend to delay the event only while
Execution
still contributing to escalation (Dowell,
Dennis, & Hendershot, 2002). The authors (Landucci, Argenti, Tugnoli, &
Cozzani, 2015) list the methodology to assess
Based on the above concepts of availability
the availaibility and effectiveness of the
and effectiveness, escalation probability is
safety barriers triggered by fire event based
the eventual consequence of a primary event.
on a 3 stage process.
As a potential alternate to LOPA, Bayesian
Belief Networks (BBN) can also be a fit for Step 1: Data repository – Reference target
purpose tool in similar applications (Ref 36- equipment and reference installations
38). In the framework of conventional
Step 2: Safety barriers performance data –
quantitative risk assessment approach, the
Active / Passive protection systems,
modified event tree analysis is considered a
procedural measures
simplistic tool to appropriately evaluate
barrier performance based on effectiveness Step 3: Reference data for escalation
criteria. Figure 14 illustrates the main steps to assessment
Figure 14: 4 staged process - Characterization of barrier performance ((Landucci, Argenti,

Tugnoli, & Cozzani, 2015)
E 40
For the selection of data repository, it is intensive, it should be conducted at the

important to consider the site features and beginning of engineering activity for drilling
equipment under analysis. Therefore, two operations for optimal pivot response to
macro categories of Reference Target negative data results that may be identified
Equipment (RTE) and Reference (Lassen, 2008). Having organizational
Installations (RI) are introduced. RI are dedication to maintain regular LOPA
installation categories where common evaluations at interval points during
standards are applicable to the selection and operation may be something organizations
design of fire protection measures. RTE are are reluctant to consider, especially if there
equipment which are more critical to domino are personnel constraints for conducting the
effect. analysis correctly. Because the approach is
intensive, its’ lack of simplicity can lead to
Safety barriers performance data would be
underuse. Additionally, the LOPA approach
based on the analysis of specific technical
is best suited for static systems, so
documentation based on NFPA and API
application for dynamic situations is not
standards applicable to the corresponding
ideal.
equipment. Due to the complexity of fire
protection systems, the evaluation of Six Step KPI Method – Evaluation based
Probability to Fail on Demand and System KPI methodology
Availability would be achieved throughfault
The Six Step Key Process Indicator (KPI)
tree analysis.The activation of fire protection
method is an evaluation based approach
systems does not ensure the prevention of
meant to assist in identifying and classifying
escalation. The effectiveness would be
barriers for KPI monitoring. It is a method
calculated through relevant literature review
that requires certain criteria for each barrier
specific to water deluge systems to protect
to be monitored on an ongoing basis to
LPG storage vessels.
identify negative changes, anomalies or risks.
Limitations This approach leads to ongoing barrier
effectiveness management and proactive
LOPA is a solution that results in outcomes
assessments to prevent failure through early
that could alter the fundamental operational
process of a system. Because it is data- detection. Limitations for this approach
include the dependency of a baseline for the
E 41
barrier performance, which automatically recommended by OGP and was developed by

omits new barrier technology from being the National Research Council (2011). The
ideal to evaluate with this method, and it does purpose of this Six Step approach is to
not evaluate barrier interdependency. identify critical barriers and develop a
systematic method to measure KPI’s (The
Purpose
International Association of Oil and Gas
In a multi-barrier hazard prevention scenario, Producers, 2011). Monitoring and measuring
it is essential to be able to identify the most KPIs on specific barriers can lead to clearer
critical barriers for evaluation and ongoing paths of visibility to the most critical points
monitoring. There is a six step process that is of hazard mitigation.
Figure 15: The Six Step Process (The International Association of Oil and Gas Producers, 2011)
E 42
their potential weakness. Barriers that have
failed to prevent hazard in the past and
Execution
barriers that have not responded to hazard
The 6 Step process begins and ends with occurrence as expected in the past should be
proactive personnel activity. considered critical by default as their inaction
or malfunction historically should be cause
Step 1: Identify the responsible team
for future monitoring and analysis to identify
members - The first step in the process is to
reliability.
identify the appropriate leadership and
personnel to hold responsibility for process Step 4: Establish relevant barrier-specific
implementation and ongoing evaluation (The KPIs - Step 4 entails a preventative and
International Association of Oil and Gas metric-based approach to identifying KPIs
Producers, 2011). This will improve the odds that pertain to the specific barriers identified
of meaningful execution and will help clarify as “critical”. Such KPIs will be tailored to the
lines of accountability for corrective action barrier and its’ dependency; for instance, if a
when issues are identified. critical barrier is dependent upon personnel
activation, then a KPI may be the number or
Step 2: Establish relevant company-specific
percentage of personnel trained at a site to
KPIs - The second step in the process is to
engage the barrier, and may include
select key performance indicators that are
accomplishment of annual refresher trainings
measurable and significant. These factors
(National Research Council, 2011).
will relate to the performance of a company,
such as response time required to mitigate a Step 5: Data collection - The fifth step
hazard when barriers fail. This will be used to requires active data collection of KPI reports
benchmark the company’s existing from Steps 2 & 4. For example, reviewing the
performance for comparison against future KPI reports from company response time in
solutions to improve the KPI in the future. step 2 and reports on number of trained
employees for barrier activation in step 4 may
Step 3: Identify the critical barriers
reveal a correlation of slower response time
pertaining to hazard prevention - The third
with fewer trained employees. This
step is to identify the barriers that are
correlation may lead management to take
believed to be the most critical and determine
action in the next step.
E 43
Step 6: Review and refine - The process following themes to derive meaningful
concludes with Step 6, which is a step of outcomes and identify gaps to serve as basis
reflection and corrective action. If KPI for building comprehensive models in the
reports from step 5 reveal a correlation with future:
failed barriers, slow company response time,
a. Barrier effectiveness criteria;
and low training statistics then the company
may decide to correct this via a more robust b. Barrier coverage in the analysis
training program. Conversely, the company (preventative and mitigating);
may find that the barrier is best implemented
c. Barrier interdependency factors; and
by automated systems that may be more
reliable, and this may lead to investment into d. Approach benefits / limitations.
a new barrier solution altogether.
While each barrier has benefits, each also has
Limitations limitations. The comparison is available in
Appendix A.
This 6-stage process assumes that the barriers
have already yielded historical results and
Conclusion
can be improved upon. This leads to
This paper evaluates various barrier
limitation of the approach to new barriers
effectiveness models. The models have been
which have no historical points for
analysed in the context of risk management.
consideration, which may require hazard to
Based on the review of existing barrier
occur before this approach is useful to the
evaluation approaches, some common gaps
drilling industry. Because of this, the 6 step
were identified. Each approach reviewed
approach is most appropriate for barriers
concluded with applicable limitations, many
which have been implemented, are generally
of which were overlapping. These
deemed useful, but seemingly have
overlapping gaps include the following:
improvement needs based on past failures.
a. Lack of a comprehensive evaluation
Comparison of barrier evaluation considering preventive and mitigation
approaches barriers
The above listed barrier evaluation
approaches were compared under the
E 44
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Mazzarotta, B.; Pipart, A.; Planas, E. (2004).
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considering prevention and mitigation Barrier and Operational risk analysis of
barriers. The barrier models discussed here hydrocarbon releases (BORA- Release): Part 1
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and operational risk analysis of hydrocarbon
E 47
APPENDIX
Barrier ARAMIS Advanced Bayesian BORA LOPA 6-Step

inefficiency barrier Safety Belief framework Approach
approach evaluation barrier Network –
techniques management (BBN) in Evaluation
risk based KPI
Column modelling methodolo
1 gy
Relevan It is a It is an It is an It is an It is an 8 It is a 3 step It is an
ce to classification evaluation approach that approach step process to evaluation
barrier approach based method considers leveraging approach identify approach
effectiv on barrier focusing on organizationa mapping of that relies barriers and meant to
eness inefficiency 3 external l and human factors upon data how their assist in
categorization risk factors as ("nodes") to inputs and layering may identifying
parameters overarching understand audit results prevent or and
on barrier elements for interdepende to evaluate delay hazard. classifying
performanc technical ncies and the barriers for
e - level of barriers. correlating frequency KPI
confidence, factors that of hazard monitoring.
efficiency lead to occurrence
and time hazard (specifically
response of occurrence. ,
the safety hydrocarbo
barrier. n release).
Barrier Open for Open for Open for Not intended Not Open for Open for
Covera application with application application for intended for application application
ge and preventative with with application application with with
Risk and mitigating preventative preventative of barriers of barriers preventative preventativ
Evaluati barriers. and and for for and e and
on of Generic model mitigating mitigating mitigating mitigating mitigating mitigating
the to identify barriers. barriers. Risk hazards. hazards. barriers. barriers.
hazard barriers in use Focused on values are Focuses on Model is a Model Model
evaluati and under causes not estimated barriers for fault-tree execution execution
on consideration. related to for the top preventative risk depends depends
external event. hazard assessment upon upon KPI
factors occurrence. of technical Reference modelling
influencing Model is a barriers to Target to measure
barrier fault-tree risk prevent Equipment hazards and
effectivenes assessment hydrocarbo (RTE) and areas for
s, such as of cause and n release. Reference performanc
environmen effect events. Installations e
tal (RI) improveme
consideratio categories to nt in
ns or human identify the preventativ
intervention procedural or e and
s or equipment- mitigating
inactions. based barriers.
barriers for
analysis.
E 48
Barrier Does not Does not Effectively Effectively Does not Considers Does not
interdep evaluate barrier evaluate depicts and depicts and evaluate barrier evaluate
endency interdependenc barrier captures captures barrier effectiveness barrier
y. interdepend barrier barrier interdepend with interdepend
ency. interdepende interdepende ency. consideration ency.
ncies. ncies. to
interdepende
ncies.
General Preliminary Addresses a Combined Used to Evaluates a Introduces Leads to
benefits screening very approach of define the targeted quantified ongoing
method to important “Bow-Tie variables and barrier type methods for barrier
evaluate the element in risk model” the related in evaluation effectivene
barrier personnel with inter- hydrocarbo and brings ss
inefficiency. and cultural “Success dependencies n release degree of manageme
influences pathways” which may prevention importance nt and
on the integrating not be and uses a into proactive
success of human and captured in quantified discussion assessment
barrier organizationa linear and approach to for each s to prevent
activation. l factors deterministic identify barrier, future
Linking of while models. successes including barrier
the safety considering Logical and failures. how each failure.
managemen barrier relationship barrier layer
t system to effectiveness of a fault tree may be
barrier can be interdepende
system leveraged for nt upon
provides a other risk- another
future analysis layer's
estimate of approaches, performance.
the safety dynamic
barrier model
effectivenes supports
s. ongoing
changes and
updates.
E 49
General Generic, Barriers are Does not Consequence A method Is a static Requires
limitati abstract model assumed to support (s) of that focuses approach that historical
ons – not specific be single fail mitigation on one isn't practical failures for
for preventive independent point barriers after single for dynamic initial
or mitigating (redundancy analysis as it the top event barrier type, operations, barrier
barriers. and depends occurrence refers to and is best identificati
interdepend upon not explored. "risk" implemented on.
ency not interdepende Also has an measureme at the Baseline
accounted). nt barriers, elementary nt when it is beginning of KPIs are
Lacks the leaving room level of truly barrier life the
ability to for unclear barriers, such "frequency and not foundation
account for root cause as the cost of of risk", and throughout for this
novel analysis. training as a is dependent the life cycle. approach,
technical Also, barrier upon requiring
safety requires having no opinions of existing
barriers historical differentiatio experts data on the
which do failures for n between instead of applicable
not have initial barrier software pure, barrier to
proven identification investment unbiased be
failure data, , which poses versus other quantitative available.
and is only limitations personnel feedback. It
meant to be for newer training also fails to
applied to a barrier expenses. account for
sampling of advancement The lack of the
barriers. s to be absolute data mitigation
Also, hyper- properly to verify this barriers
focuses on analyzed pre- is also a usually
the non- hazard limitation to depicted in
barrier occurrence. the BBN. the “right”
related of the bow-
causes to tie.
barrier
failure; only
effective if
the barrier
is deemed
technically
vetted and
fail-proof
aside from
outside
influence.
E 50
A Visualized Approach to Manage Risks Off-Shore

In Integrity Management System (IMS)
Hicham Hebaichi*, Dr. Shailendra Pokhriyal**, Dr. Geo Jos Fernandez***
*Product Development Manager, DNVGL
**Professor and HoD (Department of Oil Gas), College of Management & Economic Studies, UPES
***Asst. Professor (Sr. Sc), Department of Oil Gas, CoMES, UPES
Abstract equipment, oil loading terminals and critical

safety systems.
The application of rigorous inspection in
petrochemical industry is essential to The configuration of the risk assessments
understand the asset condition, reduce routine methodologies in the system was
shutdowns interventions and to operate in safe accompanied with a process to read the
manner. Asset inspection is regulated by the inspection data and assets technical and
authorities for safe operations of the plant and operational information from various external
consequently clean environment. The systems. The scheme was delivered under
inspection results are often used to conduct Integrity Management System (IMS) which
risk assessment to identify the hazards, their was a joint effort between the Company and
impact on the asset and to develop a mitigation the Contractor expertise using international
action plan to control or eliminate risks to standards for risk assessments.
satisfy the regulatory requirements.
Keywords
This paper describes a case study related to Risk Assessment. Integrity, Inspection,
implementing several methodologies using Remnant Life, Petrochemical facilities
software products to manage risks and reliability.
anomalies in one system for all Company
Introduction
assets. The assets were classified into ten
categories covering pipelines, wells, topside One of the Company’s core strategies is to
pressure systems, tanks, rotating equipment, continuously assess asset risks and execute
electrical generation/ distribution, steel proactive plans to eliminate them for the
structures, civil support works, lifting security of its people, plant and facilities. The
cornerstone to safe operations is a proactive
E 51
integrity assurance approach. This is documents which were scanned and attached
achievable through direct access to accurate to the asset database (ERP). However, the data
assets performance data, asset condition and was not readable or accessible by a data
risks that can impact the business. The mining tools for analysis or trending. Multiple
Integrity Division is accountable for specialized technical software tools were used
delivering integrity assurance for all facilities over the years for corrosion growth, vibration
to Senior Management using latest inspection readings or anomalies analysis. The
technologies & following best practices is risk visualization of the analytics was not
assessments. transparent and only available on request from
engineers due to the complexity of reporting
The Requirement
from many fragmented sources. A
The Company needed to determine direct
requirement for direct access to a risk
approach towards the assets risks through
dashboard was initiated by Senior
single repository for integrity assessments that
Management. An integrated solution would be
can be accessed through a dynamic dashboard.
only possible if these solutions are put
It is required that strategic decisions related to
together via a risk management engine in one
mitigating risks are supported with direct
application. The Company decided to conduct
access to the information and clear visibility to
an exercise to transform the existing
the assets conditions. The Company applies a
information into structured database that can
planned approach for the equipment
provide trends and analytics covering fitness
inspection to capture information using many
for service assessments (FFS), anomaly
means (e.g. visual, Ultrasound, Magnetic,
management (AM), remnant life assessment
Non-Destructive Testing-NDT, X-ray,
(RLA), risk assessment (RA), failure
Intelligent Pigging IP, subsea Remote
evaluation, asset visualization, optimization
Operated Vehicles - ROV, sample testing,
and compliance of maintenance activities.
etc.). The previous practice was that the
Calculating the aggregated risks to any asset
analysis is conducted randomly and based on
involves vast amounts of data manipulation
individual assessments to an observed critical
and complex technical assessments
situation. In the old method, the data is
methodologies at different levels depending
searched for and collected manually to
on the equipment type, its sub-elements and its
conduct the detailed analysis. The results of
purpose.
inspections were produced on paper
E 52
With IMS in place handling all equipment findings and anomalies positions on 2D/3D
types; it will enable all levels in the models.
organization to achieve their goals according This document will describe the process of the
to their roles. risk assessment for the ten assets categories. It
Case Study Scope will also describe some of the data required to
achieve the condition assessment of the asset.
The objective is to develop an Integrity
Management System (IMS) with asset Risk Assessment
dashboard that can provide up to date
The assessment process starts through
information about the following:
initiation as a result of routine inspection
 Asset Condition findings, corrective maintenance action, or
 Asset risk assessment methodology and a special inspection campaign by a third
risk ranking party (e.g. pipelines internal inspections,
 Mitigations plans external ROV, structural non-destructive
 Asset model and specification testing-NDT, etc.). Once the risk
assessment is initiated, it goes into
The basic asset design data to be retrieved preparation and approval by the respective
from the Company Enterprise Resource area of authority. The approval process is
Planning (ERP) system, the risk assessment conducted once the subject matter expert
with the inspection data required to do the submits the RA report with
assessment is configured, maintained and recommendations to Integrity &
regularly entered in the new IMS. With each Engineering Management.
new inspection, an analysis to the changes
Risk Matrix
over time was conducted and compared
The company uses a standard 5x5 risk matrix
against the design tolerances to evaluate the
for all assets using traffic light indicator for
asset condition and to propose planned actions
high, medium and low risk codes. The
with priorities. A management dashboard with
diagram of the sample matrix below is
visualization tools was also developed to
composed of five rows and five columns. The
support the decision process through easy
rows are defining the Consequence of failure
navigation to the risk reports, inspections
E 53
(CoF) and columns are defining the anomalies severity factor multiplied by the
Probability of Failure (PoF). anomalies number factor. The anomaly
severity is related to the corrosion rate,
The Consequence of Failure is a factor that is
growth, severe cracks, or dents. In the case of
computed based on the impact on the
Machinery, Electrical and other equipment;
production loss, repair cost or the loss of
the PoF is related to the mean time to fail and
human life. The Probability of Failure is
out of service repair time.
dependent on the equipment type. In the case
of pipelines and structures, it is based on the
Probability of Failure
Semi Quantitative Risk

Very Low Low Medium High Very High
Matrix
PoF
Catastrophic
Consequence of Failure
Severe
medium
CoF
Low
Very Low
Figure. 1 Pipelines Risk Matrix diagram
Risk Summary Report condition, inspection findings, risk assessment

and recommended work to be done in the short
The typical asset risk report contains general
and long term to sustain the asset operational
asset information, asset layout, status,
E 54
function. The focus will be on mitigating the The risk report may vary slightly for each
most critical anomalies. The general format of asset category with minor technical
the report template is in the following table. information related to its metadata, the graphs
related to the diagnostics data and the sketches
with anomaly highlights.
Figure. 2 Risk Report diagram
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IMS Decision Gates data management and have all activities

captured in the system
The Integrity system has 5 levels of decision
gates. These are following a pyramidal In order for the dashboard to be usable on a
hierarchy as described in the diagram below; daily basis it must be simple, visual and quick
to navigate through. The challenge of the
dashboard is that it must surface the key
performance indicators and allow the
management to keep their attention to the
critical issues. The data in the dashboard will
come from IMS and the ERP system with
other integrated application (i.e. Wells, GIS,
Engineering Records, etc.).
Figure. 3 Decision Levels Dashboard level zero shows assets with high
The Dashboard risks with the corresponding risk certificate on
The company wants a dashboard that can a 2D geographical map. The exposed data
explain the asset condition question to enable from the systems of Pipeline, Structure and
decisions related to major repairs or Plant are:
replacements. The site users want to view  Asset ID/Name
where the assets are with high risks based on  Link to Asset risk report (PoF & CoF)
a traffic light ranking and what are the critical  Link to Integrity status view
anomalies and status of mitigations actions.  Link to Mitigating actions
The middle managers and team leaders want  Pipeline drawn as a line
to monitor the risk trends and to optimize  Structures & plants drawn as a symbol
maintenance and inspection plans based on
best program with minimal impact on
production and. The engineers want to make Level one is accessed from level zero by
sure that the inspection data is updated and navigating to inspection map view. Further
new assessments are conducted in timely navigation will view risk reports and
manner. The data analysts want to standardize mitigating actions pages. The level one is a
E 56
graphical interface with the field site map that

is familiar to all users.
Figure 6 - Open anomalies for an asset and

the related work order
Dashboard level 2 will show textual

Figure 4 - Snapshot from the Dashboard information of open anomalies and status of
Level 0 viewer related risk mitigating actions with links to
detailed level 3 reports. The mitigation
The data is presented from the GIS map
action is a reference to a maintenance work
service and integrates the links of the asset
order number in the ERP system. This
spatial data into the GIS geographical
relationship is established via a link to the
location.
ERP work order creation page from the IMS
Dashboard Level one for a specific asset to anomaly pages. A list of open anomalies with
show graphical representation where we have the related work orders and their status
high risk and critical anomalies. (Planned, Scheduled, Completed, etc.) will be
displayed. The anomaly is considered non-
conforming if there is no related work order
for it.
Figure 5 – Level 1 Pipeline Risk Map

inspection
E 57
system. A more development will be required

in the future to include contents search.
Arc-GIS MAXIMO MCS

ECMS ROV FMS
Workflow Search Technical
Web-Services Open XML
Figure 7 –Dashboard Levels

Figure 8 – Applications Landscape
Applications Layers
There are four applications running and

Risk Assessment Standards
configured to do the risk assessment based on
The risk assessment methodology is a
the specific assets categories as described in
probability and consequence analysis
the diagram below;
supported by a statistical distribution of
An integration layer web services (XML
historical data from the maintenance and
based) passes the needed data from the
inspection findings. Anomalies rates of
relevant system to conduct the assessments.
occurrence and frequencies are used to
The workflow engine is configured to pass
estimate the next occurrences and growth
assignments between various levels of
based on Industry standards (API-RP96 & 68)
technical authorities. A graphical user
for wells, API580/581 for topside Pressure
interface with visualization and media tools
Systems, API-2Y for Structures, API-RP1110
(e.g. subsea video clips and analysis of marine
for Pipelines, API-RP2D for Cranes: API-
growth and anomalies locations) invokes a
RP14C/RP576 Safety Systems, API RP 688
media player or 3D model as required. The
for Machinery, ABS rules, BS8010,
search engine is developed as part on the
ANSIB31.4, OISD135 for loading facilities,
integration layer to bring technical records and
etc.)
drawings from a document management
E 58
First, the probabilities are evaluated for each same time maintain a references between the
component and an overall one is derived for old and new scenarios.
the whole system. The consequences are
Risk Assessment Process
defined based on the impact on the business of
After defining the plans in the ERP system, the
the high risk contributing component. The
Operations identify the hazards features with
CoF importance is correlated with production
the stakeholders. Inspection carries out the
impact as well as human and cost. In most
thorough asset check and the required
cases it is a qualitative assessment.
applicable testing (NDT, Radio frequency,
Where there is a lack of data to satisfy a PoF
Ultrasound, X-ray, Sound waves, sampling,
standard, a semi-quantitative risk assessment
etc.) to identify anomalies and mitigations.
is conducted based a number of key criteria;
The findings along with specification data are
(i.e. age of the asset, ratio of cost to repair
analysed and assessed by engineers to
versus replacement, obsolescence,
understand the risk level. The risk level
maintainability compliance, failure history,
qualifies immediate, short term and long term
etc.) This process maintains a general way of
actions accordingly. Repeated occurances of
handling outliers and mandates a method that
hazards impact the rate of change used in the
can be reviewed and revised as necessary once
risk assessment. This is captured in the
the data is available. To satisfy a standard, a
database. The process is briefed in the
new scenario can be configured and at the
following diagram:
E 59
Figure 9 – RA Process
Pipelines Risk Assessment The business risk and the technical risk are the
consequence and probability of failures for
Pipelines system uses the 2D GIS map
pipelines. They are calculated based on
technology and provides access to risk details
information available in IMS. Few parameters
and critical anomalies. The data query
in the calculation are however required as
provides anomaly visualization based on the
input by the engineers during the assessment
distances from the initially established
process. The calculations are as follows:
coordinates with GIS maps.
E 60
Probability of Failure  Calculate the grown rate per feature –

The (PoF) is calculated as outlined in the (GRF)
procedure below and used as PoF in the risk o GRF = MOP/Psafe Max Operating
matrix. The term feature can take one of the Pressure for the CD & CL from ILI
anomaly types defined by the table:  Obtain Metal loss depth factor Md
Internal Line Inspection (ILI) data is captured based on the Standard scale of (CDf)
through the launch of intelligent pig with  Calculate GRF’ = Max (GRF, Md) for
electronic sensors through the pipeline. The each Feature
electronic sensors detect the corrosion depth  Categorize GRF’ into 5 categories (
(CD) and the corrosion length (CL). The data between 1 & 2)
is aligned to the line coordinates and uploaded  Determine the range “i” for the highest
into the system with defined optional accuracy (GRF’1.to 5)
and confidence level.  Compute Average GRF’i considering
 Calculate the corrosion growth rate CR; all features in range i
(CR)=CD/(InspecT1– InspecT2)  Define factor An = (from 1 to 1.3) based
 (Use the 95% percentile from the on anomalies no. in range i
distribution of all Features) PoF = Average GRF’i *An
 Obtain the flow stress factor -
(remaining strength B31G standard
Psafe)
E 61
CoF Calculation procedure MainLineProd is taken from the system as the

The CoF for a specified line is calculated from Max. Production of all pipeline pressure
the formula settings.
Planning.Factor (PF) is taken from the table

below:
Criteria Planning.Factor
HSE.factor is determined form the table Decommissioning Value 1
below; planned in 4 years
Decommissioning Value 2
planned in 4 to 10
years
Normal operation Value 3
Required for Value 4
development plan(s)
Strategic development Value 5
plan(s)
Having generated the PoF and the CoF, we can
Redundant.Line.Capacity is defined in the now derive the Risk Ranking in the risk
system capacity for all lines associated to the matrix. based on the assessed features.
actual line. Recommendations actions can be derived for
Redundant.Line.Integrity is determined from immediate, short and long term actions.
lookup in the table below where remaining life Structures Risk Assessment
is calculated as the ERF’ with the shortest time
The simplified model is adopted at the phase I
to failure (i.e. to ERF exceeds 1.0). Values are
of the development as explained below.
in the table below:
Consequence of failure are defined to 5
Redundant Line Redundant.Lin
e.Integrity categories based on “oil production or
Remaining life does not exist Value 1 handling” of each offshore structure with the
Remaining life < 4 years Value 2 following impacts:
years Remaining life < 10 Value 3
years  Very Low for water injection platform.
Remaining life >10 years Value 4  Low for Oil Production <1 mbpd or
handling <3 mbpd.
E 62
 Medium for Oil Production <3 mbpd or are used based on the regional acceptance
handling <6 mbpd. criteria:
 Severe for Oil Production <5 mbpd or
handling <10 mbpd. Structure
 Catastrophic for Oil Production >5 mbpd 1: Very Low RSR > x1
and handling >10 mbpd or manned 2: Low x1 < RSR < x2
Probability of Failure is considered as a 3: Medium x2 < RSR < x3

function of the platform capacity to carry 4: High x3 < RSR < x4
loads acting on the structure. The estimation
5: Very High RSR > x4
of the likelihood of the failure is based on the
in-place results and Remaining Strength Ratio
Having identified the CoF and PoF then the
(RSR) of a WHT. The following categories
risk matrix can be produced.
Consequence of Failure
Semi Quantitative Risk

Matrix Very Low Low Medium Severe Catastrophic
Water O<1k O<3k O<5K O>5k

Inj P<3K P<6K P<10K Process>10K
Probability of Failure
V. High RSR<x1
Severe RSR<x2
medium RSR<x3
Low RSR<x4
Very Low RSR>x4
E 63
The RSR is the ratio between the design loads The IMS is planned to be enhanced to include
and the collapse capacity of the structure this function by using the existing asset
which is established in the collapse analysis inspection condition information and findings.
formula: The failure probability which is based on the
API-RP 2SIM can be applied after a new
RSR=Qu/Qd
inspection campaign is conducted.
Where Qu is the ultimate collapse capacity of
the structure, Qd is the design load for the The ROV and NDT inspections will typically
structure. The RSR is adopted based API RP include the Features:
2SIM. The characteristics data is passed to a
 Full platform visual inspection
special software tool (Collapse analysis) for
 Complete radio analysis of flooded
risk assessment using information related to
member
specifications, design parameters, years of
 Survey of platform primary braces
service, designed life, NDT records,
anomalies, soil and MetOcean data, structure  Scour survey
technical specifications, etc. Once the RSR is  Marine growth survey
computed, the result will return to IMS and  Cathodic Protection / Anode depletion
viewed in the dashboard. survey
The IMS calculations of probability of failure

will follow a weighted score approach (1 to
10) to determine the contribution of the
features related to design data and condition of
the platform (i.e. mechanical damage, marine
growth, corrosion rates, framing anomalies,
no. of legs, vintage, age, fatigue analysis,
waves impact, duck loading, seismic, distance
to shipping lanes, scour depth, grouted piles,
flooded members survey and Inspection
Figure 10 Screen Shot from the Structure history). This will be required to perform the
System assessment inclusive of the damage factors.
E 64
The damaged strength ratio DSR = Qr/Qd. Wi = Weighting attributed to rule i and
(Qr is the ultimate collapse capacity of the based on the modified RSR
structure in damaged condition per feature). RIFi = Score attributed to feature i
Accounting for the damage will lead to the Hence severe inspection findings (anomalies)
residual strength factor RIF which is equal to aggregated from previous inspections, are all
RSR/ DSR. included in this quantitative POF assessment.
IMS will take all the sub-assessments and

consider the weight score for each rule and Wells Risk Assessment
gives the overall PoF and produce a
A simplified qualitative risk assessment is
summation of the product score for the
conducted as first step for qualifying the well
platform as following:
for further evaluation based on the table
Stotal = ∑i (Wi* RIFi )

below. It is mostly based on annulus pressure
as measured against the maximum allowable
surface pressure (MAASP), type of well,
Stotal = Total score for Probability of
capacity, age and function
failure
(Injection/production).
# Criteria for PoF Risk rate Wgt Remarks Wgt

1 Pressure=(0-20%) of MAASP Low 1 x%
Pressure=(20-40%) of MAASP Medium 2
Pressure=(40-80%) of MAASP High 3
2 Water Well Low 1
Oil Well Medium 2 y%
Gas Well High 3
Average z%
# Criteria for CoF Risk rate Wgt Remarks Wgt
3 Handling
Oil Rate = (0-1.5) MBPD Low 1 Oil &
Oil Rate = (1.5-3) MBPD Medium 2 Water w%
Oil Rate > 3MBPD High 3 wells
Gas 0-40 MM/SCFD Low 1
Gas 80-80 MM/SCFD Medium 2 Gas wells v%
E 65
Gas >80 MM/SCFD High 3

4 Age <10 Years Low 1
Age 10-20 Years Medium 2 j%
Age >20 Years High 3
Average l%
Total 100%
Outcomes & Key Decisions:

schedule). The focus of the risk analysis in this
 Wells of any type that show sustained case is to ensure that a safe solution for
annulus pressure above the MAAOP (80% repair/restoration or abandonment of the well
MAASP) should be subject to diagnostic is selected.
testing and repaired within 1 month.
For all High and medium risk ranking, the
 Wells of any type that show sustained
following will be conducted:
annulus pressure above the MAASP shall
be shut-in and secured. The well should be  Collect Information such as well
subject to diagnostic testing and repaired construction diagrams, Casing schematics,
immediately. cement quality and well barrier schematics
 Any external leak will be mitigated with can be used to identify potential leak
immediate shut-in/kill and followed by the paths.
appropriate scope of work based on the  Pore pressure plots and lithology columns
engineering assessment to carry-out will aid identification of possible sources,
remedial works or full work-over  Historical monitoring and service data for
the well, including well all interventions
The first outcome is that it will be possible to
 MAASP Safe Operating Envelope and
continue production if risk acceptable Low or
failure or leak cause
Medium and risk reducing measurements are
 Well History, corrosion data, wellhead
implemented. A set of recommended actions
seals, operational procedures & H2S
will be planned aiming for conservative
contents.
operating setting to satisfy MAASP
Further Detailed diagnostics will cover the
The second and third outcome with High risk following and produce quantitative condition
or (any leak) is that the well has to be killed assessment for evaluating the extent of the
and secured and placed on (workover repair during the next intervention;
E 66
Level of failure? :
Christmas Tree & valves condition, Down-hole

Loss of Well Control from Xmas Safety Valve Condition, Upper Master Valve and
Tree wing valve conditions, General internal
communication or external leak.
Surface pressure not expected (estimate leak rate

Loss of Well Control from
& volume in annuli and leak location using
Contained Annuli
pressure vs. depth plots for tubing and annuli
Minor consistent or inconsistent Discharge to
Discharge from Uncontained
Atmosphere Minor internal or significant
Annuli
external leak to atmosphere
Minor or major (inconsistent/consistent) or
Discharge from Sea Bed
significant Bubbles or Discharge Observed
Confirmed or Doubtful (Isolation or
Behind Casing or within Borehole communication) tests and Logs to be reviewed
Reservoir Communication along with pressure versus depth plots
Critical Safety Systems (CSS) RA The assessment is also including the fulfilment
of all maintenance activities, audits, repairs.
Critical Safety systems are of high importance
The plan is to investigate a semi-quantitative
to the Company due to their functions as “by-
assessment based on OREDA (Off-shore &
design barriers” and mitigation actions that
onshore Reliability Database) PoF and event
prevent loss of life and sustain plant safe
tree probability analysis. The CoF for safety
operability. They provide the necessary
critical systems will continue to be the same
alarms for immediate action for a second level
where it is either High or No Risk with nothing
of protection by human intervention if by-
in between.
design mitigations fails. The integrity
assurance of these systems is of high
importance.
E 67
CSS Categories
Emergency Shutdown, Fire & Gas Systems
High Integrity Pressure Protection Systems

Burner Management System (BMS)
Firewater Pump, Fire Extinguishers (Manual)
Fire Suppression & Protection System
Fire Mains & Deluge
Flare system
Emergency Depressurization & Relief system
Electrical & Instrumentation Equipment.
Area Ventilation ( HVAC) & Earthing
Emergency Communication & Public address
Emergency & Escape Lighting
Emergency Generator, UPS
Radio & Navigation aids
Life Boat, Life Rafts, Personal survival kits Temporary Refuge & Escape route
Portable Gas detectors
Figure 11 – Critical Safety Systems
E 68
Each category is assigned assurance tasks

based on maintenance and testing compliance
as of the example below (i.e. Fire Detection P M
Initiating Event
Consequences
P M
System; the assurance tasks execution should P Release M
be secured during the routine maintenance). P M

P M
Any gap in assurance tasks or critical spares
unavailability is assessed as high risk. The Prevention Barriers Mitigation Barriers
• Plant Layout • ESD
Medium condition is only related to maximum • Construction • Passive Protection
Standards • Active Protection
15% delay in routine maintenance execution • Inspection • Detection System
• Instruments
and it changes to high if the dates cross the Figure 11: Bow-Tie Diagram
allowed tolerance. Assurance tasks for fire

Figure 12 Bow Tie Diagram
detection system are listed below:
Rotating & Electrical Machinery RA
Bow-tie Model for CSS
Rotating machinery covers major pumps,
The Company hazards barriers and mitigation
compressors, generators, motors and large air
model is built in the asset design and is
handling fans units. The PoF computations are
demonstrated in the diagram below.
based on the failure history, breakdown time,
Operational factors, age, use beyond designed
available time, mean time between failure and
life along with human factors can initiate a
mean repair time. The risk ranking is based on
risk event that can only be controlled if all
the remnant operating time before the next
designed barriers mitigations are functioning.
failure estimated from MTBF (Mean Time
IMS role is to ensure that this process is
between Failures).
sustained.
A semi-qualitative risk assessment is

implemented and is briefed as following:
E 69
. Consequence of Failure Mean Time Between Failure (MTBF):
Safety Emissions/ Repair cost Operating Obsolescence >10 5 to 10 2 to 5 1 to 2 <1

barriers Leaks vs Value Cost spares
Multiple Wider group Cost of Losses >70% Support no H L- LL-HH M-HH H-HH HH-
defect & loss exposure to repair>75% of value longer H HH HH
of lives leaks available
Multiple Persons may Cost of Losses >50% Lead time > H LL- LL-H M-H H-H HH-
injuries be exposed to repair>50% of value 180 days H H
leaks
Potential In excess of Cost of Losses >30% Lead time up M LL- L-M M-M H-M HH-
injury limits repair>25% of value to 180 days M M
Potential light Limited local Cost of Losses >5% Available L LL- L-L M-L H-L HH-
injury impact repair>5% and <30% of locally L L
and <25% value
Up to standard Compliant Cost of Losses <5% Stock Spares L LL- LL-L M-LL H-LL HH-
within limits repair <5% of value available L L LL
Lifting Equipment RA  Asset beyond life expectancy and require
This covers cranes used during operational to be replaced.
and logistical activities at production facilities B) Consequence of Failure:
locations. The main criteria’s are currently  There is redundancy for this asset which
related to the following assessments secure no HSE or production impact
conditions.  Failure has minor production impact and

no HSE issues.
A) Probability of Failure:
 Failure would not result in minor output or
 No action to be taken, asset can operate
HSE issues.
for 10 years.
 Failure would result in production or HSE
 Asset will require re- Inspection after 5
impact.
Years.
 Failure would result in a significant
 More investigation is required by
reduction of production or major HSE
manufacturer & replacement in the 3-5
issues.
years.
 Replacement of the asset should be done
Combinations of the above will result with the
in the next 3 years.
required 5x5 risk matrix. For each equipment,
the risk report header will include crane type,
E 70
make, model, boom length, radius, running Oil Loading Terminal

hours,, etc). Oil loading terminal has an asset hierarchy
C) Regular operational Evaluation represented in table 13 below. Multiple
assessment are conducted based on the asset
 Operator Certification, understanding,
hierarchy. The Hoses and the Telemetry system,
training, (Safety Rules, Understanding Policy,
with available critical spares are following
etc)
routine replacement and not subject to condition
 Cabin (Load Chart, Radio, Lights, Levers & assessments. All other equipment follows own
Joystick) specific assessment methodology. The chain
 Procedure (Log Book, Load Test on Time, Op. follows corrosion thickness evaluation based on
check List Planning , Work Flow & allowed threshold following API RP2P using
Authorisation) ultrasound for corrosion thickness measurement.
 Crane Components PM’s including Inspection When it reaches a threshold; repair or
(Instruments, Structure, Rope, Winch/Gear, replacement action will be taken. The Hawser
Travel Motor, Breaks, Hooks, Electrical, follows oil loading hours in service before it is
Limit Switches) replaced. The service hours can’t be exceeded
 Deflection (Measurement against allowed and the whole system may be at risk of
Environment) disengaging which may result with accidents or
 Legislation matrix & Codes of Practice major leak.
Adherence (Load Testing & Standards
The valves, piping, pressure containment
Examination)
systems, winches, telemetry and instruments
 A manufacturer Condition Assessment of all
each follow its own category of assessment.
components is in place
Mooring and anchoring Ultrasound & Corrosion Growth
Pipeline End Manifold (PLEM) API99, API576
Floating Buoy Body & Turret Structural Assessment (RSR &

Corrosion Growth)
E 71
Tanker Mooring Hawser System Replace based on Elapsed Time
Floating hoses & Connections Replace based on Elapsed Time
Piping & Pressure Containment API581/580
Winching & Rigging System Lifting RP2D
Instruments & Telemetry Replace based on Critical Spares
Figure 13 Loading Terminal
The overall resultant is modelled in an event Pf( t) = Gff( t) Df ( t). FMS.

tree analysis based on the PoF of each. The Where Gff(t) is generic failure frequency,
formulation of standard probability for the Df(t) is the damage factor, and FMS is the
overall PoF will provide the total risk factor management systems factor.
and based on the asset structure – Fig 13. The Generic Failure Frequency is provided by
Consequence of failure is also determined the subject API for petrochemical industries
from the 5 level matrix similar to the and intended to be the failure frequency prior
machinery risk consequences. The final to any specific damage occurring from
method will come up with the 5x5 overall risk exposure to the operating environment. It is
assessment ranking. provided for several discrete hole sizes for
various types of topside equipment. Discrete
Topside Pressure Systems RA
hole sizes and associated failure frequency are
Topside pressure systems covers oil
introduced into the assessment to model
separators pressure vessels, associated piping,
release scenarios. API RBI uses four hole
oil tanks, gas scrubbers and stabilising
sizes to model the release scenarios covering
spheroids. Probability of failure as a function
a full range of events. The damage factor is
of time Pf(t) and inspection effectiveness is
applied on a component and damage
determined using a Generic Failure
mechanism specific basis.
Frequency, a Management Systems Factor
and Damage Factor for the applicable active
Damage Factors to evaluate the amount of
damage features as described in API 581. It is
damage that may be present as a function of
computed from:
time and the effectiveness of the inspection
E 72
activity to quantify that damage. It is considered based on the fluid properties and
determined based on the applicable damage operating conditions.
features relevant to the materials of For each discrete hole size, release rates are
construction and the process service, the asset calculated based on the phase of the fluid. The
physical condition and the inspection releases are then used in equations to
techniques used to quantify the damage. determine the flammable consequence.
Methods for determining damage factors are Probabilities of ignition, and other
provided in API581 Part 2 for the features probabilities event tree of the release types
such as thinning, linings, external corrosion, (i.e. continuous or instantaneous). The
stress, cracking, temperature stress, fatigue formula was developed to compute
and brittle factor. consequence areas; CA = a ⋅ X b
The variables a and b are provided in API581
Management Systems Factor FMS, is the tables for fluid release rates. The release rate
influence of the facility’s management system X is considered instantaneous as a result of a
on the mechanical integrity of the plant. This vessel or pipe rupture, when the mass is more
factor accounts for the probability that an than 4,536 kgs escapes in less than 3 minutes.
accumulating damage will be discovered on
The consequence of flammable areas are
time before loss of containment. This factor is
determined as a probability-weighted average
derived from the results of an evaluation of the
of the individual consequence areas calculated
facility’s control systems that affect plant risk.
for each release hole using four holes with
It is usually minimal if the control system
different sizes. The equation for probability
alarm management is in place to segregate
weighting of the flammable consequence
between alarm levels as compared to the
areas is given by
consequence of the failure to bring the
operator attention to serious situation. CA (flam) = ( ∑Individual. Gff
*CAi)/Total. Gff
Consequence of Failure methodologies are
Risk Analysis is conducted based on the
determined for release of fluids as a result of
Matrix of PoF and CoF (CAflam) calculations.
hole or rupture. Consequences from
flammable, toxic or explosive events, are The implemented procedure is Semi
Quantitative since the PoF is following the
E 73
formulas and computations as prescribed in cement is conducted by taking many concrete

API581. The Consequence of failure is based samples over periods of time. The sulphate
on the qualitative approach with ranking and chloride contents are analyzed to assess
similar to the referenced machinery matrix. the rate of penetration over time before they
Additionally, the condition of bulk valves and reach the reinforced metal. This penetration
instruments are assessed on pass/fail basis rate is applied to the defusing formula (Depth
since they are run to fail in most cases except = k (t)1/2 . It is used to calculate the remnant
for Pressure Safety valves and their related life t. K is the diffusion factor over time. The
instrumented loops (API576). remnant life along with the number of
anomalies are used in the risk ranking Table
Civil Works RA
below; (PoF is based on Remnant Life –RL
Foundations are normally composed of
and percent of faulty foundations need repair -
cement part and steel support part. Based on
FF):
BS 4027, the condition assessment for the
Risk Buildings Critical Non Critical
HH RL<x & anomalies RL<x & FF>yy% RL<x or FF>yy%
H RL<x RL<x FF>yy% RL<x or FF>yy%
M RL>x medium anomalies RL>x & FF<yy% RL>x & FF<yy%
L RL>x minor anomalies RL>x & FF<yy% RL>x & FF<yy%
LL RL>x & no Str. anomalies RL>x RL>x
E 74
Non Critical Structures are Concrete Support Once steel RL is assessed, the combined 2x2
for Instruments, Cable Tray, Anchor Blocks, matrix for steel and concrete is dominated
Lamp Posts, Access Platform and Structure by the highest risk ranked element in the final
Foundations. Critical Structures are classified
assessment based on the condition of the
based on their function to support plants and cement or the metal.
production facilities. The risk matrix is above:
Summary and Conclusions
Similarly the steel support that is used as Having addressed most of the assets
equipment racks, cable trays, access platform categories will enable the move to conduct the
or cross-over bridges will be subject to
risk assessment on the Plant level. The process
magnetic resonance to obtain the stress for this assessment will be based on bow-the
concentration on the metal. The Stress model and the event tree analysis using
Concentrations are analyzed to obtain the probabilities of the process systems, critical
gradients of stress and produce a comparison safety systems, safety barriers, foundations,
results for grade steel damage mechanism and structures along with business, social and HSE
remnant life references using; BSEN 10025, impacts that effects the company reputation in
ASCE SEI7-10, API571. the case of failure.
E 75
To have all this in one visualized model, and Acknowledgments

using the same Risk Matrix color codes, a user
ADMA-OPCO Management, Integrity
interface is designed with interactive plant
Division Management & IT Managements
layout map and drill down to key decisions.
UPES support and Internal and External
This user interface is designed to navigate
Guides
further to the details of the required
information in a simple manner that is easy to DNVGL
find the information, assessments and References

mitigation actions as described in this paper. 1. API 581, API RP 580 Recommended Practice for Risk-
Further hyperlinks lead to Risk Report, Plant Based Inspection, American Petroleum Institute,
data, 3D models with risks and Mitigation Washington, D.C., 2013
2. ADMA Civil Foundations Risk Assessment
Plans screens.
Methodologies based on Chloride and sulfate buildup,
Abu Dhabi, UAE 2007
E 76
3. OGP, Draft 116530-2, “Petroleum and natural gas 10. A practical risk assessment methodology for safety
industries – Well integrity – Part 2: Well integrity for critical train control systems, Chinnarao Mokkapati,
the operational phase”, November 2012. Ansaldo STS USA Inc., Union Switch & Signal
4. ADCO - Corporate Integrity Standard, “Guidelines Building, 1000 Technology Drive, Pittsburgh, PA
for Monitoring, Diagnosis and Management of 15219, 2009
Sustained Annulus Pressure (SAP) for ADCO Wells”. 11. The United Kingdom Offshore Oil and Gas Industry
2012 Association Limited (trading as Oil & Gas
5. ADMA-OPCO - Well Integrity Standard – Annulus UK),Guidance on the Conduct and Management of
Pressure Management”, Well Integrity standards for Operational Risk Assessment for UKCS Offshore Oil
ADMA Wells”., 2013 and Gas Operations, Issue 1, January 2012
6. Baker, W.E., P.A. Cox, P.S. Westine, J.J. Kulesz, and 12. OFCM, Directory of Atmospheric Transport and
R.A. Strelow, Explosion Hazards and Evaluation, New Diffusion Consequence Assessment Models (FC-I3-
York: Elsevier, 1983. 1999), published by the Office of the Federal
7. CCPS, Guidelines for Consequence Analysis of Coordinator for meteorological Services and
Chemical Releases, ISBN 0-8169-0786-2 published by Supporting Research
Center for Chemical Process Safety of the American 13. ADMA-OPCO Standards portal inclusive of BP,
Institute of Chemical Engineers, 1999. ADNOC, and a number of API Standards (RP-96-
8. ADMA-OPCO GDL-028, Guidelines for Evaluating Wells, 2Y-Structures, RP1110-Pipelines, RP2D-
the Critical Safety Systems, USEQA Business Unit, Cranes, RP14C-Safety Systems, RP688-Machinery,
2007. ABS, BS8010, OISD135, ANSIB31.4 for Oil terminals)
9. API, API 579-1/ASME FFS-1 2007 Fitness-For- 14. DNVGL SynegiPipeline system for pipelines integrity
Service, American Petroleum Institute, Washington, management, Methodology for pipeline risk
D.C., 2007 assessment, IP of DNVGL Norway.
E 77
An Empirical Study on Brand Positioning of Automotive Lubricants

in India
Dr Gautam Srivastava*, Dr Neeraj Anand**, Dr Arvind Kumar Jain***

*Assistant Professor, Accurate Institute of Advanced Management, Greater Noida.
**Sr. Associate Professor, University of Petroleum and Energy Studies, Dehradun.
*** Associate Professor, University of Petroleum and Energy Studies, Dehradun.
Abstract four wheeler segments. Further, reliability

This research paper focuses on the need of test has been conducted to test the reliability
brand positioning for automotive lubricant in of the important factors. The conclusion of
Indian market. The brand positioning of this study identifies the important factors for
automotive lubricants is about how a brand is brand positioning of automotive lubricants.
perceived by the consumers. The importance
and necessity of brand positioning of Key words
automotive lubricant come from the fact that PSUs, Perception, Reliability, Brand
customers are affected by powerful brands Positioning.
and trademark and prefer one brand to
another. This study represents an approach of Introduction
factor analysis to determine the important Global Lubricant Market
factors for brand positioning of automotive Global demand for lubricant oil is
lubricants. An empirical study has been approximately 45 million metric tones. Total
conducted in Delhi region to find out the global demand of automotive lubricant
perceptions of consumers towards the constitutes 53% of total lubricant which is
automotive lubricants. A survey has been approximately 24 million metric tones.
conducted with the help of structured Presently U.S.A. is the largest consumer of
questionnaires to determine the different lubricating oil in the world. The Position of
attributes responsible for brand positioning China and India is second and third
lubricant oil. Factor analysis has been done to respectively. According to John Miller
reduce the number of factors and identifying (2012) within 8 – 9 years China will surpass
only the important factors for brand the U.S.A in lube consumption. The reason
positioning of automotive lubricant of for behind this is that the automobile sector in the
E 78
U.S.A. has reached its saturation point, Lubricant Market in India

whereas in China and India the demand of India is the third largest lubricant market in
automobile is increasing continuously. The the world. Demand of Automotive lubricant
total demand of automotive lubricant in India oil in Indian market is increasing
is 60% of the total lubricant which is continuously. For the last two decades the
approximately 1.26 million metric tones. demand of automobile in India in
continuously increasing due to which the
40 36.2 demand of automotive lubricant is also
35
increasing. But the market shares of PSU’s
Percentage
30 21.9
25 16.4
20 automotive lubricant brands are continually
15
10 5.8 4.4 3.5 3.2
2.8 2.2 1.9 1.9
5 decreasing. Private automotive lubricant
0
Brazil
Others
Canada
China
Japan
Russia
U.K.
U.S.A.
India
Germany
South Korea
brands are continuously increasing their

market share by aggressive brand
positioning, whereas PSU’s brands are
Countries
lagging behind them. The Indian automotive
Figure 1: Worldwide Consumption of lubricants market is largely price sensitive
lubricant oil in 2013 and volume growth is stagnating due to long
(Source: Kline Blog, Henry Machkova, lasting lubricants. Braganza Nicole and
2013) Mehra Swati (2008) said that there are

generally two types of customers in the
Indian lubricant market. First are the quality
conscious customers and the second’s price
conscious customers. The Indian lubricant
market mainly classified into two types,
automotive lubricant and Industrial lubricant.
Automotive lubricant constitutes 65% of the
Indian market, whereas Industrial lubricant
Figure 2: Major Driven Factors of Indian constitutes only 35% of the Indian lubricant
Automotive Lubricant Market market. As per the global trends, the

automobile segment dominates the industry,
and, within the automobile industry, the
E 79
diesel engine lubricants form the major part Corporation (IOCL), Hindustan Petroleum
of the market. The market volumes of the Corporation (HPCL) and Bharat Petroleum
commercial vehicle segment have declined Corporation Limited (BPCL). Only Castrol is
because of an increase in the proportion of playing a major role in the Indian lubricant
new technology. The Indian lubricant market market other private players of oil and gas are
is continuously increasing so there is too also now participating in the production of
much opportunities for lube manufacturer in lubricant oil.
the Indian lube market. Lubricants marketing
should be done on the basis of segmented Brand Positioning
consumers. The Indian lubricant market is Brand Positioning is based on segmented
increasing due to increase in income level of target consumers. Unique Brand Positioning
Indian middle class. Due to the growth of can not be applying for all the consumer
Indian middle class the purchasing power of groups. The Different Brand Positioning
the middle class is increasing which enhance strategy should be adopted for different
the sales volume of automobile sector. The segment of the peoples. For determining a
increase in sales volume of automobile sector place of a particular brand in the market place
will increase the sales volume of lubricant it is essential to inform the target audience
oil). Indian commercial automotive segment about the benefits and advantages of your
represents more than half percent of India’s brand in comparison to other competitors.
total lubricant market. India’s lubricant Whenever a new brand launched in the
market analysis focuses on developments, market, consumers starts collecting
challenges, business opportunities, threats information about that brand. After getting
and competitive positioning. Total demand information consumer’s starts collecting
for finished lubricants in India is estimated at information that what extra benefits and
over 1,400 kilotonnes in 2009. The advantages, they will get in a particular brand
commercial, automotive segment represents in comparison to other competitors, on the
about 53% of the total lubricants market, basis of that information, consumer create a
followed by the industrial segment at 34% perception towards a brand is a sufficient
and the consumer automotive segment at output of brand positioning strategies. The
13%. The Indian lubricant market is consumers must prefer that brand. Brand
dominated by public sector unit Indian Oil Positioning is one of the most complex
E 80
concepts of the marketing mix. Brand position of that particular brand and the
Positioning is something that takes place in position of all the other brands on the mental
the mind of the consumers about a particular map of the consumers represent the
Brand. Brand Positioning is based on associations of the brand to the consumers.
company versus consumers’ perspective. A The perceived positioning is dependent on
literature review has been done to identify the perception of each and individual target
that whether a brand positioning is consumer consumers because consumers interpret the
perspective or a market perspective. From the same information in a different way. The
company perspective point of view brand associations of consumers with a brand can
positioning is the process of identifying also be affected by some external functions.
target consumers and creates a positive Some external are media, promotion activity,
perception of the brand in the mind of the competitors, word of mouth, etc. Brand
consumers. The company's desire is to create Positioning is based on the perceptions of the
an association in the mind of the consumers. consumers.
From the consumers' point of view brand
positioning is a process that how the Data Analysis and Findings
consumer perceives to a particular Brand. Factor Analysis for consumers
The brand positioning is a complex Factor analysis has been conducted to
combination of feelings, thoughts, determine the important factors for brand
Impressions and beliefs that consumers map positioning of automotive lubricants for four
in their mind. Perceived positioning is a set wheelers consumers. The total numbers of
of association that consumers feel about the identified attributes are 16. So researcher
brand. A brand positioning is a concept of used the factor analysis to identify the
relativity in consumer's mind that target important factors.
consumers assess that have a particular brand
is similar or different from the other Kiser Meyer Olkin’s Test for consumers
competitors. Imagine that every consumer Kaiser Meyer Olkin’s test has been done to
has a mental map of the different category of check the sampling adequacy.
the products. The location of a particular
brand in the mental map of the consumers
relative to the competitors represent the
E 81
Table 1: KMO and Bartlett's Test for four

wheeler segment consumers The value of Kaiser Meyer Olkin is greater
Kaiser-Meyer-Olkin Measure of than 0.5 i.e. 0.713 so it is acceptable. The
.722
Sampling Adequacy. significance level of Barlett’s Test is .000. It
Approx.
2211.303 means that R- matrix is not an identical
Bartlett's Test of Chi-Square
matrix and there are some relationships
Sphericity Df 120
between different variables
Sig. .000
Component Matrix for consumers

Table 2: Component Matrix for consumers
Component
1 2 3 4 5
Price 0.188 0.053 0.152 0.74 0.044
Packaging 0.238 0.371 0.626 -0.316 0.06
Advertising -0.112 0.374 0.656 -0.13 -0.006
Purchasing -0.064 -0.09 0.408 0.589 0.014

Location
Availability 0.18 0.22 0.221 0.611 0.098
Superiority 0.474 0.628 -0.361 -0.013 -0.145
Promotion 0.011 0.391 0.689 -0.213 0.044
Brand Image 0.792 -0.328 0.087 -0.038 0.117
Novelty 0.727 -0.5 0.112 -0.142 -0.011

Reliability 0.45 0.664 -0.322 0.076 -0.144
Worthiness 0.76 -0.275 0.052 0.037 -0.214
Performance 0.857 -0.262 0.125 -0.013 0.019
E 82
Quality 0.476 0.633 -0.133 -0.109 -0.118

Experience 0.14 0.445 -0.227 0.15 0.553
Extra 0.16 -0.074 0.005 -0.186 0.704

Benefits
Durability 0.058 0.05 -0.186 -0.006 0.608
The above matrix contains the loadings of requested that all the loadings less than 0.5 be
each variable onto each factor. By default suppressed in the output. At this stage SPSS
SPSS displays all loadings; however, we has extracted five factors.
Identified factors for four wheeler segment consumers.

Table 3: Identified Factors
Facto Factor Factor
Variables
rs Loading Name
Brand
0.802
Image
Factor Worthiness 0.845 Trust

1 worthiness
Novelty 0.845
Performanc
0.707
e
Quality 0.756
Factor Quality &
Superiority 0.686
2 Reliability
Reliability 0.645
Advertising 0.702
Factor Promotiona
3 Packaging 0.712 l Tools
Promotion 0.707
Price 0.686
Availabilit
Factor 0.711 Accessibilit
y
4 y
Purchasing
0.653
Location
Past
Factor
Experience 0.665 Purchase
5
Experience
E 83
Extra
0.801
Benefits
Durability 0.701
Reliability Test for four wheeler segment test the reliability of indentified factors for
consumers: Reliability test has been done to four wheeler segment consumers
.Table 4: Reliability Test for four wheeler segment consumers

Factors Variables Cronbach Factor Name Cronbach
α α
Factor Brand 0.821 Trustworthiness 0.782
1 Image
Worthiness 0.832
Novelty 0.783
Performance 0.712
Factor Quality 0.845 Quality & 0.758
2 Superiority 0.833 Reliability
Reliability 0.754
Factor Advertising 0.889 Promotional 0.825
3 Packaging 0.653 Tools
Promotion 0.789
Factor Price 0.789 Accessibility
4 Availability 0.845 0.802
Purchasing 0.812
Location
Factor Experience 0.546 Past Purchase
5 Extra 0.686 Experience 0.606
Benefits
Durability 0.702
E 84
Table 5: Reliability Processing Summary for International Journal of Business and

Management, Vol 5, 100-108.
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2. Dr. Ananad N, Dr. Jain A.K., Srivastava
N %
Gautam (2014), Important factors for brand
Valid 162 74.05
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Table 6: Reliability Statistics for consumer
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Alpha Based on
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E 87
Asset Integrity Management of Petrochemical Process Plant in

Indian Downstream Gas Industry
R S Velmurugan*, Dr Tarun Dhingra**

*Chief Manager, GAIL India Limited, Delhi, India
**Professor & Assistant Dean, Research, College of Management and Economic studies, UPES
Abstract company in India. A Conceptual lens with

In downstream gas industry, the operation initial conceptual constructs which forms
process of a petrochemicals process plant the basis for maintenance strategy
is continuous and any abrupt stop of the selection and maintenance practices of a
process causes delay and reduction in firm has been developed from the literature
output. Although organization follows survey. Data were collected from the
various asset maintenance strategies and Maintenance Managers of the
practices, the cost and impact of sudden petrochemicals plant by conducting semi-
failure of equipment is found to be huge. structured interviews using the Case study
The implications in production and protocol. Data Analysis has been carried
maintenance suggest the need to change out with the Textual Analysis and network
the focus of maintenance polices & diagrams formulated with the necessary
maintenance methodology adopted. The quotation and frequency analysis. The
research problem is that how the outcome of this research study is a process
maintenance managers in petrochemicals framework for maintenance strategies &
process plant in India formulate the practices which explains the gaps between
maintenance strategies and how they the existing theory and practice in
practice maintenance strategies?. The maintenance strategies formulation &
purpose of this research is to understand implementation. The process framework
and model the existing maintenance provided will help maintenance managers
strategy formulation & maintenance to asses, develop & select suitable
practices of a petrochemical process plant maintenance strategy for their firm in the
in India. This research employs the case industry.
study based qualitative research method
for the study of maintenance practices in Keywords
one of the business vertical petrochemical Asset Integrity Management;
process plant of a large gas utility Petrochemicals; Maintenance Strategy
E 88
Introduction maintenance costs are wasted (Mobley,

Industries are facing a lot of challenges 2002). Further, the selection of an apt
such as optimization of operation & maintenance strategy is important as well
maintenance function due to the continual as complex in maintenance management
evolving world of technologies, global and the output of maintenance is hard to
competitiveness, environmental and safety measure and quantify (Chris and Wang,
requirements. The concern towards total 2001).
quality and profitability of an organization
are crucial factors in the business. It is In general, plant maintenance function is
evident that industrial maintenance to keep any kind of equipment or
function has gained high recognition over component in a working order to prevent
the last few decades in various industries. failures so as to perform its intended
Consequently, over the years, many function, ensuring safety, as well as
different strategies have been developed to protecting the environment (Al-Najjar et
support maintenance management al., 2001; Henriques and Sadorsky, 1999).
implementation in the industry (Swanson, Ensuring cost effective plant operation
2003). With increasing automation and such as efficient & quality production,
mechanization, production processes in equipment availability and employee &
any industry is becoming highly sensitive environmental safety depends on how the
to equipment and people. Further, the role organizations are able to effectively
of equipment maintenance in controlling integrate maintenance function with other
quality, quantity and reducing costs is functions in the organization. Therefore,
more evident and important than ever (Jay for organization to survive in the present
et al., 2006). industrial environment, healthiness of
equipment with sustainable operations
The cost associated with the maintenance should be ensured (Ben-daya and Duffuaa,
has increased constantly over the decades. 1995, Al-Najjar, 2001; Bennett, 2006).
In the present scenario, depending on the Maintenance is not just ensuring
type of industry, about 15-70% of healthiness of equipment in a facility but it
production costs are attributed towards also plays a crucial role in achieving
maintenance (Ilangkumaran and Kumaran, organization’s goals and objectives with
2012). Unfortunately, due to the optimum maintenance cost and maximum
uncertainties and inefficiencies involved in production. Traditionally, maintenance
maintenance planning, about one third of management was dealt with the short term
E 89
issues like resources, cost, man power etc. selected. All these activities are required to
Recent past, maintenance management has be clearly integrated and to be monitored
changed its concerns towards the holistically. Still there seems to be a less
consideration of long-term goals like interest among the maintenance
competitive, sustainability and strategy practitioners for a structured maintenance
(Duffuaa et al., 2002). Therefore, strategy formulation and implementation.
maintenance management needs to be The reasons may be,
viewed in a strategic perspective.  Maintenance
approaches/methods/concepts are
Maintenance strategy is a systematic resource demanding so that less
approach to upkeep the facilities and suitable for the maintenance
equipment and it may vary from facility to function in the industry, especially
facility. It involves identification, in SME organizations.
researching and execution of many repairs,  Organizations are reluctant to
replace and inspect decisions (Kelly, 1997) experiment with the new
and is concerned with formulating the best maintenance methods developed
life plan for each unit of the plant, in such as TPM, RCM, etc.
coordination with production and other
functions concerned. It describes what Despite implementation of best
events (e.g. failure, passing of time, maintenance approaches/concepts/
condition) trigger what type of strategies, maintenance managers face the
maintenance action (inspection, repair, or equipment failures and plants shutdowns
replacement). which leads to stoppage of
operation/production. Hence, before
Based on the above background, adopting any maintenance strategy,
maintenance function needs to be viewed maintenance managers must change the
as a strategic function in an organization. way they think about failures and
Therefore, there is a scope of improvement understand its diversity. The implications
in the formulation of asset integrity in production and maintenance suggest the
maintenance strategies for the need to change the focus of maintenance
organization, selection of particular polices & maintenance methodology
maintenance strategy of the specific adopted. Therefore, there is an immense
equipment or process and effective requirement of study on maintenance
implementation of maintenance strategies
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strategy formulation & selection and its Business Problem

impact in maintenance function from the  Production/Operation process is
experiences of maintenance mangers in the continuous in petrochemical
industry. Such kind of study will definitely process plant and any abrupt stop
be useful to understand the gap between of whole production process cause
the common maintenance strategies delay and reduction in output
studied and proposed in the literatures and  Although Organization follows
maintenance strategies being actually various maintenance strategies, the
adopted and practiced by maintenance cost and impact (equipment safety,
managers in the industry. upstream supplier issues,
downstream customer issues) of
It is also evident that industrial sudden failure of equipment was
maintenance function has gained high found to be huge
recognition over the last few decades and
same is case with natural gas industry. For example, gas processing plant of gas
Consequently, over the years, many utility company must produce LPG at least
different strategies have developed to 350 days per annum considering the 15
support maintenance management days scheduled maintenance. However,
implementation in natural gas industry. industry data shows that production is
With increasing automation and getting affected for at least 20-25 days due
mechanization in natural to scheduled plant shutdown maintenance
gas/petrochemical process, production and also due to emergency breakdown
processes are becoming highly sensitive to maintenance. Therefore, the plant runs for
machines and people. Consequently, the 340 days approx. If it is possible to reduce
role of equipment maintenance in maintenance by a day, company can profit
controlling quality, quantity and reducing few crore of rupees. It shows that there has
costs is more evident and important than been a need to understand the holistic view
ever. The natural gas industry is also of maintenance management in various
characterized by expensive specialized business verticals of a large gas utility
equipment and stringent environmental company in the gas industry. Especially, in
consideration. A process plant of a large an Indian environment this kind of study
gas utility company in India has been will contribute much to the industry.
chosen for the study since it is having Therefore, this research fills the theoretical
significant market share in India. gap by developing the multi level
E 91
framework for maintenance strategies to understand the strategic level of

development & maintenance practices. maintenance and the maintenance
management’s role. The main objective of
A detailed literature review was carried out the literature review was to create a strong
to understand the processes of foundation of which the result is to be
maintenance strategy formulation, based upon. Therefore, maintenance
selection of maintenance strategies, and strategy is first conceptualized from
implementation of maintenance strategy in existing research, and then a conceptual
various industries and the same is framework for maintenance strategy
presented in next section. formulation, selection and implementation
was developed. Initial Conceptual
Literature Review Construct and sub-constructs which forms
A lot of literature is available from various basis for maintenance strategy
resources in the field of maintenance formulation, selection, and implementation
management. In this literature review, have also been identified from the
published research papers related to literature review. The literatures have been
maintenance strategy, maintenance categorized into key themes and the
management, maintenance practices, inferences from these literatures have also
performance in maintenance management, been discussed in the Table 1.
e-maintenance, maintenance decision
support system etc. were studied in order
Table 1- Categorization of literature based on Key Themes

S. No. Categorization of Select Author(s) Inferences
literatures based on
Key Themes
1 Maintenance Strategy Gallimore and Penlesky,  Maintenance Strategy is not well
1988; Pintelon and Gelders, defined in the literatures.
1992; Dekker, 1996; Kelly, Maintenance Strategy term is used
1997; Mckone and Elliott, interchangeably with Maintenance
1998; Sherwin, 2000; Policy, Maintenance Approach etc.
Swanson, 2001; Bevilacqua  Maintenance Strategy is a
and Braglia, 2000; Marquz systematic approach to upkeep the
and Gupta, 2006 asset/facility.
 Authors have categorized
E 92
maintenance strategies as Time

Based Maintenance (TBM),
Condition Based Maintenance
(CBM), etc. and these are also
mentioned as Maintenance
Policies/ Maintenance Approaches
in the published papers.
2 Formulation of McAlister, 1999;  Three (3) frameworks related to
Maintenance Strategy Waeyenbergh and Pintelon, maintenance strategy formulation
2002; Kelly, 2006; brought out from the literatures.
Campbell and Reyes-  A key point in formulation
Picknell, 2006; Salonen, maintenance strategy is to link the
2011 maintenance strategy to operational
& business strategies.
 While formulating the maintenance
strategies, the same has to be
assessed & evaluated based on
major system & organizational
elements.
 Maintenance performance
measures provide key inputs in
formulation of maintenance
strategies.
3 Maintenance Strategy Dekker, 1996; Bevilacqua  Selection of maintenance strategies
Selection & Braglia, 2000; Kodali is the selection among the
and Chandra, 2001 maintenance approaches such as
Bertolini & Bravilacqua, TBM, CBM, etc.
2005; Lin et al., 2009  Selection of maintenance strategy
is treated by authors’ as Multiple
Criteria Decision Making (MCDM)
problem. The same was solved
with the techniques AHP, FAHP,
VIKOR, etc.
4 Implementation of Campbell and Reynes-  Implementation of maintenance
Maintenance Strategy Picknell, 2006; Eti M.C., strategies depends on various
2006 resources such manpower, material
etc.
 Few literatures suggest the Plant-
level Maintenance Decision
E 93
Support System (PMDSS) for

implementation of suitable
maintenance methodology.
5 Maintenance Albert et al., 1999; Tsang  Key Performance Indicators (KPIs)
Performance 1999; Swanson, 2001; are helpful in measuring
Kutucuoglu et al., 2001; maintenance performance gaps.
Visser and Pretorious,  Balance Scored Card (BSC)
2003; Weber and Thomas, approach helps organizations to
2006; Partida and translate the business strategies into
Chattopadhyay, 2007; operational strategies.
Parida and Uday, 2009;  Benchmarking is integral part of
Muchiri et al., 2011 maintenance performance
measurement.
6 Maintenance Jayabalan V,  Implementation of Preventive/
Approaches/Tactics/P DipakChaudhuri (1992); Predictive Maintenance strategy
olicies David and Shahram, leads to improvement in
(1993); Carnero, M C maintenance function such as
(2006); Ling Wang, Jian reduced maintenance cost,
Chu and Jun Wu increased equipment’s Reliability.
(2006);Gokiene, Ruta  Corrective maintenance costs
(2010); Sami El-ferek, become higher than the preventive
Mohammed Ben-daya maintenance costs in a long term
(2010) ; Jin Z, Li L, Ni J period.
(2009)
7 Development of Lin Li, SaumilAmbani, Jun  Decision Support System models
Maintenance Ni (2009); Rolando prove that the implementation of
Decision Support Quintana, Mark T. Leung, J suitable maintenance methodology
Systems (MDSS) for Rene Villalobos, Michael helps in improving maintenance
selection of Optimal Graul (2009); Ashayeri J., function & optimize the
maintenance strategy Teelen A., SelenW. (1996); operational/ maintenance costs.
Knezevic J., (1994)  Reliability assessment, risk levels
and failure management in
maintenance can be effectively
handled with the help of models
using tools such as fuzzy
Bayesian methods, fuzzy
modelling, Analytical Hierarchy
Processing etc.
8 E-maintenance & IT Marco Machi, Marco  Maintenance Environment
tools/software for Garetti (2006); Muller, responds to the IT environment &
E 94
maintenance strategy Alexander; Marquez, implementation of e-maintenance

selection & Adolfo Crespo, & Lung, concepts like CMMS helps in
implementation Benoit (2007); strategic maintenance planning,
Jay Lee, Jun Ni, Dragan scheduling and work force
Djurdjanovic, Hai Qiu, coordination.
Haitao Liao (2006); Laura
Swanson (2003); Raouf et
al. (1993); Elliot and
Tobias, (2005)
9 Impact of Pintelon and Gelders  Maintenance decision making &

Maintenance (1992); M C Eti, S O T maintenance performance depends
Policies, Ogaji, S D Probert (2006); on the maintenance policy &
Maintenance Culture Hongzhou wang (2001); maintenance culture of the
in maintenance Michael, Kwasi, and Jack organization.
strategy (2000); Nima Safaei,  Customization of maintenance
implementation DraganBanjevic, Andrew K organization according to current
S Jardine 2010) business strategies helps
organization for successful
maintenance strategy
implementation.
In early literatures, several maintenance Pintelon, 2002). Further, they points out
approaches i.e., strategies and concepts, critical success factors such as
have been discussed by various authors maintenance personnel must have through
(Dekker, 1996; Moubray, 1997; Mckone knowledge to prevent failures in early
and Elliott, 1998; Sherwin, 2000; Swanson stages, management skills including
2001). Maintenance Tactics or Approaches planning, human resource management
are the activities required to implement the and task management, ability to exploit
strategy. This deals with the management maintenance history trends and
processes, human resource, and physical opportunities.
asset infrastructure (Campbell and Reyes-
Picknell, 2006). The maintenance strategy Maintenance Management concepts have
is to create a direction of how to to be reviewed with perspectives of
accomplish the maintenance objectives business activities such as Operational,
such as availability, reliability with a Tactical and Strategic. Therefore,
structured approach (Waeyenbergh and maintenance strategies are the methods of
E 95
transforming business objectives into managers in the organization. Every

maintenance objectives. A maintenance organization has its own challenges and
plan can be developed by identifying the face different problem depends on its
current potential gaps in maintenance maintenance philosophy. Further,
performance (Marquez and Gupta, 2006). organization puts best efforts to follow
maintenance standards but it is difficult
To select/choose the maintenance due to the environment exists in
strategies for different equipment or maintenance function (Alsyouf, 2007).
system for particular industry, various
models have been developed by Further, from the literatures initial
researchers in this field. Selection of conceptual constructs and sub-constructs
maintenance strategies for particular corresponding to each conceptual construct
equipment/system in any industry is a have also been identified which contribute
typical Multiple Criteria Decision Making to maintenance strategy formulation,
(MCDM) problem (Ahmadi et al., 2010). selection and implementation and also
To deal with such kind of problem authors these constructs can also be used to assess
used Analytic Hierarchy Process (AHP), the maintenance strategy implementation.
Fuzzy Analytic Hierarchy Process (FAHP) The list of constructs & sub-construct is
etc. (Bevilacqua and Braglia, 2000; Kodali shown in Table 2. Corresponding
and Chandra, 2001; Bertolini and literatures/authors along with inferences
Bevilacqua, 2005; Ling et al., 2006; Lin, from literatures for all these initial
Ambani, and Jun, 2009; Rolando et al., conceptual constructs are presented in
2009). Table 3.
Implementation of maintenance strategy is

the great challenge for the maintenance
E 96
Table 2 - Initial Conceptual Constructs & Sub-Constructs identified from literatures

S No. Conceptual Constructs Sub-Constructs
1 Maintenance Tactics Total maintenance man hours devoted to emergencies/breakdown
maintenance; Use of Condition Based Maintenance (CBM)/ Predictive
Maintenance (Pd.M); CBM is favoured over Time Based Maintenance
(TBM); Total maintenance hours devoted to Predictive Maintenance (PdM)/
Preventive Maintenance (PM); Compliance of PM Schedules; OEM (Original
Equipment Manufacturer) Recommendations for an equipment regarding PM;
Use of formal Reliability Based Maintenance (RBM); Use of Total Productive
Maintenance (TPM).
2 Reliability Analysis Documentation of Equipment History; Equipment Criticality; Root Cause
Analysis (RCA)/Incident Analysis (IA); Mean Time Between Failures
(MTBF); Value Risk Study of maintenance program; Reliability statistics of
equipment/assets; Reliability Centred Maintenance (RCM) based analysis.
3 Performance Measures/ Labour and material cost; Maintenance Performance Measures; Key
Benchmarking Performance Indicators; Downtime Records; Training man hours of
maintenance staff; Internal Norms & Industry Norms; Benchmarking
measures & targets
4 Planning & Scheduling Plant Equipment Register; Standard written work order; Availability of PM
Schedules; Priorities of work order ; Availability of Work schedule for a
week ahead; Shutdown Maintenance Schedule; Measurement of work
backlog; Long Term Plans to forecast major shutdown/maintenance work
5 Materials Management Spares availability; Re-ordering of consumables/ identified spares; Inventory

analysis; Emergency purchase of spares; Average Inventory Turnover;
Availability of Stores; Inventory control through computerized system ;
Integration of Inventory Control with maintenance planning
6 Organization/Human Maintenance staff level; Maintenance organization; Responsibility of first line
Resources supervisors; Adequacy of support staff; Regular Technical training;
Apprenticeship program; Deployment of Contractors
7 Employee Empowerment Multi-skilled Trade People; Operators Based Maintenance; Regular discussion
with the staff by supervisors; Self-directed work teams; Minor modifications
done by maintenance teams; Partnership with key suppliers/contractors
8 Information Technology Availability of computerized system for maintenance management ;
Availability of computerized system for materials management; Integration of
maintenance management & materials management modules; Scheduling of
major Shutdown using project management system; CBM supported with
automated programs for data analysis; Expert systems for diagnosis
9 Maintenance Policies/ Maintenance mission & objectives; Long term maintenance plans integrated
E 97
Budget with business plans; Maintenance Policies; Maintenance budget
Table 3 - Initial Conceptual Constructs and literature inferences

Authors/ References Constructs Context Inference
(Country/Industry)
Jonsson, Patrik (1999); Maintenance Manufacturing firms from  Maintenance Tactics
Carnero, M C (2006); Tactics Swedish Industry; (MT) is the techniques
Ling, Wang, Chu, Jian Petrochemical Plant/food that guide how
(2006); Mahdi, Bashiri, industry in Spain ; Power maintenance activities
Hossein, Badri, & plant in China; Mexico based are implemented.
Hossein, Taha Hejazi company; Automobile  The right approach to
(2010) ; Rolando, Industry; Manufacturing determining
Quintana, Mark, T. Industry; Textile Industry; maintenance tactics is
Leung, Rene, Maritime Operations; Indian to better understand
Villalobos J, & Michael Manufacturing Industry; exactly how
Graul (2009); Pophaley, Batch Process Industry; equipment failed.
Mahesh, Vyas, R. K Battery Manufacturing Then, based on these
(2010); Jafari A, Industry understanding of
Jafarian M, Zareei, A, failure modes, what
& Zaerpour F (2008); the effects and
Chris k. Mechefske, & consequences of the
Zheng Wang (2001) failure would be and
;Ilangkumaran, M. hence determine the
&Kumaran, S (2012); most appropriate
Chitra (2003); Mokashi maintenance tactics to
A. J., Wang J., & manage those failure
Vermar A. K. (2002); consequences.
Gokiene, Ruta (2010);  The maintenance
Seth ,Dinesh, tactics are methods
&Tripathi, Deepak which decide an
(2006); Sami El-ferek, appropriate
& Mohammed Ben- maintenance strategy
daya (2010); Randall, for a firm in an
G. Wilmeth, & Usrey, industry.
Michael W (2000).
Bevilacqua, M; Braglia, Reliability Italian Refrigeration  Reliability can be

M (2000) ; Wang , Analysis Manufacturing firm; Single defined as the
Hongzhou unit & Multi unit systems; probability that a
E 98
(2001);Nima, Safaei, Cellular Manufacturing given item will

Dragan, Banjevic, & Industry; Automobile perform its intended
Andrew, K. S. Jardine Industry; Power Industry; function for a given
(2010); Li ,Lin, Ambani Chemical Processing plant period of time under a
,Saumil, & Ni, Jun given set of
(2009); Jayabalan, V., conditions.
&Chaudhuri, Dipak  Reliability analysis is
(1992); Jafari A, to identify failures,
Jafarian M, Zareei, A, root cause of the
& Zaerpour F (2008); failures and
Chitra (2003); Liu, Yu maintenance issues
Yan, feng, Li, H., related to these
Huang Z., Zuo, M.J., & failures.
Sun, Z (2010); Nguyen,  Reliability Analysis
D.Q., Brammer, C., plays a crucial role in
&Bagajewicz, M (2008) maintenance strategy
formulation, selection
& implementation of
the strategies into
practices.
Albert et al. (1999); Performance Automobile Industry; e-  Maintenance

(Kutucuoglu et al., Measures maintenance; US performance measures
2001); Li ,Lin, Ambani Manufacturing industries; reflect achievement
,Saumil, & Ni, Jun Aviation Industry and progress in
(2009); Marco Machi,& meeting an agreed
Marco Garetti (2006); maintenance
Swanson, Laura (2001); benchmark.
Gokiene, Ruta (2010);  In measuring
Ahmadi, A., Gupta, S., maintenance
Karim, R., &Uday performance, it is
Kumar (2010) concerned not only
with doing good
maintenance job. It is
also concerned that the
maintenance job
successfully removes
risk of failure of plant
and equipment.
 Formulation &
E 99
Selection of
Maintenance strategy
based on the factors of
maintenance
performance.
Noemi & William Planning & Oil Refinery; Automobile  The objectives of
(1994); Bertolinia, Scheduling Industry; Manufacturing planning & scheduling
Massimo &Bevilacqua Industry; Belgian Process in maintenance are
Maurizio (2005); Industry; Textile Industry; minimizing the idle
Rolando, Quintana, Belgium time of maintenance
Mark, T. Leung, Rene, Industry/Manufacturing workers, maximizing
Villalobos J, & Michael companies; Chemical the efficient use of
Graul (2009); Pophaley, Processing Plant; Batch work time, material,
Mahesh, Vyas, R. K process industry; Shipping and equipment &
(2010); Ashayeri, J., Industry; Aviation Industry maintaining the
Teelen, A., &Selen, W. operating equipment at
(1996); Jin Z, Li L, & a responsive level to
Ni J (2009); the need of production
Ilangkumaran, M. in terms of delivery
&Kumaran, S (2012); schedule and quality.
Peter, N., Muchiri,  Planning & scheduling
LilianePintelon, Harry are the key activities
Martin, & Anne Marie of any maintenance
De Meyer (2010); strategy. Therefore,
Nguyen, D.Q., formulation of
Brammer, C., maintenance strategy
&Bagajewicz, M. depends on this
(2008); Sami El-ferek, function.
& Mohammed Ben-
daya (2010); Verma,
A.K., & Suresh, P. G.
(2007); Ahmadi,A.,
Gupta,S., Karim, R.,
&Uday Kumar (2010)
Carnero, M C (2006) ; Materials Petrochemical Plant/food  Materials management
Garg ,Amik, & Management industry in Spain; is the process of
Desmukh S. G (2006); Telecommunication planning, organizing
Jafari A, Jafarian M, manufacturing industry; and controlling of the
Zareei, A, & Zaerpour F Manufacturing Industry; procurement and
E 100
(2008); Nguyen, D.Q., Chemical Processing Plant availability of spare

Brammer, C., parts.
&Bagajewicz, M.  In proactive
(2008) maintenance
environment, while
fire fighting and
panics are much rarer,
the same fast speed of
response and repair is
often required when a
critical item goes
down. Again, spares
availability is top
priority.
 Non-availability of
material may delay the
executing of
maintenance strategy.
Therefore, material
management is an
integral part of
development of
maintenance strategy.
John and Amrik Organization/ Telecommunication  In order to meet the

(1989), Garg ,Amik, Human manufacturing industry; changing corporate
and Desmukh S. G Resources Nigerian Industry; Spanish philosophy and
(2006); Eti, M. C., Manufacturing Industry; manufacturing
Ogaji, S. O. T., and Nigerian Power Industry strategy, the
Probert, S.D. (2006); outsourcing of
Marquez , Adolfo maintenance jobs/
Crespo, and Gupta activities can be
,Jatinder N D (2005); adopted by an
Eti, M. C., Ogaji, S. O. organization.
T., and Probert, S.D.  The outsourcing
(2006) strategy provides
flexibility in the
maintenance
organization so that
there is no need to
E 101
create fixed assets

/infrastructure.
Therefore, HR
function plays
inclusive role in
formulation of
maintenance strategy,
selection and
implementation of
in a firm.
Campbell,, John D., Employee General  Empowerment of
Andrew, K. S. Jardine, Empowerment employee helps to take
& Marshall (2001); Eti, faster decision during
M. C., Ogaji, S. O. T., performing
& Probert, S.D. (2006); maintenance and to
Wireman T (2010) manage emergency
maintenance
Ling,Wang, Chu, Jian, Information Power plant in China;  The improvements in
& Wu, Jun (2006); Technology Spanish manufacturing work processes are
Muller, Alexander, & Industry; Prognostic tool like such as methods to
Marquez, Adolfo watchdog agent; Primary perform work,
Crespo, &LungBenoit metals; a fabricated metal communication about
(2007); Marquez , products; industrial & metal work, decision making
Adolfo Crespo, & working; precision process and
Gupta , Jatinder N D instruments; chemical & food monitoring of work
(2005); Jay, Lee , Ni, processing (US Industries) activities by
Jun Dragan, employees. This
Djurdjanovic, Hai Qiu, improvement in work
& Haitao Liao (2006); process can be
Swanson, Laura (2003); achieved by
Raouf et al. (1993), Information
Elliot and Tobias, Technology.
(2005)  IT can lead to higher
work productivity,
machine availability,
maintenance personnel
effectiveness etc.
Therefore, IT also
impact maintenance
E 102
decision making such

as formulation of
and this helps to
optimize the
maintenance cost and
the equipment/asset
reliability.
Wang , Hongzhou Maintenance Single unit & Multi unit  A well formulated
(2001); Carnero, M C Policies/ systems; Petrochemical maintenance strategies
(2006); Garg ,Amik, & Maintenance Plant/food industry in Spain; and practices
Desmukh S. G (2006); Budget Telecommunication supported with the
Pintelon, L.M. & manufacturing industry maintenance policies
Gelders, L.F. (1992); and maintenance
Michael, Kwasi, and culture in an
Jack (2000) organization plays a
critical role in
maintenance function.
Therefore, this
function impacts the
implementation of
maintenance
strategies.
to select the best among the maintenance
Maintenance Strategy related frameworks strategy methods/approaches formulated? ;
have been discussed by various authors in How to optimize among the selected
published literatures (McAllister et al., maintenance strategy methods/approaches?
1999; Kelly, 2006; Salonen, 2011; ; How to measure the impact on
Pintelon and Gelders, 2002; Eti M C et al., maintenance function after implementing
2006; Muchiri et al., 2011; Pintelon and the specific maintenance strategy? Even
Parodi, 2008; Umar A Turki, 2011). A these aspects are discussed specifically in
common thread in all these frameworks is the framework the same is not discussed in
alignment between business strategies and a holistic manner. Based on literature
maintenance strategies. Few gaps in these study on maintenance strategy
frameworks are what are the outcomes of frameworks, from existing available
maintenance strategy formulation?; How theories a conceptual framework
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developed for maintenance strategies & transportation/processing operations and

maintenance practices in maintenance how they practice these formulated
function. A conceptual lens (framework) is maintenance strategies?
shown in Figure 1.
Research Question (RQ)
How the petrochemical process plant is
planning and executing its maintenance
strategy & practices to ensure smooth
operation process in the company’s
business verticals such as petrochemicals
& pipeline systems (NG transmission) and
why the specific maintenance strategy has
been selected for a particular operation
Figure 1 – Conceptual Lens for
process/equipment?
maintenance strategies & practices in
maintenance function
Objective
The specific objective of this research
The detailed literature survey also found
study is to describe and provide framework
few gaps in literatures such as maintenance
of the existing asset integrity maintenance
processes describing formulation of
strategies & maintenance practices of a
maintenance strategies & maintenance
petrochemical process plant in India. With
practices related to Indian gas utility
above Research Question and objective as
company is not available; using multiple
a basis for this research study, the next
maintenance methods for a gas utility
section describes about research
company is also found no references, and
methodology used in this research study
lacking in literature related to study of tacit
by presenting case study design, sampling
knowledge & implicit knowledge available
and data collection methods, data analysis
with the maintenance managers.
strategy, results from data analysis and
summary of findings.
Problem Statement
How the maintenance managers of a
petrochemical process plant in a large gas
utility company in India formulate the
maintenance strategies for their gas
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Research Methodology Case: Asset Integrity Management

In a maintenance function of a gas utility strategy & practices for Petrochemical
company in India, the tacit and explicit processing plant
knowledge in the field of best practices in Unit of Analysis: Plant
maintenance management are available Level of Analysis for the case study
with maintenance managers & engineers 1) Company level (at corporate)
working in the company. Thus, the need is 2) Unit/Department level
to gather an in-depth understanding of this (Compressor Stations/Gas
knowledge in formulation of maintenance Terminals/RR Stations/SV
strategy & practices in the gas utility Stations)
company. Therefore, qualitative research 3) Individual (Sectional
method will be a suitable method in HODs/Supervisory level/Executing
capturing and reusing tacit and explicit level)
knowledge in the field of best practices in The case study method focused on a asset
maintenance management at the company maintenance strategy selection and
studied. practices on a plant i.e., petrochemicals as
The purpose of this research work is to a single holistic unit of analysis. The plant
understand & describe the formulation of is a having an Operation & Maintenance
asset maintenance strategy of team with complementary skills assembled
petrochemical process plant in a large together for doing maintenance function
Indian gas utility company. Further, to and operation function. In plant, 3 levels
understand why the particular maintenance such as junior, middle, and top level
strategy has been chosen and how these maintenance managers have been
formulated strategies are being practiced in considered to understand the their view on
the petrochemicals plant. A case study maintenance strategy selection and
approach has been selected for this implementation in their plant
research study because, the definition of (petrochemicals).
the case study method say that “the central
tendency among all types of case study, is Theoretical sampling method was
that it tries to illuminate a decision or set employed for this study. For data sample,
of decisions: why they were taken, how Indian large gas utility company’s
they were implemented, and with what petrochemical complex. The
result” (Yin, 2003) plants/terminals/units are identified using
the data base available with the company
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in its Intranet/website. Among the at unit level), and Junior Management

maintenance and operation managers (Sectional Heads/Engineers/supervisors at
working in these plants/terminals/stations unit level).
were interviewed based on their
availability either at site location or The above interviews lasted between 30 to
Training institute. 60 minutes. The interviews were recorded
and fully transcribed. Typed interview
The names & contact details of the scripts were shown to the interviewees,
maintenance/operation managers were along with follow-up questions. The main
obtained from the Telephone directory steps of data collection for the above case
available in the company’s studies are:-
Intranet/website. Among the managers 1. Development of Case Study
identified, based on the unit of analysis & Protocol (CSP), Review and final
level of analysis, 25 managers/engineers CSP development
related maintenance functions were 2. Initial Contact and Arrangements
chosen. Finally, interviews were conducted 3. Data Collection and Interviews
from 6 maintenance managers/engineers. 4. Site visits for field observations
The data was collected from the 5. Review of case report for internal
Maintenance Managers of the company validity
using the case study protocol. The detailed 6. Additional Data Collection
case study protocol was developed before Data analysis aimed to identify describing
data collection and semi structured (i) maintenance strategies formulation &
interviews with the maintenance personnel selection, (ii) maintenance practices, (iii)
of the large gas utility company’s Benchmarking of maintenance practices
petrochemical plant were conducted. and reliability of maintenance of
petrochemical process plant. Within-case
The interview was conducted in three analysis entailed becoming intimately
levels to collect the data for the study of familiar with each case individually and
maintenance strategy & practices of documenting it thoroughly.
petrochemical process plant in the gas
utility company. The three levels are such Data Analysis was done with the Textual
as Senior Management (Maintenance Analysis and cross case synthesis. Textual
Heads in corporate level or unit level), analysis was done with the help of Atlas
Middle Management (Departmental Heads TI software; network diagrams have been
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formulated with the necessary quotation focused/ selective coding, similar codes,
and frequency analysis. The data analysis codes with some common attributes were
using grounded theory is a highly iterative merged to create conceptual categories and
process involving moving between abstractions from the empirical data
interview data, existing theory, and (Strauss and Corbin, 1990).
observation data (Charmaz, 2006). Three
steps such as Open Coding, Codes illustrating (i) maintenance
Focused/Selective Coding, and Identifying strategies and maintenance practices of
patterns of relationship among conceptual petrochemical process plant, (ii) Selection
categories were used iteratively for of Maintenance Strategies, (iii) Reliability
conducting data analysis. of maintenance practices & strategies
being used and, (iv) Benchmarking
At first, input data was selected, practices for maintenance processes were
categorized and combined to understand discovered from the empirical data during
main concepts and identify the relevant the open coding, were consolidated into
constructs. Part of the text which are broader categories and categories were
sentences or paragraphs (Strauss and classified into concepts/themes are the
Corbin, 1990) describing (i) maintenance basic units of analysis in grounded theory
strategies formulation & selection, (ii) since these are from conceptualizations of
maintenance practices, (iii) Benchmarking data.
of maintenance practices and reliability of
maintenance assigned labels for easy Open and focused coding resulted in
retrieval and categorization (Miles and labelling of all the interview data in codes,
Huberman, 1994) using open code categories and concepts. Here the
technique (Strauss and Corbin, 1990; relationships between codes and categories
Charmaz, 2006). The coding of interview were compositional in nature i.e.,
scripts was done in Qualitative Analysis relationships between codes, categories
software Atlas-Ti. This software facilitated and concepts identified and defined the
the analysis process be helping with composition of a particular concept or
coding, linking codes, and text segments, category. The relationships were generally
creating memos, searching, editing and of ‘is part of’, ‘is a’, ‘is associated with’.
reorganizing, and for visual display of data In third step, an effort was made to
and findings (Miles and Huberman, 1994; identify the underlying relationships
Weitzman, 2000; Creswell, 2007). In between codes, categories and concepts.
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Here the relationships identified are causal within case analysis are shown in Figure 2.
(‘is part of’, ‘is associated of’) and The findings from the conceptual analysis
associative in nature. Activities mentioned are of descriptive nature, these describe the
by interviewees leading to the maintenance nature of maintenance strategy formulation
strategy processes were identified by and maintenance practices. The findings
creating appropriate codes in Atlas Ti from the detailed analysis are perspective
software. in nature (Tsang, 1997); they describe the
relationships among the factors
Based on the interview data, within case contributing to maintenance strategies and
data analysis was undertaken keeping in practices & selection of specific
mind the research questions: How the maintenance strategy for a particular
petrochemical process plant in the gas operation process/equipment. This two
utility company is planning and executing level analysis also helped increasing the
its maintenance strategies & practices to internal validity of the research by
ensure smooth operation process and why triangulation of perspectives on the same
the specific maintenance strategy has been data set (Theory triangulation) (Patton,
selected for a particular operation 1990).
process/equipment?. This lead to the
identification of various factors forms the The results of within case analysis are
basis for asset integrity maintenance displayed in the form of “qualitative
strategy formulation and maintenance associative networks”. The network
practices of the petrochemicals plant in the diagram for case study (petrochemicals) is
large Indian gas utility company. Further, shown in Figure 3 respectively.
specific maintenance strategies being Associative networks have node linked to
adopted for a particular operation each other by association and allows for
process/equipment in the organization fuzzy, intuitive and subconscious relations
were identified. Then, the relationship between concepts to be presented visually.
between among the identified factors and The qualitative associative networks
selection of maintenance strategies was created in this study show asset
analyzed. Figure 2 shows the phases maintenance strategy selection and
within case analysis. maintenance practices for petrochemicals
plant. The key findings of these case
The data analysis was done at two levels, studies are presented below.
conceptual and detailed. The phases in
E 108
Conceptual Analysis
Conceptual Analysis
(Phase 1) -
(Phase 2) –
Identification of factors
Identification of factors
contributing to
contributing to specific
maintenance strategies
maintenance strategies
& practices in an Indian
selection for a specific
large gas utility
process/equipment
company
Detailed Analysis -
Relationships among
the factors identified in
phase 1 & maintenance
strategies identified in
phase 2
Figure 2 - Phases of within case analysis
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Availability of PM Schedules
Measurement of Work Backlog

Longterm plans to forecast major
maintenance work
Budget Factors Budget Allocation Priority of Workorder
Standard Workorder
Plant Equipment Register
is part of
Budget Monitoring is part of
is part of is part of is part of
Shutdown Maintenance Schedule
is part of
criticality of the equipment
Capital & Revenue Budget is part of
is part of Maintenance budget
is part of Down time analysis
Planning & scheduling is part of
Reliability Analysis
Availability of computerized system for Benchmarking measures & targets

maintenance management
is part of
is part of is part of breakdown records

Availability of computerized system for
materials management Reliability of maintenance practices & is part of
is part of strategies being used
Information Technology Performance Measures/Benchmarking Key Performance Indicators
is part of
is part of
CBM supported with automated is part of
programs for data analysis is part of is part of
is part of
is part of
is part of is part of is part of Maintenance Performance Measures
Expert Systems for Diagnostics
Benchmarking practices for
is part of maintenance processes
Scheduling of major shutdowns using is part of Training manhours of maintenance
Integeration of maintenance &
project management is part of staff
materials management modules
is part of
breakdown maintenance shut down maintenance

Maintenance Strategy & Practices Selection of a specific maintenance
is part of is part of Planning and Execution strategy for a particular
OEM recommendations is part of Internal Norms & Industry Norms
is part of process/equipment
is part of is associated with
Maintenance Tactics
is part of is part of
predictive maintenance is part of
is part of Factors for maintenance strategy
selection
is part of is part of Specific Maintenance strategies for
preventive maintenance is part of Petrochemicals
is part of
Reliability maintenance
pro-active maintenance Emergency purchase of spares
Employee empowerment is part of

is part of Maintenance policy Integration of inventory control with
Material management is part of
Modifications done by maintenance Organization/Human Resources maintenance planning
teams is part of is part of
Company's maintenance policy is part of identified spares
Mulit skilled Trade People is part of is part of
Partnership with key is part of
suppliers/contractors is part of Inventory Analysis
Self Directed work teams is part of is part of
Operator based maintenance
Maintenance mission & objectives is part of
is part of maintenance organization
Regular discussions with the staff by Material Stores
is part of Inventory Control through
supervisors
Long term plans for maintenance computerized system
function integrated with corporate Regular Technical Training spare availability
Adequacy of support staff
plans
Maintenance Staff Level
Responsibility of first line supervisors
Deployment of Contractors
Figure 3 – Network diagram for Case Study Petrochemicals
Case Study - Petrochemicals Findings Measures/ Benchmarking,

(Within Case Analysis) Planning & Execution, Information
Technology, Human Resources,
 Constructs emerged out from this Maintenance Policy/Budget,
study are Maintenance Tactics, Material Management and
Reliability Analysis, Performance Employee Empowerment
E 110
 Constructs emerged out from the of the phenomena. An effort was also
study are matching with the initial made to establish and maintain a chain of
conceptual constructs evidence, which would allow an external
 Additionally, two new constructs observer to follow the derivation of
have been identified such as evidence from initial research questions to
Maintenance Challenges & ultimate case study conclusions.
Specific Maintenance Strategy for
Petrochemicals The case study reports were reviewed by
 One new type of maintenance the key informants as advocated by Yin
tactics was emerged out from the (2003). Participants’ feedback was
study i.e., Proactive Maintenance incorporated in the final case reports.
Further, during data analysis, 2 level of
There are four relevant tests relevant in analysis were undertaken, conceptual and
evaluating quality of any research study: detailed. This analysis helped increasing
Construct Validity, Internal Validity, the construct validity of the research by
External Validity, and Reliability (Yin, triangulation of perspectives on the same
2003) and are discussed below. data set (theory triangulation) (Patton,
1990).
Construct Validity
To address construct validity, Internal Validity
triangulation, a technique of combining Internal Validity implies “establishing a
different sources of evidence in a single casual relationship, whereby certain
study (Rossman and Wilson, 1985) was conditions are shown to lead to other
used. This combination of different conditions, as distinguished from spurious
sources is one of the major strengths of the relationships” (Yin, 2003). Two problems
case study approach (Yin, 2003). This case associated with internal validity are (1)
study includes various sources for making interferences (as case study
collecting relevant data like interviews, involves inferences, every time event
documents, company’s website, intranet, cannot be directly observed), and (2)
observations and artefacts. The interviews spurious effects when there are other
as well as observations made in the field determinative factors than those identified
were transcribed and used in the data in the research framework. In this research
analysis, which enhanced the construct a number of tactics were used to address
validity by providing multiple perspectives these problems and improve internal
E 111
validity. First, theory triangulation, which Using replication logic in selecting case
implies triangulating perspectives on the studies addressed external validity. Case
same data set (Patton, 1990) was applied. study relies on analytical generalization
During with-in case analysis the same data (Eisenhardt, 1989, Yin, 2003), not
set was analyzed from difference statistical generalization as with
perspectives such as conceptual and experimental hypothesis-testing research.
detailed analysis levels. Second, key Once the replication is made, the results
participants were requested to review and may be accepted even though further
comment on case reports, and their replications have not been performed (Yin,
comments were incorporated in the final 2003).
case reports. To ensure construct validity
these two tactics were focused on the Reliability
understanding and interpretation of the A reliability test aims to minimize the
concepts studies, while for internal validity errors and biases in the study. It refers to
they were focused on the understanding “demonstrating that the operations of a
and interpretation of the processes that can study, such as data collection procedures
be represented as casual relationships can be repeated, with the same result”
between concepts: (a ‘cause’) leads to (Yin, 2003). This implies that if another
another concept (an ‘effect’). researcher follows the same procedures as
applied by a previous researcher for
External Validity conducting the same (and not another) case
External validity implies “establishing the study, he/she will arrive at the same
domain to which a study’s finding can be findings and conclusions (Yin, 2003). In
generalized” (Yin, 2003). Using a multiple this research a numbers of tactics were
case study strategy strengthens the used to ensure consistency in applying
generalizability of this research. The procedures for data collection and analysis.
design of multiple case studies and cross- First, the case study protocol (Refer
case analysis were undertaken according to Appendix I) was used to guide the research
replication logic, which is the same as that process. The protocol is a major tactic in
which underlies the use of experiments and increasing the reliability of case study
allows researchers to generalize from one research and is intended to guide the
experiment to another (Yin, 2003). investigator in carrying out the case study
(Yin, 2003). The protocol included
instrument (i.e., the interview questions) as
E 112
well as procedures and general rules that The theoretical framework discussed
should be followed. This ensured above in literature review section of this
consistency in the areas covered within study consists of Initial Conceptual
cases and across cases. Second, to reduce Constructs such as Maintenance Tactics,
the likelihood of forgetting or Reliability Analysis, Performance
misunderstanding the data, and to allow Measures, Planning & Scheduling,
independent data analysis by other Materials Management, Human Resources,
researchers, interviews were recorded and Information Technology, and Maintenance
transcribed. Third, use of Atlas-Ti Policy with the functions e-Maintenance,
software allowed systematic and consistent Maintenance Decision Support System,
analysis of qualitative data (Weitzman, and Companywide Integration. This
2000) and increased the reliability of framework will be used as a template for
research because the procedures can be comparing and generalizing the empirical
repeated (Yin, 2003). Fourth, the filed results of the above case study.
notes taken by the researcher were also
transcribed for future reference. The relevant issues concerning formulation
of maintenance strategies & maintenance
Results practices relate to Research Questions
The results of within case analysis are have been formulated as propositions and
displayed in the form of “Qualitative they are discussed in detail with reference
Associative Networks” (Refer Figure 3), to the process framework developed for
process maps, and conceptually clustered maintenance strategies and practices
matrix (Miles and Huberman, 1994). planning & execution in maintenance
Associative networks have nodes linked to function. A process framework for
each other by association and allows for maintenance strategies and practices
fuzzy, intuitive and subconscious relations planning & execution in maintenance
between concepts to be presented visually. function of petrochemicals process plant is
These characteristic made these suitable to presented in Figure 4.
model asset integrity maintenance
strategies and maintenance practices of a
petrochemical plant visually.
E 113
Figure 4 – A process framework for Maintenance Strategy & Maintenance Practices planning
& execution in petrochemicals plant
P1: How the Initial Conceptual utility company? How the maintenance
Constructs (ICC1 to ICC8) is being used managers planning & executing these
in formulating maintenance strategies of maintenance strategies & practices to
petrochemical process plant in the gas ensure smooth operation process?
E 114
The constructs identified from the There is no evidence found from the
empirical data are found similar with interview data that the petrochemical
the Initial Conceptual Constructs. But, process plant is using MDSS for
the extent of application of the selection of maintenance strategy.
constructs varies in the petrochemicals Development & formulation of
case study. The detailed findings of the maintenance strategy is being done
Case Study are discussed above in based on corporate guidelines such as
previous section. However, the study Maintenance Policy and MOU Targets,
indicates that develop of maintenance previous experience, process/operation
strategies are basically based on the requirements, OEM
factors such as Maintenance Tactics, Recommendations, Criticality of
Reliability Analysis, Performance Process/equipment, Internal Norms
Measures, Planning & Scheduling, such as ISO maintenance manual, unit
Materials Management, Human level guidelines, etc., Industry Norms
Resources, Information Technology, such as OISD, PNGRB standards &
and Maintenance Policy. The result of guidelines and, specific maintenance
this study validates the proposition P1. strategies as recommended by
Further, the above study emerges with equipment OEM, industry practices.
the two new constructs like
maintenance challenges & Specific P3: How Maintenance Decision Support
maintenance strategies for Systems (MDSS) helps to improve
Petrochemicals/NG Pipeline. This performance of maintenance function in
means that these new constructs are terms of maximizing availability of
also contributing in development (or) equipment/operations with the appropriate
selection of maintenance strategies of maintenance strategy selection for those
petrochemicals process plant. equipment/operations?
There is no evidence found from the
P2: What is the role of Maintenance interview data that petrochemicals
Decision Support Systems (MDSS) in plant of the gas utility company is
selection of optimum maintenance strategy using MDSS for selection of
mix (or) best maintenance strategy among maintenance strategy.
the developed maintenance strategies for
the particular P4: How integration of organization’s
equipment/process/operation? business strategy with maintenance
E 115
strategy provides an effective for failures? How this model could help in
implementation of maintenance strategy? formulation of maintenance policy at the
Organization’s business strategy has company level?
been aligned with maintenance strategy In the petrochemicals process plant of
with the help of MOU targets. These the gas utility company, e-maintenance
targets are developed at corporate level is being practices through SAP system.
aligning with the company’s business In SAP system, one specific module is
strategy. Then, these targets are available i.e., Plant Maintenance
percolated down into the level to work module (SAP-PM module). SAP PM
centre level, unit level, department Module integrate the maintenance
level and further to individual level. activities such PM scheduling,
There is a clear evidence is available planning, issuing of work permits,
for such an integration in Equipment History, Work Instructions
petrochemicals plant. records etc., Further PM Module is
also integrated with Material
P5: Why e- maintenance concepts are used Management module (SAP –MM) for
for efficient implementation of a planning of spares, issuing of material
maintenance strategy in petrochemicals etc. The data available in the SAP
plant of the gas utility company? system helps the company to review its
There is sufficient evidence available maintenance policy at the company
that the petrochemicals plant is using level.
the e-maintenance concepts for
effective & efficient implementation of P7: How the manufacturing/ production
maintenance strategies. Few such capabilities of an organization have been
maintenance concepts are such as enhanced by integrating maintenance
Distributed Control System (DCS), strategy Companywide?
Supervisory Control And Data Manufacturing/production capabilities
Acquisition (SCADA) System, of the company are getting enhanced
Vibration Monitoring System & by integrating maintenance strategy
Software, and SAP PM Module. Companywide. For example, all gas
processing plants are grouped and
P6: How maintenance tactics are being uniformity maintained in maintenance
integrated with e-maintenance framework activities, production targets, MOU
for development of comprehensive model targets, internal norms, etc.
E 116
of conceptual lens and empirical data.

This study could find evidence among Based on the detailed literature review,
relationship between the various factors conceptual constructs which form the basis
related maintenance strategies & practices for maintenance strategy formulation,
existing in the petrochemical process plant selection and maintenance practices were
(taken for this study) and the specific identified. These constructs were expected
maintenance strategies used in a particular to be found from the empirical study. Such
equipment/process. Based on the empirical constructs are Maintenance Tactics,
data collected through this case study, a Reliability Analysis, Performance
maintenance framework which clearly measures/Benchmarking, Planning &
depicts the sequential relationships among Scheduling, Maintenance Organization/
the factors which are contributing to Human Resources, Information
maintenance strategy development or Technology, Maintenance Policy/ Budget,
formulation of maintenance strategy and Material Management, and Employee
further their relation with selection of Empowerment. All these constructs have
maintenance strategy and implementation been emerged from the research study.
of maintenance strategies i.e., maintenance
practices. Additionally, two constructs such as
Maintenance Challenges and Specific
The next section summarizes the findings Maintenance Strategies for a particular
and results of this research, and discusses equipment/process have also been
the contribution of this study to theory and emerged from the data in this research.
management practice and concludes with a Further, this research study uncovered
discussion on the limitations of this maintenance strategies and practices
research and suggestions for future planning and execution related to this new
research. constructs in detail.
Conclusion For a gas utility company in the Indian gas

This research study has revisited the industry to manage maintenance activities
conceptual framework based on empirical more efficiently & effectively in order to
data. A process framework for operate the process/equipment smoothly.
maintenance strategies and practices Indian Gas utility company has taken for
planning & execution in maintenance this study needs to focus on the following
function has been developed with the help aspects of petrochemical process plant:-
E 117
1. Petrochemical plant’s asset company is achieving all the MOU

integrity maintenance strategy is to targets successfully.
be assessed using the factors 5. No much emphasis is given to
identified in this research study and Labour/ material cost in the
baseline can be set to study the benchmarks of maintenance since
progress of improvement in the the operation capacities of
area of asset integrity pipelines & process plants are
implementations. being achieved excellently.
2. Reliability maintenance concepts 6. New construct identified i.e.,
are not being used by the Maintenance challenges influences
petrochemical process plant in the the maintenance practices and also
gas utility company except root effect the formulation of
cause analysis/incident analysis maintenance strategy. Therefore,
report. Maintenance managers are company has to give due priority to
of the opinion that these concepts these issues and effective system is
are to be used for improving to be developed to mitigate these
maintenance performances. maintenance challenges in
3. Maintenance executives of the petrochemicals plant and there is a
company have not spoken about need to optimize the maintenance
the use of Total Productive function.
Maintenance (TPM). Either they 7. Proactive Maintenance is the new
are not aware of this maintenance type of maintenance tactics
method or not using the same. emerging out from this study.
4. Benchmarking measures are not There is a need to work more on
being used by the company. Not this maintenance tactic and apply
much data is available with the in practice.
company. However, they use
primarily MOU targets as Theoretical contributions
performance measures. Since Two new types of factors contributing to
company is market leader as a gas maintenance strategy
utility company, maintenance development/formulation & maintenance
managers of the company feels that practices emerged from the data such as
their present operating conditions Maintenance Challenges and Specific
are benchmark. So far, the selection of maintenance strategies for a
E 118
particular operation process/equipment. generalizability (Klein and Myers, 1999).

Apart from these, two types of The factors developed are based to a large
maintenance tactics are also emerged out extent on the perception of interviewees,
from the data such as Shutdown which may be subjective. To compensate
maintenance and Pro-active maintenance. for this subjective source of data, evidence
Both of these maintenance tactics are very was also collected from internal and
crucial for petrochemical maintenance. A external documentation and observations
process framework for maintenance in the case studies, as suggested by Yin
strategies & maintenance practices has (2003) and Eisenhardt (1989), which are
also been developed. This research considered to be more objective sources.
contributes to the theory of maintenance
strategies & practices of gas industry and Suggestions for future research
in general. The results of this research provide an
insight into the processes of maintenance
Practical contribution: Implication for strategies & maintenance practices of a
managers petrochemicals plant in gas utility
This study would help the maintenance company within the gas industry. A
managers to benchmark the maintenance number of topics can be suggested for a
practices in their organization and teams to future research.
understand the maintenance strategies  Further studies can design and
development. Further this research found conduct surveys across gas
evidence to formalize & improve the industry and other industries to test
maintenance strategy adapted since the propositions developed in this
importance attached to research.
industry/operation/equipment specific  Further studies can explore other
maintenance strategies in Petrochemicals. countries / other industries / other
types of business verticals
Limitations  Further studies can develop
The conclusions offered in this research Quantitative Associative Networks,
are based on an in-depth study at an which might further enhance the
organization level in Indian context, by understanding of maintenance
applying a qualitative interpretive strategies & maintenance practices
approach that is often considered as
subjective and having limited
E 119
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Challenges and Opportunities in Secondary Logistics in Indian

Petroleum Industry
Bhuwan C. Joshi* , Binod Kumar Singh** & Saurabh Tiwari***
* Ph.D. Scholar,CoMES, UPES,Dehradun
** Faculty, CoMES, UPES, Dehradun
*** Faculty, CoMES, UPES, Dehradun
Abstract competitiveness. The factors to be considered

The logistics of petroleum products have in optimizing have been identified from the
been a major contribution to the input cost of stakeholders’ perspectives. The foremost
petroleum products apart from raw material being customer perspective, followed by
and taxes. The primary logistics of an Oil transporters’, dealers’ and environment.
Marketing Company (OMC) involve the PESTEL and SWOT analysis have been
movement of finished products from refinery carried out in the context of MS and HSD
gate to the storage depot. Pipelines, Railways sold through retail channels. It can be
and Shipping are used for this movement and concluded that the transportation cost of
pipelines are the most economical and OMCs has ample scope for optimization.
environmentally friendly in the long run. The OMCs in India can optimize their secondary
movement of product from storage depot to logistics operations through the adoption of
the retailer or the consumer is in the realm of higher technology and collaboration among
secondary logistics which is more the OMCs and use of flexible transportation
complicated as the custody of product is models and re-alignment of markets.
transferred from OMC to the transporter and
to the retailer before finally delivering to the Keywords
consumer. Increasing competition among Logistics, OMC, PETSEL, SWOT analysis
OMCs, closure of unviable storage points,
existing tax regime are major challenges for Introduction
secondary logistics. The proposed GST bill, Petroleum Industry is marked by the huge
collaboration among OMCs and use of GPS spatial demand and supply gaps. The mother
and Information technology are the of all petroleum products, the crude, occurs
opportunities available to test newer in abundance in the areas where the demand
optimization models and increase is not high, so is transported to huge distances
E 126
where it is refined and converted to Renewable and Nuclear Energy had a share
consumable products. Consequently the of 7.1, 4.6, 2.2 and 1.2 percent respectively in
logistics cost becomes quite significant. 2014. Out of the total consumption of crude,
India, being an importer of about 80% of its only 21.4% were indigenous production and
crude requirements, does not have control the rest was imported. The installed capacity
over prices of raw materials. Duties and taxes of the all the 22 refineries in India is 215
are sovereign functions and oil industry can MMTPA. In 2014-15, India’s consumption
do little to influence it. The other major of refined products was 166 MMT against a
expenses are Operating and transportation production of 221 MMT thereby resulting in
expenses which are controllable and have a a surplus of 54 MMT. While MS is entirely
sizable contribution to expenses in the oil an automotive fuel, HSD uses 70% in
industry running on low margins. The Oil transport, 13% in agriculture, 5% in industry
Marketing Companies (OMCs) are using and 4% in power sectors. These two products
various models for optimizing primary are sold through 53,418 Retail Outlets of
logistics. In the past secondary logistics three PSUs and private marketing companies.
optimization has been limited to supplies These retail outlets are fed by a network of
from the nearest available source. With the 336 storage depots and terminals spread
de-control of MS and HSD pricing, the across the country as of 01.04.2015.
competition has increased putting pressure on With the falling of crude prices in the
the transportation which is a significant international market the average cost of
contributor to the cost apart from the raw Indian basket has come down from $105 per
material cost and taxes. Secondary logistics barrel in 2013-14 to $ 84.5 per barrel in 2014-
can be key distinguisher in the service 15. This has further come down to $61.32 per
delivery of OMCs. barrel up to 31.10.2015. (PPAC, Nov'2015).
India’s downstream petroleum sector is
Current Status Of Indian Petroleum dominated by three public sector oil
Industry marketing companies (OMCs). Indian Oil
Oil contributes to 28.3 % of the Energy Corporation Ltd (IOCL), Bharat Petroleum
consumption in India, which is second only Corporation Ltd (BPCL) and Hindustan
to coal, the source of 56.5 % of energy Petroleum Corporation Ltd (HPCL) are all
consumption. Natural Gas, hydroelectricity, members of the fortune 500 group of
E 127
companies. India’s OMCs have been an consumer in the Asia-Pacific region after
instrument of Government of India’s pricing China and Japan. (Energy Statistic, 2015)
policies to protect the Indian consumers from
the fluctuations in the crude prices in the Role Of Secondary Logistics In Indian
Petroleum Industry
international market. The huge subsidy
Secondary Logistics is essentially the last
burden has now been eased due to the sharp
mile connectivity between the OMCs and the
fall in prices of crude oil in the international
retailer and is accomplished through road.
market. The prices of MS and HSD have been
The mode of transportation is flexible to the
de-controlled to allow entry of private
extent that the supplies can be made in the
players leading to increased level of
remotest parts of the country. However the
competition in the industry.
tank trucks used in transportation are
dedicated to the particular category of
Global Scenario Of Petroleum Industry
products and cannot be used for other
The geographical distribution of total world
products. For example the tank trucks used
production of crude oil during 2013-14
for transportation of MS and HSD cannot be
across major regions reveals that Middle East
used for black oils. These tank trucks are
accounted for the highest share (32.31%),
contracted by the OMCs for the supplies from
followed by Europe & Eurasia (20.35%),
their storage depots and are attached to that
North America (18.98%), Africa (10.18%),
terminal only. The number of tank trucks and
Asia Pacific, (9.48%) and South & Central
their capacities are fixed. This provides
America (9.10%).India has accounted for
inflexibility to the system and the seasonal
only 1.02% of the world production.
and daily demand fluctuations are to be
Major region-wise consumption shows that
attenuated by creating storage tanks both at
Asia Pacific accounted for the highest share
the depot and retailer end. The tank trucks
(33.8%) of total world consumption,
take supplies from a particular storage depot,
followed by North America (24.47%), and
deliver to the retailers or consumers and
Europe & Eurasia (20.99%). African
return back empty to the storage depot. The
countries accounted for the lowest share in
carriers are paid on the basis of round trip
the world consumption (4.1%). India was the
distance (RTD) travelled during the trip. The
fourth largest consumer of crude oil in the
secondary logistics involve selection of
world and the third largest crude oil
storage depots for each market, selection of
E 128
carriers, number of tank trucks, capacities of essentially accomplished through road. The
tank trucks to be contracted and day to day optimization of secondary logistics is the key
planning and scheduling. OMCs make to the competitiveness of an Oil Marketing
contractual arrangements with the Company (OMC) and involves consideration
transporters and retailers providing of all the stakeholder’s perspectives. The
remuneration in the form of transportation custody of product during primary logistics
bills and commissions respectively. The lies with the OMCs whereas the custody of
transportation bills are paid on the basis of the the product gets transferred to the
quantity of product delivered and distance transporters and dealers during secondary
travelled whereas the dealer commission is transportation. The customer service is the
on the quantity of the product sold. The primary objective to be achieved through the
contracts have elaborate provisions to channel partners. The objectives of these
safeguard against malpractices like channel partners have to be considered and
adulteration, short delivery, tampering, route balanced while constructing optimization
deviation, non- delivery etc. by the carrier. models for secondary logistics. The statutory
The product changes hands from OMC to compliances, government regulations,
transporter to the retailer in the process. The pricing, and tax regime have to be considered
role of secondary logistics is to deliver the while planning secondary distribution of
right quantity of the product to the retailer at petroleum products.
the right time while maintaining the quality Transportation for the petroleum industry
of the product. covers the movement of crude oil from oil
wells to ports to refineries, and the movement
Literature Review of petroleum products from refineries to the
The relevant government publications and retail outlets (Chandra, 2013). Petroleum
journals have been reviewed. Most of the products comprise of Petrol, Diesel, ATF,
available literature is an optimization of Naphtha, Fuel Oil, Bitumen, LPG, lubricants
primary logistics which covers the movement and paraffin wax, petroleum coke etc. The
of crude oil and petroleum product from movement of these products from refineries
source to storage points. Secondary logistics to retail outlets is carried out using the least
cover the last mile product movement from cost mix of rail, coastal shipping, roads and
the storage depots to the retail outlet and is pipelines.
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Petroleum Product Marketing is a low margin The cost elements of the petroleum products
business. This is evident from the Annual are as under :
reports of three public sector oil marketing Price of Crude Oil + Refining Cost + Profit +
companies of India. IOCL , BPCL and HPCL Marketing and Storage Cost + Profit +
posted a net profit of Rs 4,912 Cr (IOCL Distribution Cost + Dealer Profit + Taxes and
Annual Report, 2014-15), 5,084 Cr (BPCL Duties
Annual Report, 2014-15) and 2,733 Cr (http://www.theanalytic.co.in/downloadfile/
(HPCL Annual Report, 2014-15) at the CostofPetrolinIndiaBriefOverview.pdf)
turnover of Rs 4.5 lac Crore, Rs 2.4 lac Crore According to BPCL’s annual report for 2013-
and 2.1 lac Crore respectively in the financial 14 (BPCL Annual Report, 2013-14), the
year 2014-2015. The percentages of net distribution of each Rupee earned is given as
profits to turnover are 1.1%, 2.1% and 1.3% per the following table :
for IOCL , BPCL and HPCL respectively.
Distribution of Each Rupee Earned Year
2013-14 2012-13
Raw Materials, Purchase of Product for resale and packages 87.43 87.98
Duties, Taxes etc. 4.41 4.58
Transportation 1.64 1.52
Stores and other Operating Expenses 1.96 1.74
Employees’ remuneration and other benefits 1.06 1.1
Interest on Borrowings 0.5 0.72
Depreciation 0.82 0.76
Income Tax 0.69 0.55
Dividend (including Corporate Dividend Tax) 0.52 0.37
Retained Profits 0.97 0.6
Table 1 Data Source: (BPCL Annual Report, 2013-14)

The above table shows that raw material and transportation expenses in the last three
taxes account for more than 90% of expenses. years.
An analysis of the annual report of all three Indian Oil Corporation Ltd (IOCL) is the
Oil Marketing Companies (OMCs) in public largest OMC having spent Rs 10,987 Cr on
sector throws an interesting insight into the transportation for a total sale of 76.51 MMT
in 2014-15 which is 13% increase over the
E 130
previous year. The weighted average retail the last mile is necessarily through roads,
selling price of HSD have increased by 2% in irrespective of the mode used for the primary
2014-15. movement.
Bharat Petroleum Corporation Ltd (BPCL) Finding options for optimization of the oil
has spent Rs 5004 Cr in transportation of supply chain is important because any cost
36.65 MMT products in 2014-15 registering saving means vast amounts of money for the
a 12 % increase over the last year. oil companies, therefore optimization is at the
Hindustan Petroleum Corporation Ltd centre of attention in the oil supply chain
(HPCL) has shown expenses of Rs 4999 Cr management (Gainsborough, 2006).
for trans-shipping 32 MMT of product in (Hussain, 2006) emphasize that despite the
2014-15 which is 8% increase over the economic importance and the complexity of
previous year. supply chain management in the oil industry,
Combining the figures of all three OMCs , the oil supply chain optimization is still in its
average transportation charges in 2014-15 infancy stage.
have increased by 11% against 3 % increase The increasing level of competition and
in sales and 2% increase in RSP of HSD. In requirements of high quality increases the
other words the oil companies have incurred complexity of the oil supply chain which also
a loss of 6% on the transportation charges of has a negative effect on the flexibility
Rs 20989 Cr amounting to Rs 1259 Cr. (Gainsborough, 2006). The long lead time,
Similar analysis in 2013-14 shows that there fixed manufacturing capacity and limited
was a 17% rise in transportation cost against means of transportation are the major reasons
16 % increase in RSP of HSD and 0.5 % of inflexibility in the supply chain. The long
increase in product sales. In 2012-13 there distances between supply chain partners and
was 17 % increase in transportation cost the slow means of transportation increase the
against 3% increase in sales and 11% lead time from shipping point to the end
increase in RSP of HSD. users. It becomes hard to meet a required
The primary movement of petroleum service level, but it also could hurt customers
products, from refineries to storage depots is who have to keep costly safety stock
through pipelines, or coastal shipping. The (Hussain, 2006). Using reliable
secondary movement of petroleum products, transportation mode and placing inventory
i.e. from storage depot to the retail outlet, viz. closer to the final users enhances the
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customer satisfaction because faster load determine the distribution planning (Jha,
time and faster product availability can be 2009). A secure and reliable transportation
achieved (Hall, 2002). mode and carrier gives the ability to position
Jenkins and Wright (1998) suggest focusing decoupling point which reduces the bullwhip
on the means of transportation, especially on effect, therefore, inventory could be closer to
road transport and its tankers as well as the customers (Hall, 2002)
drivers. It is mostly because they believe The activities that comprise the oil supply
these are highly flexible elements of the chain are divided into three major segments:
inflexible oil supply chain and these could be upstream, midstream, and downstream. The
a good area for optimization and reduce cost. upstream segment includes the exploration
As lead time is long and many varieties of and oil production. The midstream is an
means of transport is possible, with excellent intermediate segment and consists of the
IT software such as the fleet scheduling refining activity which includes the
package and the supply chain management transportation of oil from the production site
model suggested by Jenkins and Wright to refineries. The logistical tasks necessary to
(1998), optimization can be achieved. These move the refined products from the refinery
are cost effective, increase flexibility which to the points of consumption are in the
contributes to higher customer satisfaction downstream segment (Leiras, 2006).
and they also improve planning and Strategic (long-term) planning determines
controlling the supply chain (Jenkins, 1998). the structure of the supply chain (e.g. facility
Not to mention it helps to avoid run outs and location).Medium-term (tactical) planning is
retains customers at the filling station concerned with decisions such as the
(Balasubramanian, 2002). assignment of production targets to facilities
Jha and Deshmukh (2009) emphasize that the and the transportation from facilities to
cost and level of service have to be in centre warehouses to distribution centres. Finally,
of the attention. It is also important in the short-term planning is carried out on a daily
downstream oil supply chain that the or weekly basis to determine the assignment
distribution occurs from the refinery or from of tasks to units and the sequencing of tasks
the storage facilities. Mode of transportation, in each unit. At the production level, short-
fleet size, shipment routes and quantity of the term planning is referred to as scheduling
delivered products are the factors which (Sung, 2009). Historically, refinery planning
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models for oil industry were based on LP and increased profitability. The process involved
MILP. The computational and algorithmic Crude selection and allocation which takes
complexity of NLP and MINLP inhibited the into account product demands, refinery
model development in this area. The first capabilities and effect of crudes already
application is from 1997 however, the procured, Optimal refinery production
applications of MINLP are still considered a planning considering crude assays, unit
challenge. capacities, product specifications and
The literature on petroleum supply chain demands; and feedstock availability, Optimal
optimization can be categorized into distribution planning considering
upstream , midstream and downstream. Even transportation costs, taxes and duties and
the publications in the downstream segment transportation constraints
of petroleum supply chain may be bifurcated (www.honeywell.com, 2005)
into primary and secondary distribution Bharat Petroleum Corporation (BPCL)
models. formed Supply Chain Optimisation (SCO)
Despite the fact that petroleum refining and Department in Nov’ 2006 and launched its
petrochemical companies have recently initial project CRESCENDO (Crude
engaged in more integration projects, Refining Supply Chain Network & Depot
relatively little research in the open literature Optimization). The OMC started integrating
have been reported mostly due to its six core Supply Chain processes, namely
confidentiality reasons. Such concerns render Demand Planning, Monthly Distribution
the development of a systematic framework Plan, Inventory Management, Crude
of network integration and coordination Evaluation, Selection & Nomination,
difficult (K. Al-Qahtani, 2009). Refinery Monthly Plan and Product
India’s Oil Marketing Companies (OMCs) Exchange Plan. The company included
have carried out the optimization of their Distribution optimization in retail logistics
supply chains. Indian Oil Corporation based on freight cost and linkages. (Datta,
Limited (IOCL) has implemented 2008).
Honeywell’s Supply Chain Management
solution to integrate and optimize the supply
chain of five separate refineries. The results
of the optimization were higher margins and
E 133
Objectives depot specific and any large scale re-

1. To study the challenges in secondary alignment of markets shall require an
logistics in the Indian Petroleum amendment to the contract conditions and
industry lead to changes in business volume for the
2. To explore the factors affecting transporters.
secondary logistics in the Indian There is wide variation in the lot size or the
Petroleum industry. volume of product indented at a time by the
3. PESTEL and SWOT analysis have dealers. The low selling dealers find it
been carried out in the context of MS difficult to indent for full truck loads.
and HSD. The demand of HSD is seasonal in nature. As
the tank trucks contracted at a depot are
Challenges In Secondary Logistics In dedicated with the capacities of the tank
Indian Petroleum Industry
trucks and fleet size determined based on
Indian secondary distribution infrastructure
average demand in previous years, the
has been developed by public sector oil
variation in demand leads to operational
companies over the years, keeping the
constraints in peak season and idling of the
storage points as near to the markets as
fleet in the off season.
possible. This ensured reliability and
The storage depots sell the product to
availability of product even in case of input
resellers after paying all taxes, including state
supply disruptions. Now that the inputs to
specific VAT. Hence, each state is required
storage depots is largely through pipelines,
to have its own storage depot. Moreover the
hence reliable supplies are available resulting
storage depot cannot supply the product to
in reduced storage requirements. Even the
adjoining states even if it is nearer without
nearness to markets is not the main criteria
incurring additional tax. This leads to
with the development of robust road network
inefficient logistics where the product is
in India. However, it is a challenge for Public
travelling longer distances, even if a nearby
Sector Oil Companies to re-align the markets
supply point is available in the adjoining
and close the unviable locations.
state.
The movement of MS and HSD from storage
depots to the retail outlets is through tank
trucks contracted through public tenders once
in three or five years. These contracts are
E 134
Factors Of Secondary Logistics foremost hygiene factor to retain the

The performance of a supply chain can be customer. The logistics of petroleum
ascertained from various perspectives. These products have to be foolproof to minimize the
have been identified as the Customer, chances of adulteration or short delivery of
Financial, Internal Business, Innovation and product. Since the petroleum is a naturally
Learning Perspectives. The Customer occurring substance, its quality is not
Perspective involves Product Quality, uniform. A range of parameters is specified
Product Service Level, Customer by various standards to ensure that the quality
Satisfaction, Responsiveness and Market of the product is maintained. The logistics of
Reach. The Financial Perspective means petroleum products have to ensure that the
Adherence to Budget, Transportation Costs, quality of the refined product at refinery gate
Operating Costs, Inventory and Cost Savings. is maintained till the product reaches the
The Internal Business Perspective caters to consumer. The control of OMCs is least
Timeliness, Waste Reduction, Accuracy, during secondary transportation when the
Utilization of Resources, and Shipment custody is transferred to channel partners.
Visibility. The Innovation & Learning Location of Retail Outlet : In petroleum
Perspective leads to Automation, Learning retailing, a customer visits the retail outlet en-
and Growth. Out of these Customer route to his/ her destination and location of
perspective have been found to be the most the retail outlet affects the chances of
important, followed by Internal Business, customer visiting and refuelling at a retail
Financial and Innovation and Learning in outlet. The location of retail outlet has
descending order of importance (R. P. significant effect on the choice of the
Mohanty, 2010). customer. From a logistics point of view the
Customer Perspective market shall be fed in such a way that he
Product Quality : In India the prices of diesel overall cost of placing the product is
and petrol have been deregulated and have minimum.
become market-determined at retail level and Service Level : The retail customer is
at the refinery gate. Deregulation is expected typically a motor vehicle owner, who visits a
to result in better service delivery on account Retail Outlet of an OMC to refuel the vehicle.
of increased competition (Economic Survey The customer can be further segmented into
of India, 2014-15). The product quality is the bike owner, car owner, commercial vehicle
E 135
owner or driver. The levels of service utilisation adds to the profitability of the
expected by each segment are different. dealer.
However, in general, the customer expects Transporter’s Perspective : Generally, each
availability , prompt and accurate delivery of storage depot of an OMC has a dedicated tank
product, availability of toilets, air and water truck fleet under its contract. The optimum
facilities, flexibility in mode of payments and utilization of this fleet is essential from the
other add on services. The service level of transporter’s perspective. A well managed
Retail Outlet is a major differentiating factor transporter can ensure timely delivery of
for the customer. product while maintaining its quality and
Dealer’s Perspective : The retail outlet quantity. Indian OMCs in the public sector
dealers in India are affiliated to a single OMC are engaging individual transporters through
and can have varying relationships with the public tender. The profitability of transporter
OMCs depending on the ownership of land, shall depend on the maximisation of
buildings and facilities. The petroleum being Kilometres run by its tank trucks since their
a low margin business, the dealer would capacity is constant and transportation rates
maximise its sale using its superior services are pre-determined through the contract. The
as there is no pricing flexibility available to transportation rates are established for
the dealer. The dealer would like to minimise distance travelled in kilometres multiplied by
the operating capital and would expect the volume carried by tank truck. However
expeditious delivery of product whenever a for short distances a minimum rate is fixed or
demand is placed. The OMCs also offer per kilolitre of product supplied. The
credit facilities to select high selling dealers transporter is able to offer lower rates at the
to encourage them to keep inventory of locations where business volume is more and
products. The flow of information regarding its fleet is optimally utilized.
product availability, product quality, Tank Internal Business Perspective:
Truck loading, availability of balance amount Operating Cost Reduction : Operating cost of
with OMC also enables RO dealer to plan its a storage depot comprised of inventory cost,
business activities optimally. Many of the wages and overtime to workers, handling
dealers have their own tank trucks under losses, power and utilities cost, facility
contract with OMCs and their optimum maintenance cost, etc. These costs can be
optimised if the operations are carried out in
E 136
batches rather than continuous operations back end. The telecom industry can be taken
where facilities are underutilized. as a good example where there is cut-throat
Financial Perspective : The cost of placing competition to woo the customers while
the product in a market has huge impact on sharing the mobile tower infrastructure.
the bottom line of the OMCs. In the primary The GST bill may lead to a tax regime where
logistics, the choice of mode of transportation the entire primary and secondary logistics of
significantly changes the logistics cost petroleum products will have to be re-
whereas in secondary logistics there is no worked. This will be a great opportunity for
choice. The objective of reducing the optimization of secondary logistics.
logistics cost has to be balanced with those of Although the petroleum products are not in
channel partners. the list of GST goods in the current bill ,but
there is a high probability of their inclusion
Opportunities In Secondary Logistics In after the success of the first phase. GST will
Indian Petroleum Industry be a huge opportunity for secondary logistics
Increased competition is forcing the OMCs to optimization and re-alignment of markets.
take drastic measures to optimize their The availability of digital maps, GPS systems
secondary logistics. The private players are on Tank Trucks and tracing of routes from
coming up with newer transportation models. storage depots to the retail outlets and
The OMCs will emulate and improve upon automation of retail outlets has opened a vast
the models based on the success of new field for analyzing the data available and
models. make logistic decisions and policies. The
The competition is indeed heating up. secondary logistics being the more
However, there is enough scope for co- complicated will benefit the most with the
operation among the oil companies. The increase in objectivity in decision making.
OMCs may enter into agreements to share
their infrastructure leading to saving in Pestel Analysis
capital cost and optimum utilization of Political:Petroleum products, especially MS
existing infrastructure leading to a win- win , HSD, SKO and LPG are politically sensitive
situation for both the companies. The future products. The general public is directly
scenario will be one of intense competition at affected by their pricing and Government of
the customer end and collaboration at the India does not have control of the cost of raw
E 137
material i.e. crude. Although all these in WPI is 1.09 % and 4.67 % respectively. An
products are distilled from the same crude, increase in price of MS and HSD by Rs 1 per
their pricing is different based on the litre leads to inflation of 0.02% and 0.07%
customer segment consuming them. MS is respectively. (PPAC, Nov'2015)
used in two and four wheelers by middle and Social: Consumption of petroleum products
high income groups. HSD is used in is an indicator of social and economic
commercial vehicles and any increase in its progress of a nation. The biomass or tree
price increases all other commodities being wood is the fuel for cooking food in the
transported across the country. The lowest segments of society who do not have
agriculture sector is a major user of HSD access to coal or petroleum products. It is still
making is more politically sensitive. the cheapest available fuel. The firewood
Currently there is an increasing trend of using needs to be collected from the nearby forest
HSD in high end private vehicles inciting a and is the most primitive fuel. With the
public debate on its pricing. Various restrictions on tree cutting, the next cheapest
governments have subsidized these fuels fuel for domestic and industrial use is coal.
when the crude prices were high and now SKO, being highly subsidized fuel, is used by
when the crude prices are low, the taxes and the poor for cooking and lighting purposes.
excise have been increased cushioning the The diversion of SKO for adulteration and
effect of variation in crude prices. Improved sale in the open market has forced the
secondary logistics will certainly increase the Government of India to target the subsidy
bottom lines of OMCs making them a little through direct benefit schemes. This scheme
more resilient towards input cost variations. has already been successfully implemented in
Economy: OMCs are among the largest LPG. However, LPG is being used by middle
commercial concerns in India and a major class society. Hence the use of petroleum
source of tax revenue for the central and state products improves the quality of human life
governments. The pricing of HSD impacts and is an indicator of the social progress.
the price of various commodities as Technological: The democratization of GPS
transportation is a significant factor in the and digital technology, the logistics sector
pricing of commodities at the particular has seen a quantum jump in data acquisition
location. The MS and HSD have a and decision making tools. The information
substantial impact on inflation. Their weight flow among the stakeholders of a company
E 138
and among the companies, is leading to SWOT Analysis

informed decisions bringing efficiency in Strength: The downstream Indian Petroleum
logistics. The secondary logistics being more Industry has the surplus production capacity
complicated than primary logistics as more and has capability to process a variety of
stakeholders are involved and custody of crude available from domestic and
product changes hands multiple times, the international sources. It is earning valuable
use of information technology tools will foreign exchange from export of refined
simplify decision making. products in the international market. Out of
Environmental: Optimisation in secondary total exports of $310 b in 2014-15, petroleum
logistics will certainly reduce carbon products accounted for $ 47.3 b which is 15.2
emissions with more efficiency in % of India’s gross exports. The Indian
transportation. The use of higher capacity refineries are capable of meeting the growth
tank trucks leads to higher fuel efficiency. in demand in near future. Hence product
However the high capacity tank trucks availability is an area of strength for the
increase the lot size for the lowest selling petroleum industry in India.
retail outlet dealers. Total Petroleum Products Pipeline in India
Legal: The petroleum products being was 12,129 Km long with a capacity of 86.76
inflammable in nature have always risk fire MMTPA as on 1st April’2015 (MOPNG,
as an occupational hazard. The Petroleum 2015) The construction new pipelines have
and Explosive Safety Organization (PESO) is not only improved reliability of
the statutory body issuing licenses for storage transportation of petroleum products but also
and transportation of hazardous petroleum contributed to reducing carbon emissions and
products under the Indian Petroleum Act increasing energy efficiency in transporting
1934.The storage capacities and petroleum products.
infrastructure of storage depots are regulated Weakness: Many refineries are inland
trough this act. The capacities and tank truck refineries and hence are unable to export their
size and fittings are also covered under the surplus products. The evacuation of certain
Act. The retail outlets, storage and products in periods of low demand becomes
infrastructure has to meet the requirement of a logistics challenge to OMCs. The pipeline
the act and rules framed under this act. infrastructure is not flexible enough to meet
the sudden surge in demand, coupled with the
E 139
product shortages due to periodic shutdowns optimization. Although each of the

of inland refineries. The other modes i.e. rail companies has optimization programs for
and road are incapable of taking the load primary logistics, there is ample scope for
during such contingencies. optimization of secondary logistics functions
Opportunity: There is an opportunity for the not only for increased margins for OMCs but
OMCs to collaborate at the back end to also for enhanced service levels to the
reduce their operating and logistics expenses customers and channel partners. The
and serve the customers better and improve transporters and retail outlet dealers are main
their margins. The secondary logistics have a channel partners who successively take
huge potential for optimization and has not custody of product before handing it over to
got its due attention from the oil industry. A the consumer. Any optimization model has to
model incorporating the perspectives of all take their perspectives into consideration.
the stakeholders leading to a reduction in the The business, financial, innovation and
cost of placement of product at retail outlets learning perspectives need to be balanced,
by optimization of operating and logistics making optimizing a multi objective
costs will improve the margins of OMCs. function.
Threat: The entry of private players in oil Flexible transport contracts and innovative
marketing may lead to a price war to gain logistics models shall evolve in secondary
higher market share, thereby further lowering logistics in OMCs as more and more data is
the marketing margins across the industry. made available through the adoption of GPS
The fluctuations in crude prices in the and information technology in decision
international market lead to wide variations making. The raw material cost and taxes
in prices of finished products and the OMCs being un-controllable costs for the OMCs,
focus are shifted and the savings in they can improve their margins by optimizing
optimization seem marginal as crude their operations and logistics costs. The
constitutes 90% of the input cost of primary logistics have already been in focus
petroleum products. of companies and is less complicated as the
custody of the product remains with the
Conclusion company. It is a challenge for OMCs in India
It can be concluded that the transportation to optimize their secondary logistics
cost of OMCs has ample scope for operations. This can be achieved through
E 140
adoption of higher technology and 6. Datta, B. K. (2008). Retrieved from

www.iimb.ernet.in:
collaboration among the OMCs thereby
http://www.iimb.ernet.in/~review/imrc2008/Resource
avoiding duplicity of infrastructure and
s/Datta.pdf
delivery of better value to the customer. The 7. Economic Survey of India. (2014-15).
development and adoption of flexible 8. (2015). Energy Statistic.
transportation models and re-alignment of 9. Gainsborough, M. (2006). Building World Class
Supply Chain Capability in Downstream Oil Business.
markets shall go a long way in improving the
Business
secondary logistics of the downstream
Briefing: Oil and Gas Processing, 29-32.
petroleum industry in India. 10.Hall, B. (2002). A Structure for Supply Chain
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selling petroleum products MS and HSD sold Crude Oil
Supply Chain. Logistics Innovation Management, 15
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(1), 8-23.
affect the day to day life of the Indian
11. HPCL Annual Report. (2014-15).
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Indian Economy. PetrolinIndiaBriefOverview.pdf. (n.d.). Retrieved
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Crude Oil Price Shocks and their Impact on Macro economy

Intkhab Hamid Zuberi*, Narendra Nath Dalei**, Alka Mittal***, Anshuman Gupta****
*
Oil and Natural Gas Corporation Limited, New Delhi (India)
**
Department of Economics & International Business, UPES
***Oil and Natural Gas Corporation Limited, New Delhi (India)
****Department of Economics & International Business, UPES
Abstract outside the economy, are unpredictable and

Crude oil shock and their impact of unexplainable and have great endogenous
macroeconomic parameters are widely impact on the economy. If the shocks are
investigated in this paper. The availability due to constrained supply, they are called
of crude oil plays a paramount role in the supply shocks and usually results in
growth of any country’s economy. The increase of the price of the product. The
world crude oil price, besides governed by technology shock is caused due to sudden
normal market forces, is greatly affected development of new technology and
from other factors like geo-politics, improves the productivity of the product.
economies of major countries and Inflationary shock may happen when the
technological advancements. The crude oil prices of the commodity increases abruptly
is such an important commodity that its for example if government subsidies are
price/availability influences the economies cut, there may be temporarily a loss in
of most of the nations and therefore needs purchasing power of the public as all the
to be studied for mitigating its extreme salaries are not adjusted immediately.
impacts. Similarly, if there is a sudden hike in energy
prices, the production costs of the corporate
Keywords
may increase while revenues may not
Oil Price Shocks, Gross Domestic Product,
increase in the same proportion leading to a
inflation, depreciation, Industrial
temporary loss.
Production Index.
In this paper, an attempt is made to bring
Introduction out all the issue arising out of a sudden
An economic shock is an unexpected or increase in crude oil prices. In section 2, the
unpredictable event that may affect the oil shock is explained. Section 2.1 brings
economy to a large extent on any side - out the various types of oil shock. Section
positive or negative. The shock factors are 2.2 details the direct and indirect effects of
exogenous in nature that is, they occur oil price shock. Section 2.3 reviews the
E 142
global effects of oil price shocks. In section B. Oil demand shock driven by economic
2.4, the effect of oil price shocks in Indian activity:
scenario is brought out. Section 3 puts up In case of demand driven shocks, the oil
the concluding remarks. price and production moves in the same
direction and increased demand is
Oil Shock
accommodated by increase in oil
Oil shock is defined as a sharp increase in
production by oil exporting countries. The
world oil prices that may have a potential to
increased demand of oil from emerging
rattle the global economy. Oil shock is one
economies like India and China is a good
type of Economic shock, exogenous in
example of demand driven oil shock. These
nature and may produce a significant
demand driven shock results in co-
change in the economy. These shocks are
movement of the world’s economic
unpredictable and typically impact supply
activity, oil production and oil prices.
or demand throughout the markets.
Hamilton (2000) briefly described some of C. Oil specific demand:
the events which led to large scale The shock as a consequence of fear/
disruptions in world oil supplies. speculation of future availability and/ or
price rise is examples in this category. The
Types of oil shocks
rise in demand of oil in this case is not
The oil shocks could be of three types (Gert
emanating due to the economic activity and
Peersman and Ine Van Robays, 2010):
so these shocks may affect the global
A. Oil supply shock: economic growth negatively.
These are the consequence of productions
In addition to the above three types of
disruptions caused by say military conflicts
shocks, Claudio Morana (2013) brought out
or reduction in quotas of oil exporting
one additional type of oil price shock
countries. In this case, since the shock is of
caused by the volatility in the Real and
exogenous in nature, both oil price and
Nominal prices. It was brought out that a
production moves opposite in oil supply/
positive shock in real oil price resulted in
demand curve. In such a situation, world’s
permanent increase in volatility of the
industrial production will not increase with
nominal price of oil and permanent
the increase in oil price.
appreciation of US Dollar exchange rate.
Also, positive shock of nominal price of oil
resulted in permanent increase in the real
E 143
price of oil with a depreciation of US Dollar The indirect effects may be induced
exchange rate. because of change in the pattern of
consumption and technology, labor/ capital
Direct and indirect effects of oil price
reallocation across different sectors. If
shocks
factors of production are product or sector
An oil shock may affect activity directly
specific, the oil shock may also induce
through various demand and supply
efficient technologies and durables which
channels. For example, the fear of future
may lead to capital and labor
unemployment/ longer unemployment
unemployment (Hamilton, 1988).
durations may induce a contraction in
household disposal of lower real income Effect of oil prices on Global level
after paying for energy bills (Edelstein and
Empirical evidence suggests that several
Kilian, 2009). Moreover, volatile and
factors are responsible for oil price shocks
higher oil prices may lead firms and
globally. Before proceeding to highlight the
consumers to postpone the irreversible
impact of oil price on global economy, it is
decisions on investments and durable
very important to explore the various
purchases, respectively (Bernanke, 1983;
factors responsible for oil price shock. It
Pindyck, 1991), uncertain oil prices via
may be noted that historically, most of the
operating through cost channels may have a
geopolitical and economic events happened
considerable influence as durable purchases
during first quarter of the event year except
may be postponed by consumers and firms
9-11 terrorist attack and global financial
may save on usage of capital due to
collapse which happened during 3rd quarter
increasing marginal cost, decreasing capital
of 2001 and 2008 respectively (see Table
& labour productivity (Pindyck and
1).
Rotember, 1984; Rotenberg and Woodford,
1996).
E 144
Fig.1: Crude oil prices and key geopolitical and economic events
Source: Compiled by authors from U.S. Energy Information Administration
According to the data base and analysis of seen in Nigeria, Venezuela, Iraq, Iran, and
U.S. Energy Information Administration Libya.
(EIA), much of the world's crude oil have (Price per barrel in real 2010 US$)
been found in regions that have historically 1: US spare capacity exhausted
been prone to political upheaval, or various 2: Arab Oil Embargo
political events have disrupted their oil 3: Iranian Revolution
production. Table 1 and Fig.1 show 4: Iran-Iraq War
simultaneous occurrence of the supply 5: Saudis abandon swing producer role
disruptions produced by political events 6: Iraq invades Kuwait
such as the Arab Oil Embargo in 1973-74, 7: Asian financial crisis
the Iranian revolution and Iran-Iraq war in 8: OPEC cuts production targets 1.7
the late 1970s and early 1980s, and Persian mmbpd
Gulf War in 1990 and major oil price 9: 9-11 attacks
shocks. Disruptions to supply or curbs on 10: Low spare capacity
potential development of resources from 11: Global financial collapse
political events have more recently been 12: OPEC cuts production targets 4.2
mmbpd
E 145
Table 1: Geopolitical and Economic Events
Legend Year Quarter Geopolitical and Crude oil Data Source/Type

Economic Events prices (price
per barrel in
real 2010 US$)
1 1971 1 US spare capacity 13.47 Imported refiner
exhausted acquisition cost of crude
oil
2 1973 1 Arab Oil Embargo 12.69 Imported refiner
acquisition cost of crude
oil
3 1978 1 Iranian Revolution 39.65 Imported refiner
oil
4 1980 1 Iran-Iraq War 75.1 Imported refiner
oil
5 1986 1 Saudis abandon swing 32.9 Imported refiner
producer role acquisition cost of crude
oil
6 1991 1 Iraq invades Kuwait 32.02 WTI crude oil price
7 1997 1 Asian financial crisis 29.31 WTI crude oil price
8 1999 1 OPEC cuts production 16.41 WTI crude oil price
targets 1.7 mmbpd
9 2001 3 9-11 attacks 31.76 WTI crude oil price
10 2005 1 Low spare capacity 54.71 WTI crude oil price
11 2008 3 Global financial 118.44 WTI crude oil price
collapse
12 2009 1 OPEC cuts production 42.89 WTI crude oil price
targets 4.2 mmbpd
Source: Compiled by authors from U.S. Energy Information Administration

Now coming back to oil shock, lot of disruption of energy supplies. A negative
research is done studying the effects of oil correlation of energy prices with
crisis on the global economies. Hamilton employment or aggregate output was also
(2000) brought out that the economic reported by Rashe and Tatom(1977 and
activity is affected significantly due to 1981), Hamilton(1983), Burbride and
E 146
Harrison(1984), Santini (1985 and 1992), as volatility of oil prices to study the impact
Gisser and Goodwin(1986), Rotemberg and of oil price.
Woodford (1996), Daniel (1997) and
A Cologni and M. Manera (2005) studied
Carruth, Hooker and Oswald(1998). At the
the effects of sharp rise in oil prices on the
same time, the direct negative contribution
economies of G-7 countries. The empirical
of oil shocks to downturns in economy
analysis confirmed that most of these
remained controversial to an extent as the
countries resorted to a contractionary policy
correlation appeared much weaker from the
of increasing the interest rates which lead to
data obtained after 1985 (Hooker, 1996).
reduction in the output growth as well as the
Although it was reported that exogenous
inflation rate.
disruptions in oil supplies is an important
factor causing economic downturns , but R.J. Rodriguez (2008) analyzed the
the study finds it difficult to attribute it’s influence of oil prices shock on the
movement along an aggregate production industrial output of 6 industrialized
function. Hamilton (2005) also brought out countries and found out that its pattern is
that out of ten US recessions, nine were diverse for four EMU countries ( France,
preceded by large increases of oil prices. Germany, Italy and Spain) but is very
similar for UK and USA.
J. Cunado, F P d Gracia (2003) analyzed the
effects of oil prices on inflation and Theo Naccahe (2010) analyzed the
Industrial production indexes(IPI) for asymmetry and weakening of the oil prices
European countries. The study brought out relationship with macroeconomy after early
that oil prices permanently affect the eighties. After analyzing and filtering the
interest rates but has a short term and slow price variations of oil prices, it was
asymmetric impact on industrial production found out that oil prices acceleration and
growth. Also considerable differences were GDP relationship has been growing
found among some European countries on stronger since early eighties.
the impact of oil prices on inflation and
S. Rahman and A. Serletis (2010)
Industrial production.
investigated the asymmetrical effects of oil
B.N. Huang, M.J. Hwang and H.P. Peng price shocks and the monetary policy on the
(2005) applied multivariate threshold macro economy considering the data of
autoregressive model (MVTAR) model for USA from the period 1983 to 2008. They
three countries namely Canada, Japan & US found that a large literature (Herrera and
and used threshold levels of change as well Pesavento, 2009 and Killian & Lewis,
E 147
2009) investigates whether the economic investment growth, higher inflation and a
effects also depends the response of week exchange rate. Also oil shocks lead to
monetary policy along with oil prices deterioration in current account and
shocks. Bernanke et al (1997) argued that depletion in foreign exchange (forex)
the monetary policy of increasing the reserves.
interest rates at the time of oil price shocks
Effect of Oil prices-Indian context
caused the economic downturn. However,
The study of effects of oil price on Indian
Hamilton and Herrera (2004) argued that
Economy is very significant considering
these monetary policies played only a
India’s position in the world oil market.
secondary role and increase in oil prices
India is the fourth largest consumer as well
directly leads to reduced economic growth.
as fourth largest importer of oil after United
The empirical studies carried out for US States, China and Japan as of Jan 1st 2014.
indicates that till mid 1980s, price of oil was As per the Petroleum and Natural Gas
a significant determinant of the macro (PNG) statistics 2014-15 released by
economic activity ( Aguiar Conraria and Ministry of Petroleum &Natural Gas
Soares, 2011; Aguirar Conraria and Wen, (MoP&NG), India’s import dependency of
2007; Gisser and Goodwin, 1986; crude oil is around 78% and its crude oil &
Hamilton, 1983, 1985) but after 1985, their petroleum products net imports are valued
correlation is not clear(Hooker, 1996). at INR(Indian Rupee) 4,715 billion which
is 30% of the total import of the country.
Claudio Morana (2013) investigated the oil
Thus the import of crude oil & petroleum
price to macro economy relationship
products plays a vital role in India’s
through a large scale macro financial
economy.
econometric model. The findings provided
inter-alia recessionary effects associated to Surender Kumar (2009) studied the impact
the oil price shocks w.r.t the first & second of oil price on India’s industrial production
Persian Gulf wars and the market supply for the period 1975Q1 to 2004Q3 whereby
side oil shock of 2008. in addition to its positive relation, it was
also found out that oil prices were Granger
L.S.V.Portes (2012) studied the effects of
causing the macroeconomic activities.
high and volatile oil prices on the Central
American and Caribbean economies. He M. Akram & R. Mortazavi (2011)
found that at macroeconomic level, high oil investigated impacts of oil prices on macro
prices are associated with low GDP, low economies of India, Bangladesh & Pakistan
E 148
by multivariate time series analysis. In the in long term implicating a weak long run
study, it was indicated that the impact of oil effect on the Indian macroeconomy.
prices on India is more negative than on
S.Ghosh and N.Sivakumar (2015) studied
Pakistan & Bangladesh. Also, the fall of
the impact of oil prices on the economic
crude prices Granger causes growth in India
parameters of India using Beta Clustering
but not in Bangladesh& Pakistan.
approach. Using the technique of clustering
N.R.Bhanumurthy, Surajit Das and of K-means, the various economic
Sukanya Bose (2012) analyzed the impact parameters are grouped into four impact
of international oil price with the domestic clusters- General Economy, Sectoral
oil pass through policy on macroeconomic efficiency, Sectoral profitably and
variables in Indian context. It was brought Economic policy.
that in the extant partial pass through
J Cunado, S Jo and F.P.D.Gracia (2015)
policy, a 10% rise in oil price will result in
studied the effect of oil shocks on the macro
0.6% fall of growth, while in full pass
economy of four top oil consuming Asian
through policy, the growth rate can
economies namely- Japan, Korea, India &
decrease by 0.9%.
Indonesia. The study brings out that the
M. Hassanpour (2013) examined the long effect varies according to the type of shock;
term relationship between oil prices and a supply shock has a limited impact.
India’s GDP and brought out that 1% rise in However a global demand driven oil shock
oil prices will bring down the GDP by has a considerable positive effect on all
0.065418%. these Asian economies.
Z.Ftiti, A.Tiwari and I.Fatnassi (2014) Conclusion

focused on the relationship of oil prices and From the recent studies on the
fundamental macroeconomic indices industrialized countries, it evolves that due
(industrial production, inflation, trade to the exogenous oil supply shocks, the net
deficit and US-India exchange rate) using oil importing countries faces a permanent
correlation and also dynamic correlation decrease in economic activity and increased
techniques. The study finds out different inflation. However, the long term impact of
patterns between co-movement of oil price oil price shock on net exporter country’s
index and macroeconomic indices. These real GDP is not very significant or positive.
co-movements are higher in short term than Thus, the effects of these oil price shocks
for countries which have improved their
E 149
position in oil/ energy is getting favorable wavelets to analyze old issues." Empirical
Economics 40.3 (2011): 645-655.
over time.
Alessandro Cologni and MatteoManera, “Oil
Apart from oil/ energy, other factors like Prices, Inflation and Interest Rates in a
Structural Cointegerated VAR Model for
monetary policies, characteristics of labour
the G-7 countries”, FondazioneEni Enrico
market or structural factors do have a
Mattei
considerable influence on economic Bernanke, Ben S. Non-monetary effects of the
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Bwo-Nung Huang, M.J. Hwang and Hsiao-Ping
inflation are although, to an extent, Peng, “The asymmetry of the impact of oil
dependent upon the quantum of pass- price shocks on economic activities: An
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E 152
Demand forecasting for Installation Capacity of power sector: A

Cost Effective Approach
M V S Sai Hemant1, Dr. Rajeev Sharma **, Dr. Hiranmoy Roy***
*BBA FT – Semester IV student at UPES
**Asst. Prof – SG at UPES
*** Asst. Prof – SG at UPES
Abstract additionally one of the essential need such

The Power has slowly crept into human life as food & water for people. For maintaining
as an essential element & it is now GDP development rate of 6 to 7 % power
impossible to even think of without power generation needs to develop at approx. 8-9
for a day. Growth & sustenance of the %. India has more than 1.252 billion
Power sector has become a prerequisite of individuals and one can envision the power
development of any nation. The evaluated demand in the nation. Electricity was a
demand of power by 2030 is 950 GW.2 scientific curiosity before the era of 2750
which is immense and will be exceptionally BC and turned into an essential tool for
troublesome for the nation to supply. This modern era after 19th century due to
paper is an attempt to find the optimum mix contribution of great scientists like Michael
of Installation capacity on the basis of cost Faraday, Thomas Alva Edison, and Nikola
efficiency, which is necessary to be Tesla etc.3 The Demand of Electricity is at
installed within next 15 years. Also this peak while the supply is less. The
paper speaks about the reasons for PLF and significant explanations behind lesser
T&D losses and gives out the way for supply than interest is because of lower
reducing these losses. production and losses in the form of
transmission and dissemination. This paper
Keywords
is an endeavour to investigate answer for
Plant Load Factor, Transmission and
take care of the expanding demand of
Distribution Losses
power/lessen crevice between demand and
supply in India through expansion in
Introduction installation capacity with ideal blend of
Power is an essential input to maintain conventional & non-conventional energy
economic progress of the nation. It is sources.
2 [ http://www.cea.nic.in/reports/month to month/installedcapacity/2015/installed_capacity-10.pdf dated on 9/12/2015].

3 [ Source: https://en.wikipedia.org/wiki/Electricity. ) dated on 8/12/2015].
E 153
Major energy sources for power production now, to take care of the aggregate energy
in India are (a) Thermal (b) Hydro (c) demand by 2030.
Nuclear (d) Solar (e) Wind
Problem statement
Present status of Installation Capacity4
1. The demand for power in the blink of
Table 1 an eye is at peak and the installed
capacity is around 280.328 GW.5 The
S.No. Power Source % in total
evaluated demand of power by 2030 is
installed capacity
950 GW.6which is immense and will be
1 Thermal Power Plant 69.8%
exceptionally troublesome for the
2 Hydro Electricity 15.2%
nation to supply.
3 Nuclear power 2.1%
2. Other than demand and supply of
4 Other Alt. Sources 13%
power, the real issue is loss of power
due Transmission and distribution
losses and low PLF.
Objective
1) To expansion the installation capacity
of the nation by 600 GW in next 15
years, i.e. by 2030 with ideal blend of
conventional & non-conventional
energy sources i.e. combination of coal
, nuclear, Hydel and solar and wind
sources.
Figure 1
2) To arrange out the approaches to
From above it can be seen that, real source diminish PLF and T&D Losses.
of energy for power generation in INDIA is
coal. In any case, as it is a quick draining Methodology
valuable assets, an ideal blend of coal and Secondary data has been used from the
the other energy assets ought to be arranged sources mentioned below:
4(http://powermin.nic.in/power-sector-glance-all-india) dated dated on 9/12/2015].

on 9/12/2015 6 [ http://www.cea.nic.in/reports/month to
5[ http://www.cea.nic.in/reports/month to month/installedcapacity/2015/installed_capacity-10.pdf
month/installedcapacity/2015/installed_capacity-10.pdf dated on 9/12/2015].
E 154
Source of Data: power, financial input i.e capital investment

1. Annual report of Central Electricity required would be major deciding factor.
Authority 2012-13, Main aim is to achieve Installed Capacity of
2. Coal Annual report 2014-15, about 600 GW with optimum cost and to
4. Coal directory of India 2013-14, Coal fulfill the power demand of the country.
in India The average cost of setting up a power
plants with Solar/ Wind/ Hydel/coal based/
5. 2015 by www. Industry.gov. Au/oce,
Nuclear Power Plant per 1 MW is shown
nd
6. Energy statistics 2015 22 issue, below in a tabular form based on the
8. Load generation Balance Report 2015- information procured from different
16 sources
Tools used: Table 2
1. Mathematical equations,
2. Hit & Trial method,
3. Graphs & Charts
Data analysis
In India major contribution to generation of
electricity is coal based thermal power
plants. The coal being supplied for one of
To achieve an optimized mix of various
GW capacity coal based power plant per
sources of energy to achieve target installed
annum is
capacity of 600 GW by 2030, hit and trial
method has been adopted. The details are as
under:
Case-1:
Table 3
MT of coal is required per annum for

operating 1000 MW CBTPP. To arrive at
optimum mix of capacity should be
installed in different sectors such as solar,
hydro, coal based thermal, wind & Nuclear
E 155
In Case 1, capacity addition of 250 GW of Case 3:

Solar Power Plants,100 GW of wind Power
Table 5
Plants,80 GW of Hydro Power Plants,190
GW of Coal Based Thermal Power Plants
and 80 GW of Nuclear Power Plants has
been considered ,. For this combination,
minimum cost of INR 34, 61,500 Cr. to
Maximum cost of INR 39, 19, 000 Cr has
been worked out.
Here, in Case 3 we reduced CBTPP by 100
Case 2:
GW and increased SPP by 100 GW, and
Table 4
arrived at Minimum required investment of
INR 28,79,000 Cr. to Maximum investment
of INR 33, 55,000 Cr.
Case 4:
Table 6
In Case-2, capacity addition of 100 GW

Solar Power Plants, 50 GW of Wind
Power, 400 GW Coal Based Thermal
Power Plants, 100 GW of Hydro Power
Plant and 50 GW of Nuclear Power Plant In case 4, Installation Capacity of SPP &
has been considered. With this CBTPP of CASE 3 have been interchanged
combination, an estimated investment of whereas installation capacity of HPP, NPP
minimum INR 35,08,000 Cr. and Maximum & WPP have been varied and the result is
40,40,000 Cr. Would be required. investment of INR 28,98,200 Cr. to INR
33,20,000 Cr.
E 156
Case 5: MT which is more than the present demand

by power utilities.
Table 7
 Present off take of coal by Power
Utilities = 418.489 MT7
To estimate the availability of domestic non

coking coal by 2030, year wise coal
In case -5,Installation Capacity of SPP &
production from 2005 to 2014 has been
CBTPP have been fixed to their installation
taken from Table1.2, Coal Directory 2013-
capacity in their previous values of Case-3
14, By Ministry of Coal and is indicated in
and installation capacity of HPP, NPP &
Table 8
WPP have been fixed to their previous
values in case - 4 and the result is follows, Table 8
Minimum cost of INR 28,48,200 Cr. to INR
34,30,000 Cr.
Considering required investment in all

cases, optimum combination is CASE -3.
Accordingly, coal demand prediction can
be done as follows:
Average CAGR in Coal production

calculated from 2005-2014 comes out to
be 3.44%8. Based on this, we can estimate
the indigenous non coking coal production
by 2030, which comes out to be 845.2793
Hence, as per the analysis predicted coal
MT9. Considering the percentage of Non-
demand for Power sector would be 712.65
Coking Coal supplied to Power Utilities in
7 provisional coal statistics 2014-15, Published under calculator/?present_value=375.528&future_value=508.9

Ministry of Coal, G.O.I, by coal controller’s 47&num=9
organisation, Kolkata on September, 2015. 9 http://ncalculators.com/investment/cagr-compound-
8 http://www.miniwebtool.com/cagr- annual-growth-rate-calculator.htm
E 157
2014-15 in total Non-Coking Coal From the above, it can be seen that there is
Produced in 2014-1510. a huge demand & supply gap for coal to
power utilities of the country. This gap has
to be reduced by import substitution.
Therefore the amount of coal to be imported
approximately in 2030, would be around
493.798 MT
Analysis of losses
PLF
‘Plant Load Factor’ or ‘(PLF)’ in
relation to thermal generating station or
unit for a given period means the total
sent out energy corresponding to
scheduled generation during the period,
expressed as a percentage of sent out
energy corresponding to installed
capacity in that period11. It means if there
is an installed capacity of 100 MW with
PLF of 70 %, it is generating power of 75
MW.
PLF Levels in different Power generating

Considering the same share of 75.40% of sectors of INDIA are
Non-Coking Coal Produced would be
supplied to Power Utilities by 2030 also, The data in the table below clearly
estimated coal availability to power utilities
depicts the falling trend of PLF level of
would be 637.34 MT, Therefore, there will
be a gap between demand & supply of coal different power generating sectors in the
to Power Utilities. country. Also, we can see right now in
2015 the PLF level central based PSU’s
are 73.46%, state owned SEB’s is at
56.07%, and private sector are operating
at 57.48% so that simply states the PLF
10Using data from provisional coal statistics 2014-15, 11

Final CERC Regulations 2014-19.pdf
Published under Ministry of Coal, G.O.I, by coal
controller’s organisation, Kolkata on September, 2015.
E 158
Level of our Power generating

companies is not even 60% of their total
Potential. The aggregate PLF Level is
61.8%
Figure 2
Table 9
Plant Load Factor (PLF):
Notwithstanding the fact that many of the Thermal Power Station (TPSs) in the country are very old, the plant
load factor has shown improvement over the years 2009-10 to 2012-13.
The PLF in the country during 2009-10 to 2015-16 is as under:
Target Actual Sector-wise Actual

Year
% % Central State Private
2009-10 77.2 77.5 85.5 70.9 83.9
2010-11 72.1 75.1 85.1 66.7 80.7
2011-12 68.7 73.3 82.1 68 69.5
2012-13 70 69.9 79.2 65.6 64.1
2013-14 69.6 65.6 76.1 59.1 62.1
2014-15 65.52 64.46 73.96 59.83 60.58
2015-16(Upto
66.27 61.78 72.23 55.34 59.35
October 2015)
Source: http://powermin.nic.in/power-sector-glance-all-india dated on 18/11/2015,

published by Ministry of Power, GOI.
E 159
Transmission & Distribution Loss of WPP, NPP of 25 GW, HPP of 50 GW,

(T&D Loss)12 and CBTPP of 300 GW. For introducing
300 GW coal based Power plant, coal
In India, average T & D (Transmission &
demand would ascend to 1131.139 MT.
Distribution) losses, have been officially
There would be a colossal crevice of
indicated as 23 percent of the electricity
493.798 MT between demand and
generated. Energy losses occur in the
Supply of Coal. This crevice ought to be
process of supplying electricity to
met by Coal Imports.
consumers due to technical and
commercial losses. The technical losses Major reasons for PLF Loss
are due to energy dissipated in the
 Lack of Infrastructure in coal &
conductors and equipment used for
Power sector.
transmission, transformation, sub-
transmission and distribution of power.  Lack of Investments in coal & Power
These technical losses are inherent in a sector.
system and can be reduced to an optimum  Lack of coal imports from the
level with improving technology. The cheaper & abundant market
commercial losses are caused by
 Logistics problems in coal sector.
pilferage, defective meters, and errors in
meter reading and in estimating
unmetered supply of energy.
Reasons for T&D Losses13
Result
1. Technical Losses14
It can be concluded from the examination  Inadequate investment on
and forecasts, most optimum mix of transmission and distribution,
energy source for expanding installed particularly in sub-transmission and
capacity in light of cost is case 3. distribution.
Accordingly, correct blend of capacity
 Haphazard growths of sub-
establishment is 200 GW of SPP, 25 GW
transmission and distribution system
12 13
(http://www.teriin.org/upfiles/pub/papers/ft (http://www.teriin.org/upfiles/pub/papers/ft33.pdf),
33.pdf) , read on 9/12/2015 read on 9/12/2015
14
(http://www.teriin.org/upfiles/pub/papers/ft33.pdf),
read on 9/12/2015
E 160
with the short-term objective of  Changing C.T.ratio and reducing the

extension of power supply to new recording.
areas.
 Errors in meter reading and
 Large scale rural electrification recording.
through long 11kV and LT lines.
Limitations
 Too many stage of transformations. 1. Huge measure of Investments are
required in limited capacity of time.
 Improper load management.
2. Imports of coal will Increase which
 Inadequate reactive compensation
will offer ascent to Balance Of
 Poor quality of equipment used in Payments issues to nation.
agricultural pumping in rural areas,
Conclusion
cooler air-conditioners and industrial
Analysis came about that we have to
loads in urban areas.
build the installation capacity on the
2. Commercial Losses 15
premise of cost proficiency by 600 GW
 Making unauthorized extensions of through introducing 200 GW of Solar
loads, especially those having “H.P.” Power Plants, 25 GW of Wind Power
tariff. Plants, Nuclear Power Plants of 25 GW,
 Tampering the meter readings by Hydro Power Plants of 50 GW, and Coal
mechanical jerks, placement of Based Thermal Power Plants of 300 GW
powerful magnets or disturbing the in next 15 years. This is an enormous
disc rotation with foreign matters. target to accomplish in less time

accessible. For achieving this, India
 Stopping the meters by remote
needs high amount of investments in both
control.
Coal & Power sector with more
 Willful burning of meters. liberalized policy in coal & Power sector.
 Changing the sequence of terminal With establishment of 300 GW of Coal

wiring. Based Thermal Power Plants the coal
demand will rise and there might be a
 Bypassing the meter.
15(http://www.teriin.org/upfiles/pub/papers/ft33.pdf
),
E 161
crevice of 493.798 MT of coal which can can be taken to reduce PLF problems
be secured by Import substitution. are:-
The potential markets for Import of coal 1) Renovation of Power Plants and
are PR China, Australia, Indonesia, USA, Proper Regular Maintenance of
Vietnam and so forth. India Imports Power Plants.
extensive measure of coal from USA,
2) Setting up more Power Plant
Australia, Indonesia, South Africa and so
Consultancies.
forth. The least expensive coal business
sector is Asia and USA16 yet India doesn't 3) More & More investments in coal &
import coal from China because of Power Sector.
overwhelming logistics charges. 4) Increasing Privatization in Power

Unexpectedly, China likewise confronts Distribution sector so that incorrect
the same demand and supply of coal projection of demand by
issues like India. Hence China Imports Distribution sector is diminished.
substantial measure of coal from And the Transmission & Distribution
Vietnam .Vietnam may be a decent
17
Losses are majorly due to technical and
choice for coal imports for India in light commercial losses. T&D Losses can be
of the fact that the lower logistics charges reduced through19
for Import of coal from Vietnam. At this
1. More & More investments in
moment India is Importing 212.10 MT
Transmission & Distributing sector.
Coal18 and generally there will be an
expansion by 300 MT of coal in next 15 2. Make vigilance squads to check and
years so India needs to investigate more anticipate pilferage of energy.
alternatives for coal imports.
3. Serious punishments might be
Advancing, the issues of PLF is because forced on those messing around with
of part of Power plants of India have the meter seals and so on.
ended up old and numerous break downs
4. Energy audits should be introduced
and another reason is inferior grade coal
and personal responsibility should
delivered ingeniously. The steps which
be fixed on the district officers
16 [ table 10.4.1 in Coal Directory 2013-14] Published under Ministry of Coal, G.O.I, by coal
17[ (https://en.wikipedia.org/wiki/Coal_in_China#Internat controller's association, Kolkata on September, 2015.]
ional_opinions), read on 8/12/2015] 19 (http://www.teriin.org/upfiles/pub/papers/ft33.pdf),
18 [ (Source: temporary coal measurements 2014-15),
E 162
(executive engineers) for energy  Installed Coal Based Thermal Power

received and energy sales in each Plants (CBTPP) = 176.13788 GW22.
area.
 Coal demand (CD) = 787.03 MT23
5. Installation of tamper-proof meter
 Coal supply (CS) [domestic +
boxes and use of tamper-proof
Imports ] = 824.538 MT24
numbered seals.
 Domestic CS = 612.435 MT25
6. Providing adequate meter testing
facilities. A time bound program  Imported CS = 212.103 MT26
should be chalked out for checking  Non Coaking Coal Produced =

the meters, and replacement of 554.984 MT27
defective meters with tested meters.
 Indian Proven coal reserves by
1/4/15 = 131614 MT28
Appendix  And total coal availability is by

Summary of data 1/4/15 = 306596 MT29
 Power demand in India in 2015 is
 Supply of raw coal in India to power
350 GW.
utility sector = 418.489 MT30
 Installed capacity (IC) = 280.324
 Total offtake of raw coal = 608.206
GW.20
MT31
 Installed Thermal Power Plants
 Total coal exports = 1.238 MT32
(TPP) = 195.6689 GW. 21
20(http://www.cea.nic.in/reports/monthly/installedcapacity/2015/ organisation, Kolkata on September, 2015.

installed_capacity-10.pdf), dated on 31/10/2015 28 Source: provisional coal statistics 2014-15, Published
21 (http://powermin.nic.in/power-sector-glance-all-india)
under Ministry of Coal, G.O.I, by coal controller’s
22 (http://powermin.nic.in/power-sector-glance-all-india)
organisation, Kolkata on September, 2015.
23 Source: Coal Annual Report 2014-15, published by 29 Source: provisional coal statistics 2014-15, Published
Ministry of Coal. under Ministry of Coal, G.O.I, by coal controller’s

24Source: provisional coal statistics 2014-15, Published
under Ministry of Coal, G.O.I, by coal controller’s 30 Source: provisional coal statistics 2014-15, Published
organisation, Kolkata on September, 2015. under Ministry of Coal, G.O.I, by coal controller’s
25Source: provisional coal statistics 2014-15, Published
26 Source: provisional coal statistics 2014-15, Published
27 provisional coal statistics 2014-15, Published under
Ministry of Coal, G.O.I, by coal controller’s
E 163
Parameters/Abbreviations
IC Installed Capacity
TPP Thermal Power Plant
HPP Hydro Power Plant
SPP Solar Power Plant
WPP wind Power Plant
NPP Nuclear Power Plant
OGPP oil & Gas power plants
BPP Bio-gas Power Plants
MT Million Metric Tonnes
CAGR Compound Annual Growth Rate
E 164
Derivation and Correlation of Human Involvement in Assessment of

Demand Scheduling in the Process of Logistics improvement in an
Oil Refinery
Pankaj Mohan Prasad*, Dr. Shailendra K. Pokhriyal**
*Assistant Professor, College of Management and Economic studies, UPES
**Professor & Head (Department of Oil & Gas), College of Management and Economic studies, UPES
Abstract time and place with maximum efficiency

The paper is an exploration of a novel and the least cost. Scheduling is generally
concept to reduce the mechanistic understood to be fulfilling the demand
dependency of the Human (Personnel) supply requirements in an organized way
involved in the routine jobs of refinery throughout the organization and is further
demand assessment and scheduling classified unit-wise, product-wise, quality
operations. It highlights the importance of wise, price wise etc. On a broader terms the
scheduling and the factors for an optimal factors driving logistics plan depends on the
job. The paper identifies and incorporates following factors:
the Human Factors and derives a mechanism 1. The proper scheduling of the
in a model based analysis to understand and material .
optimize the productivity output, in the 2. Proper communication.
scheduling operations, and better and 3. Right tools for schedule the supply
efficient way of achieving company and delivery process.
objectives. 4. Choice of the right vendor.
5. Flow of information smoothly.
Key Words 6. A perfect coordination among the
Supply, demand, humans, productivity personnel involved.
7. A verification system to eradicate
Introduction errors and minimize costs and losses.
The process of logistics scheduling aims at
making available material and products at There are several factors contributing to its
efficacy7. They can be categorized to,
E 165
according to previous theories, dependent 2. The representing world — a set of

upon two major variables: symbols;
1. Humans 3. An interpreter (which includes
2. Machine procedure for operating upon the
3. Human Machine Interface(HMI) representation) .
The ongoing trend is that of perfecting and This concept deals with the perspectives
developing the Human Machine Interface of:-
(HMI). 1) Problem recognition , dealing with:
The HMI concept is based on the user a) Efficacy and quality
friendliness and interactive feature between b) Economy and Sustainability
the Man and the Machine. Norman10 c) Safety and Reliability of Human
delineates three critical component of an component
artifact, or tool: their role in enhancing 2) Problem identification:
recognition; the degrees of engagement that a) Systemic approach--------
one can experience; and the roles of Systemic approach-----HMI------
representational format. Artifacts act as ---- Software Hardware
mediators between the users and the world, Interactions
both in execution and in perception. From b) This perspective deals with the
Norman’s perspective, an interactive Reliability and Safety of Human
scheduler is a representational system – Machine Interactions(HMI)
having the following elements: 3) Cognistic Engineering Perspective:
1. The represented world — the This deals with user centered design
manufacturing environment;
E 166
This paper is a novel development after that as designed by the company goal
in the field of Human Machine Interaction requirement.
(HMI). The focus is on the Humans as Human Association2 with the connected jobs
contradictory to the previous theory in to not let isolation and inefficiency creep in.
which it the focus was on maximizing the Hence the paper takes up the task of proper
efficiency through better machine and analysis of Human Factor Identification and
software development to suit the Humans its relative effectiveness with the overall job
working with. The present theory makes for to do a productive assigned job.This paper
understanding the human traits and qualities examines the factors leading to supply chain
to suit the job even along with the machines. efficiency and proper management, leading
The drawback10 associated with the previous to margin and profitability improvement in
theory ignored the necessity of Human oil and gas industry, with particular
perfection, the current the current emphasis emphasis on the scheduling process.
on Humans and their trait wise qualities is
stressed to be of utmost importance in doing This is a conceptual approach in identifying
a good job. These traits need to be identified what is in a simplified form a novel
and isolated and assessed using various tools development in assessing and evaluating the
as to how suited they are to the jobs supply margin linkage. What is new in this
assigned and in giving a good performance paper is the development of a concept in
which a method of rationalization of the
E 167
demand assessment of the product material b. Underestimation leads to

is made. It highlights the importance of the frequent order placements and
training need and compliance of the thereby more costs.
personnel involved, in procurement process c. Improper communication leads
of the material, also stressing the need for to spoilt relation with the vendor
training programs to specifically train the and an image distortion in the
people in the need be so. market and consequently affects
the image and brand name of the
Assessment is a critical factor because: company.
1) Proper assessment links to entire
manufacturing cycle. It attaches the 3. Another factor that affects the
importance of knowledge connected schedule and assessment process is
with : the: Type of Organization: The type3
a. Company profile. of the organization in the subject
b. Process flow concerned is also an important point
c. Product info. to be kept in mind. Companies are
d. Quality concern also Standards related conforming to
e. Cost savings given norms to have an authorized
f. Profit margins certification of meeting the market
challenges and be of competitive and
2. Knowledge based and educated quality standards to fulfill the
assessment process is always better consumer bases legally and
and recommended over uneducated justifiably.
guesswork relying on chance and
trial. This is important to best judge 4. Threats: Organizations always have
the suitability of the person for the to be on their toes to meet the threats
job. on various counts. Threats increase
a. Erroneous estimation leads to the liability6 of the organization and
inventory build up leading to increase the chances of liquidation
carrying costs and increased and business shut down and closures.
expenses. These threats arise on the grounds of:
E 168
a. Unsuitable personnel. 2. Machine

b. Poorly trained staff 3. Man(Human)
c. Inefficiencies
d. Quality failures The factors can be symbolized by M3.
e. Carelessness and negligence The M3 is further classified into:
1. M3(H+): This denotes high Human
The paper focusses on how demand involvement.
assessment is linked to Human factor (H) in 2. M3(H-): This denotes low Human
making effective scheduling programs: involvement
The Human Factors are: The Demand Assessment calls for Human
1. The capacity to make effective Involvement depending on the system in
decisions. These depend upon: use. For example: An oil refinery industry /
a. Education and knowledge of the refinery for example would be characterized
job and on educational by unit wide dependency of the Human
qualification. Factor.
b. The motivation to repeat the job
and enthuse others for regularly 1. A Hydrocracking unit or a
good results conversion unit might use a
c. The realization of accountability conversion factor as high as 30% as
or fear of being punished. a Relativity Factor Association
d. Self development awareness and (RFA) with the next or previous
career growth ambitions for units.
effective contribution to 2. The next step would be to highlight
company goals the Human Involvement Factor (H)
and RFA to draw maximum
A Conceptual Model productivity in the refinery
The Human Factor Analysis: The three 3. The RFA is gauged considering the
factors7 involved in the demand assessment OBSERVED input / output traits
for scheduling operations involve the: over a time period on a percentage
1. Material factor basis
E 169
correlation (2) using the weighted average

mechanism:
The formula derived will be:

The above depiction explains different kinds
of H+ factor, priority-wise, say, for example
in an oil refinery: There are factors not directly connected but
+
1. H connotation is for High associated, they are explained by:
involvement for a manager 1. Interest
(productivity) 2. Dedication
=
2. H connotes medium involvement 3. Motivation
(Neutrality) 4. Knowledge etc.
3. H- connotes a low involvement
(liability) They can be clubbed together as a number/
integer ranked on scale convenient and
The permutation-combination linkage added to
between Human Factor (H) and the RFA is The equation 1.
given by the universal formula:
And denoted as PA(Plus F):
Where n= the number of cases

So to get the overall value of the indicator of
r=the number of number team
Human Factor, we take the simple average
member in a group
of
p= probability of success
q= probability of failure
The H factor can be further refined to be

Where
operated under constraints:
H** to be a targeted
H* to be constrained
The next objective is to rationalize the H
Together they can be termed as Contributory
factor maximized for H in H and RFA
Factor. Nearness Factor can be scaled to
E 170
denote each Human Involvement divided by insight in to the human development process
his or her contributory factor. and gives a better understanding and
contribution to the broader concepts of
NF1 = Indicates high involvement , better scheduling and demand assessment, in
contribution and good estimation pursuant with the organizational goals.
characteristics References
NF2 = Indicates improvement necessary 1. State of Logistics Report, Council for Logistics
Management, 2004.
NF3 = lower still involvement
2. Stewart, G.B., The Quest for Value, Harper
These can be computed till …n
Business, 1991 (EVA is a registered trademark of
Thus each Human Factor is characterized Stern Stewart & Co).
and denoted by his or hers effectiveness . 3. Buffet, W., Annual Report, Berkshire Hathaway
Assessing these sums up all the factors and Corporation, 1994.
4. Srivastava, R. et al., ‘Market-Based Assets and
for the most optimal9 human involvement
Shareholder Value: A Framework for Analysis’,
and results.
Journal of Marketing, Vol. 62, No. 1, January 1998,
Conclusion pp. 2–18.
The use of intelligent human decision 6. Johnson, H.T. and Kaplan, R.S., Relevance Lost:
makers with vast local knowledge also The Rise and Fall of Management Accounting,
Harvard Business School Press, 1987.
obviates the need for an exhaustive
7. Barrett, T., ‘Mission Costing: A New Approach to
knowledge base. There are two options or
Logistics Analysis’ International Journal of Physical
ways out. Firstly the tools need be more user Distribution and Materials Management, Vol 12, No.
friendly with productivity increase 7, 1982.
objective. Here the machines are made to 8. Shillinglow, G., ‘The Concept of Attributable
Cost’, Journal of Accounting Research, Vol. 1, No. 1,
make humans comfortable. But as the
Spring 1963.
second option , another way to think and
9. Cooper, R. and Kaplan, R.S., ‘Profit Priorities
work on could be to increase human from Activity-Based Costing’ Harvard Business
effectiveness. To be able to train the Review, May–June 1991.
personnel and to suit them to the jobs. It is 10. Peter G Higgins and Andrew Wirth , Interactive
Job-Shop Scheduling: How to
sought to redefine human characteristics and
combine Operations Research Heuristics with
traits. To be able to draw a correlation th
Human Abilities .6 International Conference on
mechanism is what is requires and the paper Manufacturing November 1995 ,Melbourne PP. 293-
seeks to attempt. The mechanism gives an 302
E 171
Developing Holistic Contract Award and Project Performance

framework for Indian O&G Projects
Swarupa Deshpande*, Dr.Sumeet Gupta**, Dr.Hiranmoy Roy***, Ravi K Mallick****
*Manager, Marketing & Sale, Oil & Gas, Bureau Veritas
** Associate Professor, Department of Finance & Head Centre for Infrastructure Finance, UPES
*** Assistant Professor. Department of Economics and International Business, UPES
**** Oil and Gas Consultant
Abstract Keywords
India, a country of world’s third largest Contract Award, Project Performance
GDP1 (PPP)2 and second largest population, measure, Contract evaluation factor.
has its economic growth closely linked to
Organization
energy demand. 25% of India’s energy
demand is fulfilled by Oil and gas sector. Background of the study
Oil & Gas sector is of strategic importance
Indian Oil & Gas sector is predominantly
to Indian economy. India’s economic
taken care by Public Sector Undertakings
growth is closely linked to energy demand.
where contract award is based on tendering
Oil and gas provides 25% of India’s energy
by “competitive bidding” awarded to
requirement and is projected to grow
bidder with L1( Lowest price). Indian oil
further. The Indian oil and gas (O&G)
and gas projects are suffering with low
sector is projected to touch US $ 140 billion
project performance, cost & time over run,
by 2015. With 8th largest oil consumer in
compromises in quality & safety,
the world (expected to be the 5th largest by
controversies and allegations of favouritism
2025) and importing 80% of its
and kickbacks. This paper presents holistic
consumption of crude, O&G sector is one
contract award framework for Indian oil
of the major & critical industrial sector of
and gas projects which will consider
India. This key sector is focusing on areas
comprehensive parameters apart from price
and opportunities for investment,
in a quantitative way. The study develops
technology and partnership of global
contract award index and project
players with India’s public and private
performance index as a transparent
companies.
approach for award framework and project
performance gauging process. Complexity of large oil and gas projects is
increasing due to diversified functions as
1 2
Gross Domestic Product Purchase Power Parity
E 172
contract & procurement, project 2011’3, ‘Lokayuktas Act 2013’4, various

management, integrated operations, human NGO5 initiatives as ‘I paid a bribe’ etc.
resources and projects growing in size, Further to this with ‘Make in India’
value and geographies. Large projects have campaign and government initiatives, India
significant impact on business sectors, is expected to see business involvement of
industrial world and even national large foreign companies by way of joint
economies. One of the preliminary ventures, foreign direct investment or
functions of large Indian projects (in private suppliers to Indian public sector owners and
as well as public sector organizations) is operators.
contract award. Indian Oil & Gas sector India’s O&G sector predominantly handled
comprises mainly National Oil Companies by public sector undertaking, involves
owned and/or operated by Central or State numerous contracting for projects, products
Government, contract award & & services carried out under competitive
procurement is a vital function. Though bidding or tendering by lowest price criteria
liberal business culture in India, contract which are facing risks as collusion, bid-
award in Central or state government are rigging, fraud, corruption, artificially raise
facing many challenges like poor contract of prices and compromise on the quality
enforcement, lengthy processes, corruption parameters affecting project performance.
and corporate frauds etc. Hence there is a felt need for Indian Oil &
Timeliness and rationale of the study Gas large projects for paradigm change of
L1 contract award with no records of
Year 2011 in India is mockingly dubbed as
project performance to develop holistic
‘year of scam’ with many sophisticated and
Contract award framework based on
large business fraud coming into lights.
quantitative parameters and measures
With this India witnessed a wave of strong
project performances for maintaining fair
anti-corruption movement by way of
and transparent project culture.
widespread activities like ‘The Lokpal Bill
3 4
Lokpal Bill- Appointment of an independent body Lokayukas Act –allowing enquiries into
to investigate corruption cases allegation of corruption against public officials
5
NGO-Non-governmental organization
E 173
Review of Literature
Objective
The Review of Literature was made in two
 To identify the significant factors
steps. The first step was to understand the
during Contract Award for oil and Gas
Theoretical significance of the current
projects in India.
award culture. The second step was to
 To identify significant factors
study recent practices and researches on the
during Project Performance of oil and
Contract award and project performance
gas project in India
measurement. A theoretical flow of the
 To suggest the holistic framework
concept of contract award and project
in terms of Contract Award Index
performance is represented for the current
(CIA) and Project Performance
practices in India which are based on
Index (PPI) for Oil and Gas Projects
“Competitive Bidding” with lowest price
in India.
‘L1’ criteria.
Figure 1: Theoretical Framework
E 174
of contracts may result in heavy leakages of

Literature Review for need to propose
revenue and adversely affect the image and
alternate framework for Contract Award
profitability of the organization. [50].
& to measure project performance
A Comptroller Audit General (CAG)
Public Procurement in India is prone to
Report on “Issue Of Licenses and
anticompetitive practices. “The Public
Allocation of 2G Spectrum” indicated the
Procurement Bill 2011” announced by
loss at 310 billion. In coal Mine allocation,
Prime Minister has prepared a report under
CAG estimated that the "windfall gain" to
Shri Vinod Dhall and presented to
the allocatees was 10673 billion. In RIL’s
Government of India which reports,
KGD6, the oil ministry imposing a fine of
“Procurements by Government in India
70billion on RIL for the sharp drop in
have always been controversial with
production of gas and violations. [15].
allegations of favouritism, inefficiency,
Competitive tendering (bidding) is a widely
quantitative and qualitative compromises
used procurement method within
and above all, corruption and kickbacks.
government agencies and in some private
There is no uniformity in the procurement
organizations. “The idea behind
manuals of various government
competitive tendering is that it forces
departments and the whole exercise is
suppliers to compete and (so the theory
"handled in an amateurish manner". The
goes) consequently the purchaser and
practice of holding negotiations with the
taxpayer will gain better ‘value for money’.
lowest bidder for public contracts is the
"seed for most corrupt practices" that In reality this rarely occurs” [54].
makes a mockery of the bidding process.” “Father of Quality” Dr. Deming

[18]. mentioned “The idea of several suppliers
for any one item, competing with each other
Chief Technical Examinor’s Organization
for lower prices (as advocated by some
(CTOS) under Central Vigilance
authors), makes good talk, but as a practical
Commission Government of India Report
matter it is only talk, even under long term
indicated “Common Irregularities/Lapses
contracts. It destroys any possibility of a
in Award” and one area which not only
good relationship between customer and
affects the bottom line of the organization
supplier. There is a bear-trap in the
considerably but is also corruption prone is
purchase on the basis of price tag, Safety
the area of contract management. Any
Short cut, slow process, insufficient profit
mismanagement in the award and execution
margin to allow investment for research &
E 175
development, new technology, equipment. Best Value for Money are Cost for entire
In government organizations, procurement life cycle and Quality. [61]
methods are influenced by politicians. OECD Guidelines for Fighting Bid Rigging
When the results of competitive tendering (2011), mentioned Public and private
are bad for the purchaser, a scapegoat is organizations often rely upon a competitive
often found. [17] bidding process to achieve better value for
“Financial people like to have several money. Bid rigging occurs when
vendors pit against each other to drive businesses, that would otherwise be
down price. This practice with no regard to expected to compete, secretly conspire to
quality and service can actually drive good raise prices or lower the quality of goods or
vendors and good service out of services for purchasers who wish to acquire
business. How does one measure such a products or services through a competitive
loss to society?” [63] bidding process. [39]
Richard J. Long (2011), from Long A key recommendation of OECD Report
International Inc has reported Typical (2012) on “Better Policies on Improving
problems leading to Delays, Cost overrun, Regulation, Public Governance &
claims on process plant & Offshore Oil & Transparency” is “Mitigate risks of waste
Gas projects indicated some of the problem and corruption in the whole procurement
areas as inadequate cost estimate by cycle from project design through the
contractor & award based on it, ambiguity
tendering process and to the contract
in Contract documents & multiple change management. [39]
orders. [48]
Tender Info Oil and Gas Overview In India
United Nations Procurement Manual (2010), has analyzed the process and the
(2014) specifies Best value of money character of contracting and awarding
(BVM) as one of the general principles based on the lowest bidding entity for the
when exercising the procurement functions future course and consequently the success
of the United Nations. BVM is defined as of the project. A need is shown for efficient
the “Optimization of whole -life costs and contract award process. [57]
quality needed to meet the user’s
Chemtech Foundation in Industry Insight in
requirements, while taking into
India (2010) Report has indicated that
consideration potential risk factors and
significant challenges still exist in
resources available” Factors to determine
successfully bidding work from the Indian
E 176
Public Sector. Some examples of these A prototype decision support/expert system

challenges are; a poor bidding and award for contractor prequalification is described
process in the public sector which results in by CP-DSS in Construction Industry in
significant problems during project Hong Kong. [58]
execution and the tax and the duty regimes Thomas, Skitmore, Martin et.all. (1998)
in India which adversely affect how proposed Contractor pre-qualification
contractors bid and execute projects in both process to improve the reliability and
the public and private sector. [13] objectiveness of decisions being made,
prequalification needs to be carried out on
Literature Review for various Contract
a more rational basis where a technique in
Award frameworks
artificial intelligence namely Case-Based
“A Competitive bidding theory” presented
Reasoning (CBR) is used for
a method that determines optimum bids in
prequalification. [58]
a competitive-bidding situation where each
Large Engineering and construction
competitor submits one closed bid. This
projects in Oil and Gas are studied to
method makes use of the previous “bidding
suggest 3 case based approach for
patterns” of all possible opposition bidders
Engineering Contractor Contract Price.
and in the case where the bidding is on
[56]
contracts, the estimated probability
distribution of the cost of fulfilling the The decision support system, such as the
contract. [22]. Analytical Hierarchical Process (AHP)
methodology to model contractor selection
Tender evaluation by Fuzzy sets explained
problem is proposed in a government
the process of evaluating tenders to be
procurement supply chain. The proposed
largely dependent on subjective judgment
methodology used a set of criteria for the
when cost is not the only criterion used. A
selection and evaluation of the best
systematic procedure based on fuzzy set
contractor in Ministry of Ghana. [14]
theory and multi criteria modeling is
proposed for the selection of bid contracts. Bid is evaluated on P2 criteria for
[38]. information collected & P3 criteria for
Price & 60% of P2 & 40% of P3 is
Multi parameter bidding system for
calculated to arrive at decision. [25]
construction projects in USA mentions the
major attributes selected by the owner are In contractor selection using “Multi criteria
cost, time, quality, and safety. [24] Utility Theory an Addictive Model,”
E 177
considers score of each bidder against 5 The Art of Assessing Multi-attribute Utility
main criteria & 20 sub criteria and Utility is Functions proposed Organizational
calculated between 0-1 to arrive at Final Behavior and Human Perform. [28]
score by Additive Model in Construction Decision theory proposes ‘Encompassing a
Industry in Australia. [65] wide variety of analytical techniques for
handling management problems’. The
Contracts are frequently complex, may
purpose of decision theory is to solve
involve multiple actors, may last a long
management problems of the type that
time and may consume many resources. It
traditionally could be attacked only through
is therefore vital that they are properly
intuitive judgment. [43].
managed. Contract management activities
Utility is one of the basic components of
can be broadly grouped into three areas:
decision-making. Computation of the
delivery management, relationship
utility is an alternative approach to the
management, and contract administration.
commonly used subjective elicitation of the
[53].
utilities.
"Performance-Based Contracting for
Scope definition for bidding project control
Services: A Case Study". NASA describes
services is scope of work weighs the time
QAP, Performance Standards, Job analysis,
and costing as to not exceed the intended
organization analysis, work analysis,
profit by the contractors. [60].
Performance analysis, Directive analysis,
data gathering, Cost analysis, contract type, Quality is the end product of the Project
Contract Administration, Conflict Management Triangle. The dimension of
resolution: Partnering is a technique for scope, time and cost equals quality product.
preventing disputes from occurring. Under [9].
this concept, the agency and contractor, Triple Constraint explained the Project
perhaps along with a facilitator, meet after Management Triangle concept applied in
contract award to discuss their mutual the execution of projects tendered by the
expectations, alternative dispute resolution Oil and Gas Companies and Contractors
etc [2]. which fall in either its cost and time, or
quality and time. [8].
Literature Review to find parameters
responsible for success of Project
Performance Effect of Six Sigma projects on innovation
and firm performance explained the scope
E 178
of work is more important to the contractors SCOR model to develop a dynamic cSCM
rather than the clients. [42]. model using computer simulation. [41]
KPI for performance evaluation: Client

Satisfaction, Environmental, Finance, Further a shift in the focus of measurement
Personnel, Process. (University of Oxford for project management from the exclusive
Report, KPI process). process driven criteria from the Iron
Triangle to the Square Route. It is further
Various Performance evaluation suggested that shift could be significantly
approaches and angles studied are Earned helpful if a definition for project
Value Management (EVM), leadership management was produced which did not
behaviours of project managers, develop include limited success criteria. [1]
and maintain good relationship and
1.1 Criteria’s to summarize from
effective communication with key stake
Literature Review for success of
holders and project sponsors, fuzzy
project:
multiple attribute-based group decision
system etc. 1.2 Major parameters to validate for
Implementing a pmValue Measurement relevance to O&G in India from
System to measure project management literature Review which are
performance and value will help responsible for success of a project
organizations achieve one or more of the are :
organization goals. These goals are based [1] [61] [62] [73] [78] [81]
on determining the value of implementing  Integration of Project
project management improvement • Integrated project
initiatives in the organization. Choosing charter
those measures is key to the success of the • Project schedule/plan
pmValue Measurement System [12]. • Clear scope statement
Performance evaluation model of • Defined project
engineering project management is based management plan
on improved wavelet neural network. [66] • Top management
support process review
Enhancing construction project supply
planning
chains and performance evaluation
• Client satisfaction
methods is published for a case study of a
bridge construction project applying the
E 179
• Arrangement of • Leadership skill development

Change control • Team Building
• Motivation
 Scope Management
• Conflict management
• focused scope
• Compensation
statement
• Organisation Structure
• cost/Benefit analysis
• project constraints  Communication between Owner &
• work breakdown Contractor
structure • Communication Matrix
• responsibility • Communication Vehicles
breakdown structure • Listening and presenting skill
• scope change control • facilities to remove barrier
 Time Management  Risk Management

• Risk Identification
• Risk Analysis
• PERT and GANTT
• Risk mitigation
chart
• Contingency Planning against external
• Critical Path Method
risks
• Network model
• Resource Loading  Procurement and subcontracting
• Reporting efficiency
• Material selection
 Cost Management
• Vendor pre-
• Financial Analysis
qualification
• Cost Estimating
• Contract types
• Forecasting
• Contract Risk
• Cost Control
assessment
• Cost reporting
• Contract Negotiation
 Quality Management • Contract Change
• Quality Assurance address
• Quality Control
 Benefits to Stakeholders
• Cost of Quality
• Stakeholder
• Quality Conformance
satisfaction
 Human Resource Management
E 180
• Stakeholder • Financial stability

profitability
 HSE competency
• Stakeholder retention • Employee health care
• Market share • Safety policy
• Shareholder use • Environmental Policy
 Benefits to Performing Organisation • Social responsibility
• Employee satisfaction • Ethical Value
• Employee motivation
 Risk Management capability
• Employee • Capability to address Economic risk
empowerment • Capability to address Political risk
• Employee productivity • Capability to address statutory requirement
• Organization growth • Capability to address regulatory changes
• IT development • Capability to handle unforeseen risk
 Lessons Learnt
 Human Resource competency
Major parameters to consider at the • Number of Manpower
minimum & validate for Contract award • Quality of Manpower
from parameters responsible for project • Training & Development of Manpower
performance are • Empowerment of Manpower

• Attrition rate
 Technical Capability
• Use of Technology & Science  Communication competency
• Engineering capability • Communication with Owner company
• Emphasis on research & Innovations • Communication within Bidder's
• Accreditations with various bodies organization
• Development of Strategy • Top management support & involvement of

Bidder's organization
 Financial Capability
• Cross functional communication within
• Return on Investment
Bidder's organization
• Return on Capital Employed
• Update on Regulatory & Statutory syatem
• working capital
• Update with National & International
• Financial Risk
approval bodies
• Cost saving
• P/E ratio  Management competency
• Earnings per share • Past performance and quality
E 181
• Quality control policy rotated component matrix score and

• Quality management system ranked by assigning weights to each.
• Project management system For Objective 2: Parameters are
• Experience of technical personnel collected from primary data and
• Management knowledge secondary data for Contract Award
 Company Reputation from broad categories: Financial,
• Past failures in completed projects Technical, HSE, Risk Management,
• Number of years in construction Human resource capability,
• Past client relationships communication efficiency,
• Cooperation with contactors Management capability, Reputation.
• Past failures in completed projects Significant factors are decided from
Principal Component Analysis based on
Research Methodology
rotated component matrix score and
 Theoretical Framework ranked by assigning weights to each.
Research design for the study is
exploratory and analytical.
For Objective 3: Contract Award
Index (CAI) and Project Performance
For Objective 1: Parameters for
Index (PPI) is constructed using
successful Project Performance are
Geometrical Mean as given below:
gathered from primary data and
secondary data forming broad
Composite Index = n√(I1 x I2 x
categories as: Integration of Project,
I3 x I4 x ….. In)
Scope Management, Time
Management, Cost Management,
The Geometric mean approach
Quality Management, Human Resource
normalizes the variations of
Management, Communication between
Observations. (Source : UNDP 2010).
Owner & Contractor, Risk
The holistic Contract Award framework
Management, Procurement and
indicating relationship between
subcontracting efficiency, Benefits to
Contract Award Index and Project
Stakeholders, Benefits to Performing
Performance Index through cross
Organisation, Lessons Learnt.
section data regression analysis is
Significant factors are decided from
suggested.
Principal Component Analysis based on
E 182
 Sources of data of the model to be correctly

estimated. As with any
Primary data from different
statistical method, the critical
Companies is collected. Some
question is how large a sample
secondary data is also used from
is needed? Bentler and Chou
different sources to collect additional
(1987) suggest that in SEM the
data.
sample size requirements vary
Primary Data: The primary data is
for measurement and structural
collected from the representatives of:
models.
 Oil and Gas Owner/operator
 To test a measurement model, a
companies
ratio of ten responses per free
 Consultants
parameters is required to obtain
 Contractor
trustworthy estimates (Bentler
 Subcontractors and Chou 1987). Others suggest
Secondary Data: The secondary data a rule of thumb of ten subjects
is collected from the following sources per item in scale development is
: prudent (Flynn and Pearcy
 Project Management Journal (PMJ 2001). However, the number
from PMI) (www.pmi.org) shall be increased to fifteen if
 Oil and Gas websites the received data is found to be
 Oil and Gas Company websites volatile (Bentler and Chou
 Major Contractors / 1987; Hair, Black et al. 2006).
subcontractors websites in India Tabachnick‟s rule of thumb that
 Indian Oil and Gas Govt. suggests having at least 300
/regulatory sites cases are needed for factor
 Other Research Journal / analysis. Hair et al suggested
Research Papers / that sample sizes should be 100
Articles/Forums or greater. A number of

textbooks1,8-10 cite the work of
 Sampling Comrey and Lee1 in their guide
 Sample size provides the basis to sample sizes: 100 as poor,
for the estimation of sample 200 as fair, 300 as good, 500 as
error and impact on the ability very good, and 1000 or more as
excellent.
E 183
Sampling Technique used is Sections , Section 1 to understand

judgmental sampling. Samples need for change in current Contract
respondents selected from Oil & Award approach, Section 2 need for
Gas Operators, EPC Contractors, framing Project performance
Engineering consultants, Large measure, Section 3 for important
equipment manufacturers from Parameters for success of Project
Upstream, midstream, Downstream Performance and Section 4 for
companies in India. 700 Parameters to be considered during
Respondents were picked up from Contract Award Framework.
70 companies from which 300
 Statistical Analysis and Results &
completed responses are taken for
Discussion
analysis. Number of responses were
distributed equally among 300 Feedback responses taken
Upstream, midstream & showed 85% respondents
downstream companies and mentioning need for change in L1
proportionately among top approach, 83% agreeing specific
management level, mid framework to be constructed to suit
management level and Lower Indian scenario, 93% agreeing
management level. 5 point Likert inclusion of comprehensive
scale is used for 1 being least parameters and their weightage in
important parameter and 5 being alternate Contract award
most important parameter. Framework & 80% agreeing
Questionnaire were provided in 4 building trust among international
Analysis. Factor Analysis is run for

players and better control of Cost-
parameters of all categories and
time over run & Quality monitoring
separate for each category. Scree
by Quantitative framework for Oil
Plot for eigen values of each
& gas projects in India.
parameters are recorded. (screen
Feedback responses of 150 Oil &
shot presented below). Weight (W1,
Gas projects and Contract personnel
W2, W3, ……. Wn) for each major
are analysed using SPSS software.
parameters are taken from
Parameters are reduced to
Component Matrix score to decide
significant Factors using Principle
Factors for constructing Project
Component Analysis of Factor
Performance Index (PPI). Factor
E 184
measurement table constructed is to PCA calculated weighted score (D1

provide Dimension value for each x W1, D2 x W2,……. Dn x Wn) for
sub-Factor (D1, D2, D3, D4,….. Dn). each Factor (P1, P2, P3, P4,….. Pn).
Minimum & Maximum limit can be PPI is constructed using Geometric
set as per the need of User. mean which normalizes variation in
Dimension score & weight from input value.
Figure 2: Scree Plot
Table 1: Component Score Coefficient Matrixa
S. No. Component
1 Integration of Project .104
2 Scope management .031
3 Time management .109
4 Cost Management .113
5 Quality Management .098
6
Human Resources Management .109
7
Communication between Owner & Contractor .112
8 Risk Management .104
E 185
9
Procurement & subcontract effectiveness .097
10 Benefits to Stakeholders .124
11
Benefits to Project Performing organisation .094
12 Lessons learnt from previous projects .102
shot presented below). Weight (W1,

PPI= n√(P1 x P2 x P3 x P4 x P5 x …..
W2, W3, ……. Wn) for each major
P12)
parameters are taken from
P1 =∑ D1 x W1
Component Matrix score to decide
Similar procedure is followed for Factors for constructing Contract
Contract Award Index. Factors Award Index (CAI). Factor
derived from Project Performance measurement table constructed is to
are given to 150 Oil & Gas Contract provide Dimension value for each
personnel. Responses are collected sub-Factor (A1, A2, A3, A4,….. An).
on 5 point Likert scale. These Minimum & Maximum limit can be
responses are analyzed using SPSS set as per the need of User.
software. Parameters are reduced to Dimension score & weight from
significant Factors using Principle PCA calculated weighted score (A1
Component Analysis of Factor x W1, A2 x W2,……. An x Wn) for
Analysis. Factor Analysis is run for each Factor (C1, C2, C3, C4,…..
parameters of all categories and Cn). CAI is constructed using
separate for each category. Scree Geometric mean which normalizes
Plot for eigen values of each variation in input value.
parameters are recorded. (screen
E 186
Table 2: Rotated Component Matrix
Raw
Component
1 2 3 4 5 6
Update on Regulatory
.811 .127 .143 .217 .028 -.024
and Statutory system
Capability to address
.878 .165 .252 .042 .142 .124
Regulatory Changes
Legal & Statutory .837 .269 .108 .156 .094 .087
requirments
Update with
National/International .782 .178 .251 .024 .077 .217
approval bodies
.757 .189 .351 .031 .309 .164
Political risk
Capability to handle
unforeseen .731 .118 .124 .263 .144 .384
contigency
E 187
Attrition Rate .672 .132 .435 -.051 .055 -.170
Empowerment of
.488 .199 .335 -.088 .009 .264
Manpower
.332 .223 .288 .088 -.134 .182
Economic risk
Social responsibility .085 .658 .080 -.030 .138 .047
Ethical values .108 .529 -.015 .076 -.026 .063
Environmental Policy .074 .482 .030 .148 .132 -.012
Safety Policy .095 .472 .025 .146 .053 .032
Employee Health
.135 .537 .319 -.071 .139 .022
Care
Engineering
.166 .401 .023 .176 .192 -.185
capability
Traning &
development to .190 .357 .091 -.016 .059 .119
Manpower
Accreditation with
.139 .468 .222 .166 .402 -.112
various bodies
Working Capital .094 .340 .134 .050 -.132 .203
Quality of Manpower .132 .289 -.016 .205 -.057 .134
Earning per share .213 .050 .955 .053 .177 -.058
P/E Ratio .280 .111 .804 -.047 .023 .022
E 188
CAI= n√(C1 x C2 x C3 x C4 x C5 x ….. C32 x  Relevance of the research in Project
PPI) performance
CAI & PPI indices worked out in this
C1 =∑ A1x W1
research are anticipated to be used as a
Significance of the Research measure of Project success. This

indicator is a tool to reward performer
 Anticipated uses of the Research
of quality projects encouraging R&D &
This research is anticipated to be used
new technology.
in Contract Award process as a
 Contribution to Literature
transparent, fair process of contract
Constructing Contract Award Index in
award considering comprehensive
Contract Award Framework is
parameters beyond Lowest Price.
contribution to Literature. Similarly
This research is intended for users as construction of Project Performance
O&G Owner & Operators, EPC Index is contribution to the literature
Contractors, Large equipment which can be used by researcher,
manufacturers in Upstream, Midstream industry people and Policy makers to
& downstream sector. find project performance. Findings on
 Relevance of the research in relationship between Contract Award
International Arena and Project performance may open

different way for further research.
The holistic approach can help build
trust in award process among Oil & Gas Conclusion
contractors, manufacturers and
 To mitigate issues as time and cost
technical service providers from outside
overrun, problems in quality, cases
India.
of unfair practices faced by oil and
 Relevance of the research in Contract
gas companies in India, a
& Procurement
quantitative contract award
This framework is anticipated to be
framework using Contract Award
used for Contract Award as a
Index can provide easy solution.
transparent process and a quantitative
technique as an alternative for “L1 price  CAI considers comprehensive
award” and speedy and fair process. Factors which are considered
crucial for success of a Project.
E 189
 PPI provides yardstick for 5.

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Potential for Cost Overruns in Road Lecture). University of Chicago.
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Civil Engineers. doi:: 10.1061/(ASCE)IS.1943- aggregation for complex structural equation
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Management Institute Inc. ePublications@SCU.
E 194
Developing Conceptual Framework for establishment of

Natural Gas Storage for City Gas Distribution in India
*Narendra Kumar, **Dr. Anirban Sengupta, *** Dr. Neeraj Anand
*Managing Director, Indraprastha Gas Limited, New Delhi

**Dean College of Management & Economic Studies UPES, Dehradun
***Professor and HOD- LSCM and Operations and Professor at UPES, Dehradun
Abstract transcribing the interview, data coding is

In India, neither there is an existing done using Atlas Ti software. Suggestive
Natural Gas storage facility nor is it in Framework is developed based on Atlas
planning stage while CGD industry is TI output. Theoretical premises used for
developing at fast pace considering this framework is stakeholder theory
environmental concern and priority given where supplier, shareholder, worker,
by Government of India. This research consumer and local community become
paper considers developing Conceptual stakeholder. This Conceptual Framework
Framework for establishment of Natural can be used for developing gas storages
Gas Storage for City Gas Distribution in in India by any identity or by policy
India. Based on earlier study six factors makers.
emerged which influences the
Key Words
establishment of gas storages for CGD
City Gas Distribution, Geographical
industry in India. These factors are
Area, Petroleum and Natural Gas
Economic, Legal & Techno Operational,
Regulatory Board, Compressed Natural
Geographic/ Political Concerns,
Gas and Piped Natural Gas
Awareness & Importance of gas storage,
Technical & Labor Skills as well as CGD Scenario in India
Environmental concerns. Qualitative City Gas Distribution (CGD) is a fast
research is carried out using emerging industry catering natural gas to
observational design method to develop Automobiles, Households, Commercial
conceptual framework. Data collection is and Industrial units. CGD network in
done through semi structured interview India increased exponentially at
followed by focus group approach. After Compound Annual Growth Rate (CAGR)
E 195
of 21.44% during 2010-2014 (source: Round of bidding is likely to be finalized

TechSci research published in June by mid of year 2016. With PNGRB and
2015). According to “Vision 2030” Ministry of Petroleum & Natural Gas
Natural Gas Infrastructure in India Report aiming to develop CGD network in more
by Industry Group for PNGRB, total than 200 cities and considering Prime
CGD demand is expected to grow to 85.6 Minister’s mission of 1 Crore PNG
MMSCMD in 2029-30, at CAGR of connections in 5 years, CGD offers vast
10.3%.In India the CGD business is opportunities in various business
regulated by the Petroleum and Natural segments.
Gas regulatory board (PNGRB)
For supplying gas to more domestic
constituted under the PNGRB Act, 2006.
consumers and to promote CNG based
PNGRB has authorized 28 entities to public transport, Government of India has
operate CGD activities in 57 started giving 100 percent requirement of
Geographical Areas in India (source: natural gas for compressed natural gas
www.ppac.org.in ; www.pngrb.gov.in ) (CNG) and piped natural gas for
Presently, there are 2.55 million vehicles households (PNG) through cheaper
running on CNG that are catered by more indigenous gas. Further, for the
than 1000 CNG stations set up in various encouragement of natural gas usage in
cities of India. In Delhi-NCR itself, more these two segments, Government has also
than 350 CNG stations are operating to decided to provide 10 percent extra
supply CNG to more than 1 million domestic gas to meet growth requirement
vehicles. CGD companies are also and fluctuating demand of city gas
supplying piped natural gas (PNG) to distribution. In percentage terms, gas
2.86 million households, and 28,274 consumption in India is depicted in the
Industries & Commercials units in India. table given below which indicate that out
To expand CGD network across India, of total consumption of Natural Gas,
PNGRB has so far already covered 55 CGD has 14% share.
Geographical Areas in 5 Rounds of CGD
CGD 14%
bidding and has recently announced 6th Fertilizers 35%
round of bidding for development of Power 24%
CGD network in additional 34 cities. 6th Refineries 11%
E 196
Petrochemicals 3%  Take or pay penalties from gas

Others 13%
supplier
Figure- 1
For coping up with increased demand of
Source: MOPNG annual report 2014-15
natural gas in city gas distribution,
Challenges in CGD Operations companies have to seriously consider
In India, National Gas Grid is yet to be increasing efficiency of gas distribution
fully developed. A natural gas storage network. Natural gas storage is a vital
facility also does not exist to meet component of the natural gas chain that
emergency demand of Natural gas for increases the efficiency of gas
PNG and CNG segments. In fact, distribution system. Natural Gas storages
majority of Geographical areas in India are developed to:-
are connected with single pipeline having  Balance gas supply and demand
single source of gas supply. Since few  Optimize the transmission
lakhs of domestic households and CNG network size
dependent public transport is supplied  Provide security of supply in case
natural gas from single source of gas of interruption in gas supplies
pipeline, CGD companies may face  Supporting tool to trading
problems related to:-  Supplementary function to cover
 Un-interrupted gas supply for variability in gas demand where
PNG and CNG Consumers gas is used as a back‐up to

intermittent power supply for
 Insurance against supply
renewable energy sources.
disruption due to any
breakdowns, shutdowns, etc.
Natural gas can be stored in number of
caused by third party damage,
ways depending upon the requirement as
maintenance or any natural
well as geographical considerations.
calamity
Following are the types of facilities most
 Wide Natural Gas price
commonly used to store natural gas:
fluctuation
(Source is
 Large daily and seasonal demand
http://naturalgas.org/naturalgas/storage/)
variations
E 197
 Depleted oil and gas underground  Expert Group selection

reservoir  Semi Structured Interview
 Aquifers underground reservoir with experts
 Salt cavern formations reservoir  Transcribe interview
 Above ground LNG storage tank  Coding with Atlas Ti
 Vertically buried large diameter software
pipes storage  Suggestive Framework
 Above ground Natural Gas based on Atlas TI output
spheres storages Development of Conceptual
Framework
Six factors which emerged out based on
There are ample numbers of gas storage
earlier research were considered for the
facilities in the world which are
development of conceptual framework.
responsible for meeting base load and
These factors are- are Economic, Legal &
peak load demand of natural gas
Techno Operational, Geographic/
consumers and also provide the security
Political Concerns, Awareness &
in case of any unplanned disruption in gas
Importance of gas storage, Technical &
supply. As India doesn’t have any gas
Labor Skills as well as Environmental
storage facility presently, the future is not
concerns. The framework integrated all
properly secured and thus “in the event
these factors along with regulators and
of any disruption in consistent gas
policy makers i.e. GOI, PNGRB on one
supply, due to non–existence of Gas
hand and Stakeholders i.e. CGD
Storages will lead to actual and
companies on the other.
opportunity loss to CGD industry in
India”. For the focus group technique used to
developed conceptual framework, expert
group is selected based on Judgment
Qualitative Research has been used for Sample. Following experts are
the purpose of development of conceptual considered for focus group interview:-
framework. Focus group technique is
used to developed conceptual framework.  Natural Gas Transmission
Following sequence is followed- Expert
E 198
 CGD Marketing & questions are discussed among the focus

Technical Experts group. The discussion is recorded and
 Regulatory Expert transcribed. Transcribed conversation is
 Safety Expert fed into Atlas TI software. The snapshot
of coding of focus group interview is
shown below:-
In-depth semi structured interview with
experts are conducted using the Focus
Group technique. A questionnaire is
developed for the experts and the
Figure-2
E 199
Figure-3
The transcribed coding provided certain development of conceptual framework.

keywords and parameters which are The output of Atlas TI is as below:-
instrumental in the formulation of
conceptual framework. These keywords
and parameters are utilized in the
E 200
Network view of codes with Labels
Figure-3
E2
The conceptual framework is developed Suggestive Framework

based on the outputs of Focus Group
Following framework has been
discussion and further deliberation is
developed based on the output received
shared in the next section.
focus group coding from ATLAS TI
Software and subsequently network view
developed as discussed in the previous
section.
Figure -4
E2
Parameters Considered In gas when the prices are low and selling
Development of Suggestive gas when the prices are high. India is an
Framework importer of gas so storage will prove to
be very fruitful option in the coming time.
Captive Market for Gas Storage in CGD
Further the CGD companies can store gas
Business in India
during the non-peak times and deliver it
India is a gas importing country. The
later when the demand increases. In India
demand of gas in India is increasing day
a Government agency is formed named
by day and so as to fulfill this demand
Indian Strategic Petroleum Reserves
there is limited supply. Hence it can be
limited (ISPRL) which manages the
concluded that as long as there will be a
strategic storage of crude oil in locations
gap between supply and demand of
like Visakhapatnam, Mangalore, Padur
natural gas there will be a scope of gas
etc. This step has been taken keeping in
storage in Indian context as gas storage
mind the future oil scenario in India. It
can be used to cater seasonal and peak
can be inferred that gas storage options
demand. Currently the CGD network in
should also be considered as the use of
India has no storage available, if any
gas in India by various sectors especially
unforeseen situation arises where there is
city gas distribution is increasing day by
disruption in the main transmission
day.
pipeline of gas due to any reasons like
technical, environmental, political etc. Flexibility
then the whole CGD network will come By using gas storage facilities short and
to a halt due to non-availability of gas. In long term flexibility can be achieved by
this context again gas storage will play a the gas operating companies especially
very important role as gas can be by city gas distribution companies. Base
extracted from storage so as to fulfill the load storages like depleted reservoirs of
consumer needs. oil and gas can be used to store large
volume of gas incase same is close to
Arbitrage
operating area and cater seasonal
Gas industry is an industry where price
demand. Peak load requirements can be
fluctuations are common. Gas storage
fulfilled with facilities like LNG tanks,
will play a very important role in storing
E 202
above ground gas storage spheres or by type gas holders for storing gas or above
using buried pipes at high pressure etc. ground LNG tanks. The reason behind is
thickly populated city and environment
Land requirement & availability issues
concerns. Australia, China, Korea etc. are
For building gas storage facilities for city
also making the use of underground,
gas distribution companies, it is essential
above ground and LNG storage facilities
that the facility is near to the market
for gas storage. In Indian scenario, there
place. Acquiring land in densely
are different options available for gas
populated area is always difficult
storage depending upon location. There is
however with the implementation of the
possibility of construction of
Land Acquisition act 2013, and the new
underground gas storage facilities in
ordinance will help in speedy acquisition
depleted field in regions like Gujarat,
of land. The compensation plan for land
Rajasthan, KG basin etc. In densely
acquisition is sufficiently high
populated areas like metropolitan cities
considering market price. Further state
vertically buried pipe type gasholders can
governments are also giving a helpful
be used for storing gas considering
hand to companies for acquiring of land
thickly populated cities and
for economic growth of the nation.
environmental concern as well as cost of
Gas Storage options for India land.
As learnt from the global experience
Consumer Satisfaction
different companies all across the world
The main consumers of a city gas
are using different types of gas storage
distribution companies are CNG, PNG,
facilities for storing gas as per their
Commercial and Industrial users. So as to
needs. In United States, Russia and
achieve and maintain consumer
Europe the companies are generally using
satisfaction it is essential that
Underground storage facilities and LNG
uninterrupted gas is maintained as per the
storage facilities for catering their
consumer needs. To achieve this
demand. The reason behind this is that
objective gas storage can be used as a
they have enough natural underground
source of gas when there is shortage of
formations available. Some countries are
gas.
making the use of vertically buried pipe
E 203
Access to Technology and Services storages. Companies can store the gas in
As Gas Storage is a new concept in India storage at time of reduced gas prices and
and till now there is no storage set up. can sell the gas later when the prices
India needs latest technology for setting increase.
up of gas storage. For the construction of
Developing Gas Storage Policy
gas storages, technology and services
Gas Storage policy needs to be developed
needs to be imported from foreign
and at the same time it is also required to
countries like United States, Germany,
be communicated so that people are
France, China, Japan etc. India is having
aware about the Gas Storages and
good political relations with most of these
companies can show their interest in this
countries having expertise in the
business.
establishment of gas storage, importing
technology and services from foreign Fast Track Statutory Clearances
countries will not be a very big concern. For promoting and developing gas
storage facilities in India it is essential
Environmental Concerns
that land availability and acquisition
Environmental concerns like gas leakage
issues etc. needs to be dealt at a speedy
from storage, gas leakage while injection
pace. This is essential because these
and withdrawal from the storage etc. can
aspects take too much time for approval
be minimized with the help of latest
in current scenario and projects get
technology and right materials available
delayed. For speedy establishment of gas
for storage construction. Automation can
storage facilities in India it is essential to
play a measure role in reducing leakage
have such a legal framework and single
or venting of gas in atmosphere.
window clearance which can give
Revenue Generation decisions at a speedy pace.
Gas storage will help companies in
Extracting data
maintaining adequate supply and hence
All the data should be extracted from the
increasing the revenues of the companies.
CGD companies of all the countries that
Not only CGD companies but companies
are having the storage facilities like U.S,
involved in upstream, midstream and
Germany, Russia, U.K, Japan etc. So that
downstream can also benefit through gas
detailed study can be conducted and one
E 204
can avoid the mistakes learning from past skill set. This can be done by deputing
experiences. This will help us a lot in individuals in different companies that
establishment of gas storage facilities. are operating gas storage facilities
worldwide.
Decide possible locations of gas storage
in India Research and Development (R&D)
Deciding location is very important if to CGD companies that want to establish
establish the gas storage facility gas storage facility should also formulate
especially underground type as all the research and development department so
locations can’t support the development that any future brown field expansion
of underground gas storage. A detailed within the storage facility can be done.
study of geography of India or nearby Also R&D will be beneficial for the
location of a CGD company needs to be consistent focus on improving the
conducted so that the underground gas technologies and to improve the overall
storage options can be identified. If efficiency of the facility.
developing underground storage is not
Theoretical Premises
feasible, then depending upon the
location requirement other options like Various theories like Stakeholder theory,
line pack, gas holders, buried pipeline Theory of Constraint (TOC), Resource
type gas holders can be pursued. value based theory (RVBT) etc. were
studied to deliberate the theoretical
Training
premise for this study. After due
As India doesn’t have any prior
deliberation, it is observed that
experience in natural gas storage
Stakeholder’s theory is the most
establishment, hence training programs
relevant for this study. Stakeholder
of individuals should be conducted so
theory suggests that the purpose of a
that they can become aware of the
business is to create as much value as
terminologies, operations, maintenance,
possible for stakeholders.
and management of gas storage facilities.
Real time training in existing facilities The various stakeholders and their roles
can be very fruitful in the overall learning are deliberated as:-
experience and to develop the required
E 205
1. Suppliers: Major suppliers will be

international companies in gas
storage, since India is not having
adequate technology and material for
the establishment of gas storage.
2. Shareholders: Establishment of gas

storage will lead to wealth
maximization and profit
maximization of shareholders as the
Figure -5
demand of gas in India is increasing
which in turn means more gas
business.
Further, for the establishment of gas
storage for CGD, other important
3. Workers: As gas storage is a new
stakeholders will also play a major role.
technology in India so they need to be
CGD companies and the Government of
provided with adequate training so
India are two major parts of the
that they can handle the facility.
framework. PNGRB (Petroleum and
Natural Gas Regulatory Board), the
4. Consumer: Consumer will be
downstream regulator for CGD
benefitted the most with the
companies in India will also be
establishment of gas storage facilities
instrumental in successful
for CGD as they will receive
implementation of Gas Storage in India.
uninterrupted supply at affordable
Academia need to step up as well for skill
prices that is value for money.
development and R&D. Action plan will
therefore include all the actionable points
5. Local community: Local communities
for all these entities. The roles of other
will get employment opportunities
crucial stakeholders are deliberated as
along with regional area development
below:
which will ultimately lead to
economic growth.
E 206
 Regulator d. Free market pricing regime

a. Learn from global should be promoted for
experience- Studies need be attracting major and minor
carried out regarding the players in gas industry.
success and failures of already
established natural gas  Companies
storages from all across the a. Companies should carry out
globe. feasibility studies of natural
b. The regulatory environment gas storage by acquiring
should be such that it promote appropriate data through
fast track clearances for gas surveys.
storage facilities b. Indian Oil and Gas companies
establishment in India should develop healthy
c. PNGRB should conduct linkages with major global
bidding to ensure fair play and players in order to acquire
competition. technical, labor and financial
support for the execution of
 MoP&NG the plan.
a. MoP&NG need to gather data c. Establishment of gas storage
from public domain and will lead to economic
create awareness about the development of India with
establishment of gas storage major increase in employment
for city gas distribution in generation.
India.
b. Formation of gas storage  Academia
policy by MoP&NG is a. R&D to be carried out so as to
important for the adapt with the changing
implementation of gas storage technologies and reduce
projects. various cost associated with
c. HSE should be given top most gas storage. For example:
priority.
E 207
Operating cost, Maintenance 1. Government of India has to take

cost etc. following actions:
b. For the maximization of  Swift clearance of legal
capacity building, Academia formalities like land
will play a major role for skill acquisition etc.
development.  Give directions to
PNGRB to form gas
Conclusion
storage policy.
Based on factors which influence the
establishment of natural gas storage for
2. PNGRB has to take following
CGD industry in India and the outputs of
actions:
focus group discussion organized
between experts of oil and gas sector, a  Formulate a gas storage
conceptual framework is developed. policy, keeping in mind
Factors considered are Economic, Legal the current policies of
& Techno Operational, Geographic/ other countries. Which in
Political Concerns, Awareness & turn should provide the
Importance of gas storage, Technical & data regarding gas
Labor Skills as well as Environmental storage; provide possible
concerns. Data collection was carried out locations of gas storage
through semi structured interview etc.
following focus group approach. After  Conduct Bidding rounds
transcribing interview, data coding (or give approvals) for
carried out by using Atlas TI software. allocating the specific
The conceptual framework is developed land for gas storage.
as an output of Focus group methodology

where stakeholders like Government of 3. CGD company has to take
India, PNGRB and CGD companies have following actions:
important roles to play. Certain roles of  Make a merger/ JV with
crucial stakeholders can be summed up foreign players so as to
as: absorb the technology and
E 208
skilled labor related to in India by any City Gas Distribution

natural gas storage. company to enhance its operating
 Study worldwide CGD efficiency. Framework can also be used
companies and their gas by policy makers or regulator while
storage facilities and take formulating gas storage policy in this
a note from their country.
experience.
Abbreviations
 Study the domestic
CGD- City Gas Distribution
market, which will
GOI- Government of India
include the demand and
GA- Geographical Area
supply analysis, project
PNGRB- Petroleum and Natural
feasibility study (i.e.
Gas Regulatory Board
which type of gas storage
CNG- Compressed Natural Gas
will be more feasible),
PNG- Piped Natural Gas
Investment required in the
NCR- National Capital Region
project, HSSE issues and
MoP&NG- Ministry of Petroleum
concerns, etc.
& Natural Gas
 Make collaboration with
PPAC – Petroleum Planning &
oil and gas sector’s
Analysis Cell
academia so that the CGD
HSSE - Health, Safety, Security
companies will get
and Environment
informative inputs and
workforce as well.
References
 Board of directors should
 A New Concept for CNG carriers and
make decisions regarding
floating CNG/OIL processing and
participating in bidding or storage offshore platforms,2011, Regu
taking an approval for the Ramoo, Mohan Parthasarathy, Thomas
establishment of gas Lamb.
 Building your own underground gas
storage facility.
storage project: From leasing to open
The Conceptual Framework developed season under FERC order NO. 636. By
can be used for developing gas storages
E 209
Jerry R. Fish and Robert A. Nelson,  “Vision 2030” Natural Gas

Portland, Oregon Infrastructure in India Report by
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June 2015  www.pngrb.gov.in
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Sofregaz US Inc. and LRC, November standard.com/article/pti-stories/ongc-
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Chaudhary
E 210
Electricity Act 2003: Review of Select Indicators

Ms. Shilpi Mukherjee*, Dr Tarun Dhingra**, Dr Anirban Sengupta***
*
Doctoral Research Fellow, Department of Power Management, CoMES, UPES
**Assistant Dean- Research, Sr. Associate Professor and Head, Department of Strategic Management, CoMES, UPES
***
Dean, CoMES, UPES
Abstract Introduction
Electrical Energy is one of the driving forces The Electricity Act 2003 has been a landmark
for the economic and social development of a Act which promised to change the way in
country. The electricity sector of India was in which the power sector of India functions. It
shambles – technically and financially. Urgent raised the hopes of the people wherein concepts
restructuring and reform was the need of the such as competition, open access, market
hour. The initial reforms, in the 1990s, had a oriented pricing and such other things were
piecemeal approach and did not yield desired introduced. Power Trading was given a distinct
results. The Electricity Act 2003 brought a identity and it also created a platform for
paradigm shift in the power sector of India. In development of the power market. The Act also
spite of a decade of its enactment, the shortages takes care of consumers through provisions for
are aplenty and per capita consumption far Appellate Tribunal, Ombudsman and other
below the world average. But we cannot deny grievance redressal mechanisms. The Act
the improvement that the Act has brought in, in promised a paradigm shift in the functioning of
terms of competition, captive generation, the power sector.
trading and private sector participation. This There were quite a few papers reviewing the
paper reviews the Act on the basis of Core Act, hailing the provisions that would
Indicators to evaluate the impact of the Act and positively affect the power sector or one of its
would help us to decide the future course of segments, highlighting the loopholes, focusing
action. on the questions that were left unanswered and
suggesting improvements in the same
Keywords (Ranganathan & Rao, Power Sector Reforms in
Electricity Act 2003, India, Power Sector India, 2004) (Sharma, Nair, &
Reforms, Electricity Sector Restructuring Balasubramanian, 2005) (Singh A. , 2004)
(Sioshansi, 2006) (Godbole, 2003). Moreover,
these papers were limited to a couple of years
E 212
from the implementation of the Act. As per the commercial difficulties (Indian Electricity Act,
knowledge of the researcher, an actual review 1910). With India gaining independence in
(not a probable review) of the impact of the Act 1947, the preferences changed to social
needs to be studied and has been attempted in obligations and thus, on the lines of the UK
this paper. It remains to be seen whether the Electricity Supply Act 1926, the Electricity
Act has achieved its objective or not. Supply Act 1948 was enacted (Electricity
Supply Act, 1948). It mandated the creation of
Electricity sector reforms have been attempted
State Electricity Boards (SEBs) in the states for
in many countries around the world. But the
the development of electricity in each and
scenario in developed countries is quite
every part of the country. It also increased the
different from that of the developing ones.
role of Government in the sector.
While there is good amount of research for
these reforms in the developed market The monopolistic nature of the industry did not
economies, the ones for developing market are encourage competition and electricity tariff
very few and sparse. The author, through this became the object for vote bank politics. In
paper, reviews the EA 2003 after a decade of spite of huge demand, most of these SEBs were
its enactment based on the Core Indicators for drowned in debts and numerous efforts to
evaluating the same (Jamasb, Newbery, & salvage them had gone in vain. The Annual
Pollitt, 2005). Report (2003) of Ministry of Power reports the
dues to exceed Rs 41,000 crores as payment
Regulatory Framework of Indian Power
dues by the SEBs.
Sector
Indian Power Sector has achieved numerous The 1991 amendment to the Act introduced the
milestones since inception. The regulatory concept of (Independent Power Producers)
framework for power sector started with the IPPs in order to attract private investment for
Electricity Act of 1887 followed up by Indian increasing the generation capacity. Very few
Electricity Act 1903 by the British to regulate investors came forward as they were aware of
the supply, distribution and consumption of the paying capabilities of the SEBs which
electricity. Electricity was mostly concentrated would act as the sole buyer. The Enron debacle
in the urban areas and in the hands of private further worsened the scenario wherein foreign
players. investors constructed the Dhabol Gas Power
The Indian Electricity Act 1910 replaced the Plant. The ghost of Dhabol is said to still haunt
1903 Act due to various practical, technical and the foreign investors with regard to investing in
E 213
India especially in the power sector (Sant & Literature Review

Dixit, 1995) (Li, 2010) (Reineberg, 2006). A review of literature brings the researcher to
the fact that very few papers study the impact
A need was realized for a complete overhaul of
of EA 2003 after a considerable period of time.
the power sector. But before that a separate
Most of the papers either discusses the likely
entity needed to be set up for making policy
impact or study/reviews it within a couple of
decisions including the tariff determination. It
years (Bajaj, 2004) (Bhattacharyya, 2007)
was for this purpose that the Electricity
(Bhattacharyya, 2005) (Godbole, 2003) (Joshi,
Regulatory Commissions Act 1998 was
2004) (Ranganathan, 2004) (Ranganathan &
enacted which mandated the creation of CERC
Rao, 2004) (Rejikumar, 2004) (Sankar, 2004)
in the Centre and SERC in the states. Small
(Singh A. , 2004) (Singh A. , 2010) (Thakur,
states were left with the option of constituting
Deshmukh, Kaushik, & Kulshrestha, 2005)
JERC along with some other state. It was aimed
(Umesh K Shikla, 2011).
at building the foundation for restructuring of
Sharma et. al. (2005) discusses with reference
Indian Power Sector.
to the start of the initial phase of reforms and
The Electricity Bill 2001 after lots of debates not with reference to the EA 2003 specifically.
and discussions got published in the official (Central Electricity Authority, 2014) gives us a
Gazette of India and implemented on 10th June state wise list for implementation of steps like
2003. It repealed all the previous Acts, i. e., unbundling, appointment of Ombudsman etc.
IEA 1910, ESA 1948 and ERC Act 1998 (Pargal & Banerjee, 2014) gives us some good
(Chatterjee, 2012) (Thakur et. al, 2005). information in this regard but focuses on
distribution and does not give a comparison
The Electricity (Amendment) Bill, 2014
since the implementation of the Act.
presently being considered for implementation
proposes to segregate the distribution and These literatures give us good information
supply businesses. ‘Distribution’, in the earlier regarding the reforms in Indian Electricity
Acts, encompasses both wire and supply Sector but leave a gap as to review the impact
business. Its segregation is expected to provide of the Act. The researcher attempts to fill this
choice of supplier for the consumer and thus gap based on indicators developed specifically
promote competition amongst the suppliers. for Electricity Sector Reforms in developing or
less developed countries.
E 214
Jasmab et. al. (2005) provides us with core bounded rationality (Jamasb, Newbery, &
indicators for electricity sector restructuring in Pollitt, 2005).
developing countries (Jamasb, Newbery, & EA 2003 had proposed radical changes in the
Pollitt, 2005). The author utilizes these power sector of India. It’s been a decade since
indicators to find the status of implementation its implementation on 10th June 2003 which
of the Act by comparing the 2003 data with the gives rise to the need for evaluating it/ studying
latest one available, 2013, 2014 or 2015. It will its impact.
help us to ascertain the impact of the Act to a
Through this paper, the researcher tries to
certain extent with regard to ‘Sector
evaluate the same through ‘Performance
Endowments and Characteristics’ and ‘Key
Indicators for Sector Endowments and
Reform Steps’. Comparing all the indicators
Characteristics’ as well as the ‘Key Reform
would be beyond the scope of this paper but can
Steps’ as discussed in the previous section. The
be a further scope of study.
sources for these data are Reports and websites
Electricity Sector Indicators of Ministry of Power, CEA, CERC, SERC,
‘Indicators reflect or represent the state of a World Bank, IEA and similar ones. The source
phenomenon in the form of information’. It for each data has been mentioned alongside in
helps us to understand complex issues and order to reduce any ambiguity.
systems and save us from being limited by
E 215
Table I : Sector Endowments and Characteristics

Data
Focus area Indicator Reference 2003 Source Present Status Source
Source
(UK as
example)
Electricity
? Resource IEA and
? generatio
mix OECD
n mix:
? Resource (i) net generation CEA Annual Report CEA Report
126238.98 MW 278733.62 MW
mix capacity (MW) 2003-04 (Chapter 2) (30.9.2015)
http://powermin.nic.in
(ii) energy supplied CEA Annual Report 1048.673 BU
596.543 BU /power-sector-glance-
(MWh) 2003-04 (Chapter 3) (2014-15)
all-india
Primary
energy
? Coal: 175.425 IEA Report Coal: 382.355
supply mix
(MTOE)
Crude Oil:
Crude Oil: 232.043
131.045
Oil Products: Oil Products: -
9.966 48.923
Natural Gas:
Natural Gas: 9.896 Energy Statistics
25.87
http://www.iea.org/s
Nuclear: 4.634 Nuclear: 8.913 Annual Report 2015
tatistics/statisticssea
Hydro: 6.949 rch/report/?country= Hydro: 11.587
INDIA&product=ba
Geothermal, lances&year=2003 Electricity: 0.482
solar etc: 0.36
Biofuels and
Waste: 155.244
Electricity: 0.145
E 216
Electricity
Electricity
Electricity Supply
? Energy Generation and http://pib.nic.in/newsi
consumpti Drillisch et (including
security Import: te/PrintRelease.aspx?r
on, al. import):
and 1048403000 MWh elid=118256
domestic 535030440
(2014-15)
MWh (2003-04)
Domestic Domestic
resource
production, import, Generation: Production: CEA Executive
independen -1998 CEA Annual Report
export (MWh) 533282040 1043400000 MWh Summary Mar 2015
ce 2003-04 (Chap 5)
MWh (2003-04) (2014-15)
Import: 1748400
Import: 5109500
MWh (Nepal and
MWh (2014-15)
Bhutan)
NLDC Mar 2015
Export: 58380 Report
Export: 4515000
MWh (Nepal and
MWh (2014-15)
Bhutan)
Energy Energy Energy
? consumption, Consumption: IEA Report Consumption:
domestic production, 333.969 424.509 (2013-14)
Domestic Energy Statistics
Domestic
import, exports (MTOE). Production: http://www.iea.org/s Annual Report 2015
Production: 332.628
397.715 tatistics/statisticssea
Import: 116.167 rch/report/?country= Import: 326.976
Export: 16.476 INDIA&product=ba Export: 69.728
lances&year=2003
Self-sufficiency in
? electricity – 1043400000
domestic
production GWh / Calculated from Calculated from
99.67 99.51
domestic production + net above data above data
E 217
imports (%)
Energy
self-
sufficiency Calculated from Calculated from
? (%) 77.39 50.43
– above data above data
domestic/t
otal
Reserve
capacity –
? Reserve
? at Nil Nil
generation MoP Annual Report MoP Annual Report
maximum
2003-04 2014-15
demand
(MW, and as % of total (Energy Deficit (Energy Deficit &
capacity
installed capacity) & Peak Deficit) Peak Deficit)
Electricity
? Integrated Energy
consumpti Zhang et al. CEA Monthly Report
Electricity ? 553 U (2003) Policy, Planning 957 U (2013-14)*
on per (2002) Jan 2015
and energy Commission, 2006
capita
Energy
consumptio
consumpti
n per ?
on per
capita
head
Expert Report on
? Unserved Households without 8536X10^4 Census 2001, NEP 75 million HH Climate Parliament
?
demand electricity (number (2001) 2005 (2014) 2014 submitted to
prime minister
and % of total) 30.40
44% (2001) NEP 2005, MoP 33% (2011) Census 2011
IEA Website
(Biofuels and
Non- Waste):
commercia 155.244 MTOE http://www.iea.org/s
?
l energy (2003) tatistics/statisticssea
(amount) rch/report/?country=
INDIA&product=ba
lances&year=2003
E 218
Electricity GDP: 618.4 bn GDP: 1.877 tn USD https://www.google.c

? Energy
use per Zhang et al. o.in/webhp?sourceid=
and ? USD (2003) (2013)
GDP unit (2002) https://www.google.
electricity chrome-
(kWh/$) co.in/webhp?sourcei
Electricity Use Electricity Use per instant&ion=1&espv=
d=chrome- 2&ie=UTF-
per GDP Unit: GDP Unit: 0.638
instant&ion=1&esp 8#q=energy%20use%
0.978 kWh/$ kWh/$
v=2&ie=UTF- 20per%20capita%202
Energy use 8#q=energy%20use 003%20india
Energy Use per %20per%20capita% Energy Use per
intensity of per GDP
? GDP: 0.23 GDP: 0.11 TOE/$
GDP unit 202003%20india
TOE/$ (2003) (2013)
(TOE/$)
Price/cost
? Overall
(values per Cost: 239 paise Cost: 593 paise
system ? TERI Report
kWh, (2003-04) (2013-14) Planning Commission
price-
ratio) Report on working of
http://www.teriin.or Power Utilities 2013-
cost g/index.php?option 14
Realization: 203 Realization: 480
relationshi =com_featurearticle
paise paise
p &task=details&sid=
717
Ratio: 84.94% Ratio: 80.94%
Planning
Planning Commission
? Number No. of residential, Commission Report
Total: 113.86 mn Total: 2025 lakhs Report on working of
of ? industrial, and on working of
(2001-02) (2013-14) Power Utilities 2013-
customers commercial Power Utilities
14
2001-02
Residential:
Residential: 220894
Customers. customers 83355 CEA Report on
CEA Report on
Growth of
Commercial: Growth of Electricity
Electricity Sector in Commercial: 82322
25437 Sector in India from
India from 1947-
1947-2015 for 2013
Industrial: 2015 for 2003
Industrial: 395221
168821
E 219
Agricultural: Agricultural:
84486 173200
Traction: 8797 Traction: 16794
Proven
? Natural reserves / Estimated Estimated Reserves:
gas ? annual Reserves: 751 1427.15 BCM
(domestic production BCM (2003) MOSPI Report (2014) Energy Statistics
ratio Petroleum and NG
Annual Report 2015
availability Production: Extraction Chap 7 Production: 34.64
) 31.39 BCM BCM
23.92 41.20
Table II : Key Reform Steps

Focus area Indicator Data Source Source/reference 2003 Source Present Status Source
(e.g. UK) (example)
Date of Electricity Act Electricity Act
? Electricity Regulator’s web-
? effectiveness Bacon (1999) 2003 enforced in Electricity Act 2003 enforced in Electricity Act
law or act site
(year) June 2003 2003 June 2003 2003
Are state-owned yes- partially CEA Report-

?
? enterprises Interviews Bacon (1999) (most of the Status of progress
Corporatisation
corporatised? yes- partially CEA Reports states) of EA 2003
(no/yes-fully, partially)
Zhang et al.
? Privatisation ? Start date (year)
(2002) Started in 1991 Started in 1991
Privatisation
? proceeds from G,
T, D G: 184138 MU CEA Annual
Report 12-13
(national currency and US$
Siniscalco, et al.
per kW, MWh) * G: Rs 65468 cr
E 220
Privatised
? electricity assets -2001
– G (MW), T T: Rs 2294 cr
(MW), D (MWh) as % of
Bacon (1999)
total D: Rs 1766 cr
G: 91503 MW/ CEA Report Dec

255681.46 (36%) 2014
Vertical
? Unbundling ? separation of G Bacon (1999) Yes (G, T and
from T/D D) Yes (G, T and D)
(no/yes – legal, accounting,
Steiner (2001)
ownership)
Are new private ADB

? Private sector ? Bacon (1999)
concessions and Yes Research- Yes
Policy and
Regulatory ADB Research-
Environment Policy and
participation greenfield investments for Regulatory
(new entry) allowed? (no/yes) Private Environment for
Investment in Private
the Power Investment in the
Sector Power Sector
Is retail
? Retail
? competition Bacon (1999)
competition
allowed? (no/yes - No Yes
Down to what level?
Is a wholesale
? Wholesale market Zhang et al. Yes, for
?
electricity established? (2002) customers of CERC
(no/yes Not established 1MW and above Regulations
– Pool, single -buyer, cost-
market Steiner (2001)
based/price-based, Voluntary
voluntary / compulsory
participation, Price based
E 221
demand participation, Bilateral and

contract market Exchanges
bilateral, forward), Balancing market
balancing, IPPs) known as UI
Yes, independent
regulator
established
Is a regulator Yes, according to ERC
Zhang et al.
? Regulator ? established? independent Act 1998 and
(2002)
(no/yes – regulator provisions exist
established for the same in
according to Electricty Act
ERC Act 1998 ERC Act 1998 2003 ERC Act 1998
independent, ministerial,
Bacon (1999)
other)
? Composite key reform steps Bacon and

?
reform taken Besant-
Change in Change in
a. Change in ownership
ownership ownership
b. Ability to recreate Formal Planned Formal Planned
index Jones (2002),
conditions for reforms Change Change
Unbundling, Unbundling,
c. Formal Planned Change
Corporatization Corporatization
Drillisch et al.
-1998
G: Generation, T:
Transmission, D:Distribution
E 222
Inference from the Tables 99.67% in 2003-04 to 99.51% in 2014-15

which shows that apart from a little import,
Table I
most of the electricity is generated in India.
Sector Endowments and Characteristics
But this is not the case with energy. The
The Sector Endowments have specific reform energy self-sufficiency has decreased from
measures, some aspects of market structure 77.39% to 50.43% for the same period of
and institutional framework as the variables. time.
So, we can say that India was and is self-
 Resource Mix:
sufficient in terms of electricity but not so in
The comparison of data shows that net
terms of energy. Suitable steps need to be
generation capacity has more than doubled
taken in this regard.
since the implementation of the Act while the
actual electricity generated is slightly less
 Reserve generation capacity:
than double. In spite of the increase in
Indian is still an energy deficit country so
installed capacity and unfulfilled demand, the
there is no reserve generation capacity at the
net generation was not so high because of the
national level. Deficit exists in the electricity
issues with supply of coal and gas.
sector for both energy (average) as well as
peak time (Ministry of Power, 2004)
The primary energy supply mix also shows
(Ministry of Power, 2014).
an increased consumption of coal, crude oil
and hydro while that of Natural gas has
 Electricity and energy consumption per
decreased. Electricity has also increased
capita:
manifold from 0.145 MTOE in 2003 to 0.482
The per capita consumption of electricity has
MTOE in 2015 in the primary energy mix.
approximately doubled from 553 Units in
2003 to 957 Units in 2013-14. Although this
 Energy security and resource independence:
indicator shows impressive increase, it is
The Energy Security of a country is of a
much less than the world average as well as
prime concern. The import, export,
that of emerging economies (Pargal &
generation and consumption of electricity
Banerjee, 2014).
help us to calculate the self-sufficiency in
electricity. There is a slight variation in self-
sufficiency, with respect to electricity, from
E 223
 Unserved demand: considerable improvement in the cost

The number of households without electricity incurred for each unit of GDP (Suehiro,
which was an enormous 85.36 million in 2007).
2001 decreased to 75 million in 2014.
Percentage wise it had reduced form 44% in  Overall system price cost relationship:
2001 to 33% by 2011. Presently, vast This indicator gives the relationship between
electrification programmes are being carried the price and cost of electricity. The data
out for providing the rest of the population shows that both the cost and the price have
with access to electricity. Schemes have been increased in the last decade since the
set up by the Ministry of Power like implementation of the Act but realization of
Deendayal Upadhyaya Gram Jyoti Yojana the cost incurred has decreased from 84.94%
and Rural Gandhi Grameen Vidyutikaran to 80.94%.
Yojana for Rural Electrification (Ministry of This is mainly due to the highly subsidized or
Power, 2015). However, very few of them free electricity provided to the agricultural
are getting quality power with 33% of them sector and the complicacies in increasing the
being under electrified with 50Units of tariff (Joseph, 2009). Steps have to be taken
electricity per month per household (Garud, in this regard for rationalization of the tariff
2015) which is one of the objectives of the EA 2003.
 Energy and electricity intensity of GDP:  Number of Customers:

Energy or electricity use per GDP provides us The number of customers has increased
with energy intensity. It indicates the cost or enormously by 886.4 lakhs since the
price for converting energy/ electricity into implementation of the Act. Although there is
GDP. Higher values indicate lower energy an increase in all the segments of consumers,
efficiencies or extreme climatic conditions the maximum increase is in the residential
like Russia etc. and agricultural sector.
The decrease in electricity intensity from
0.978 in 2003 to 0.638 in 2013 shows  Natural Gas (Domestic Availability):
improvement in electricity efficiency in the There is not much increase in the production
country. The energy use per GDP was halved of natural gas with a meagre 3.25 BCM
during this span of time which shows increase since the implementation of the Act.
E 224
Moreover, the reserve/ production ratio has Haryana, Andhra Pradesh, Karnataka, Uttar
increased from 23.92 in 2003 to 41.20 in Pradesh and Rajasthan were corporatized.
2014 indicating the need to increase the
production.  Privatization:
Privatization started in 1991 in the state of
Orissa but even by 2003 none of the states
Table II was completely privatized except for Delhi
Key Reform Steps and Orissa although few like Karnataka,
Rajasthan, Uttar Pradesh and Andhra Pradesh
 Electricity Law or Act:
were in the various stages of privatization
The Electricity Act 2003 was enforced in
(Planning Commission, 2002) (Ministry Of
June 2003 specially structured for the
Power, 2003).
restructured electricity industry with
provisions for unbundling, power trading,
 Unbundling:
open access and such other features. It was a
The Electricity Act 2003 mandates the
consolidated law for generation,
separation of State Power Utilities into
transmission, distribution, trading and
Generation, Transmission and Distribution.
consumption of electricity. It repealed all the
Unbundling has been accomplished in 20
previous Acts concerning these areas of
states by the end of 2013 (Planning
concern, that is, Indian Electricity Act 1910,
Commission, 2002) (Planning Commission,
Electricity Supply Act 1948 and Electricity
2014).
Regulatory Commissions Act 1998.
The Electricity Act was amended in 2007 and
Further to this, the Electricity Amendment
proposed to be amended soon through
Bill 2014 proposes segregation of
Electricity Amendment Bill 2014.
Distribution into distribution and supply
business.
 Corporatization:
Most of the states have corporatized the state
 Private Sector Presentation (new entry):
power utilities, that is, 21 states out of the
Private Sector Participation has been
total 29 (Planning Commission, 2014) by the
encouraged right from the beginning of
end of 2013 while in 2003 only that of Orissa,
reforms in the electricity sector. The
E 225
Electricity Act 2003 furthers this cause there was bilateral, balancing and spot market
through delicensing of captive generation and for power.
other provisions. Greenfield Investments 98.99BU of electricity was transacted as
have been allowed wherein private players short term products in 2014-15 which
may bid for the concerned projects accounted for 9% of the total electricity
competitively. generated.
 Retail Competition:  Regulator:

Before the Electricity Act 2003, there was no Although the regulator was established in
provision of retail competition. The Act built 1998 through the Electricity Regulatory
the foundation for retail competition although Commissions Act 1998 for distancing the
retail competition can thrive only if Government from policy decisions, it
distribution and supply business are function was mainly tariff determination. Its
segregated which is presently being proposed responsibilities as well as independence
by the Electricity Amendment Bill 2014. increased after the implementation of the Act
Presently, customers of 1MW and above but even as on date, the independence of the
have been provided with open access wherein regulators is a debatable topic.
a generation and a distribution The Central Electricity Regulatory
company/consumer can transact power Commission (CERC) at the central level and
directly with each other with non- State Electricity Regulatory Commissions
discriminatory use of available transmission (SERC) at the state level determine the
lines. The power exchanges provide a regulations at their respective levels. Small
platform for competition. states like Goa have Joint Electricity
Regulatory Commission (JERC) as per the
 Wholesale Electricity Market: provisions of the Act.
No such wholesale electricity market existed
before the enactment of the Electricity Act  Composite Reform Index:
2003 but bilateral transactions were there. There was a change in ownership with a
Customers of 1MW and above were allowed formal planned change. The vertically
open access as discussed in the previous integrated State Electricity Boards (SEBs)
section. It was a voluntary market where were unbundled into generation, transmission
E 226
and distribution; CERC and SERC was improvement with improvement in

constituted; privatization was achieved in technologies and way of use.
most of the utilities and Appellate Tribunal
The overall system price cost relationship is
were set up to resolve the complaints of the
the only indicator showing a negative turn of
consumers. The Key Reform Steps included
events. The revenue realization ratio decrease
privatization, unbundling, corporatization,
would adversely affect the financial
constituting CERC, SERC, JERC and
condition of the distribution companies
Appellate Tribunal and appointing
which are already said to be weakest link in
Ombudsman.
the Indian Power Sector. This, in turn, would
Private sector has increased its ownership in
be harmful for the complete sector and nullify
the manifolds. The generation itself has
the objective of the reform.
increased from 11351MW in 2003 to an
enormous 104122 MW in 2015 (CEA, 2015). Unbundling, corporatization, privatization,
increasing competition in wholesale and
Conclusion
retail markets and such other indicators show
The Electricity Act 2003 has helped in
positive and remarkable results. Some more
reforming the power sector of India in a
steps are required to make the regulators
remarkable way. Although we cannot say that
independent like the appointment procedure
the sector has become hale and hearty
etc but the establishment of CERC and SERC
completely, we have to admit that it has
has distanced the Government from
reformed the sector notably.
regulations and brought transparency in the
The generation scenario is impressive with system.
the huge increase in installed capacity,
Thus, the indicators emphasize the fact that
private sector participation and more than
the daunting task of restructuring the Indian
99% self-sufficient in terms of electricity.
Power Sector is progressing but yet to
But the demand for electricity is not
achieve its goal. The Electricity Act 2003 has
completely met and 75 million households
enabled the Indian Power Sector to aid the
are yet to get access to electricity.
development of the country.
Considerable effort is required in this regard.
The electricity intensity also needs
E 227
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Lifeline / Below Poverty Line (BPL) Customers based on their Cost
of Service and Management of BPL Support Requirement
Gargi Chatterjea*, Dr. P. Dwivedi**, Dr. A. Sengupta***
* Executive Director, CESC Limited, Kolkata
** Senior Associate Professor, College of Management and Economic Studies, UPES, Dehradun
*** Professor and Dean, College of Management and Economic Studies, UPES, Dehradun
Abstract: Keywords:
Failure by State Regulators to adopt cost-to- Below Poverty Line consumer; cost of supply;
serve retail tariff model is a likely causer of cost to serve; lifeline customer; subsidy
financial distress of Indian power sector. In
Introduction
competitive environment, tariff needs to move
The blueprint for development of Indian
towards cost-to-serve with some protection for
economy is closely linked with development
the poor to serve societal needs.
of the infrastructure sector, of which the
Economic aspect of protection for “Lifeline Indian power sector plays a pivotal role. For
customers” or “Below Poverty Line more than 20 years, the sector is undergoing
customers” is examined. A cost-to-serve changes and reforms, with opening up of the
model for the BPL category based on real life sector and progression towards a competitive
data of a utility is developed. Through environment. In spite of these developments,
comparison of BPL cost-to-serve and average Indian power sector has a staggering loss of
BPL tariff, the magnitude of support need for Rs.3.8 trillion (Government of India, 2015).
BPL category is assessed. Overall volume of The sector is beset with many problems, not
BPL sales, at 1.4% of total sales, is not the least of them being problems emanating
substantial. Since the support quantum is not from high and sustained levels of subsidy
daunting, the long standing issues can be /cross-subsidy1 existing in the final consumer
handled without major financial difficulty
through levy of a universal charge or by
resorting to direct subsidy. 1
Subsidy and cross-subsidy are two leitmotifs in Indian
power sector. While in literature, the two words are
Further research is needed on allied aspects, often used interchangeably, subsidy is understood by
power industry experts in the Indian context as external
including prevention of subsidy leakage and support, usually rendered by the State Governments,
while cross-subsidy is the inter se support, usually
mechanism to identify lifeline segment
understood as support extended by the segments with
needing support. higher capacity to pay to the segments with lower
capacity to pay. There are associated issues of subsidy
leakage, as revealed by literature.
E 230
tariff and inability of the sector to move Indian Policy Instruments and judicial reviews
towards a cost-to-serve model. require cross-subsidy reduction and
2
progression towards cost of supply. The
The problem is familiar to all experts in the
Electricity Act, 2003 recognised cross-subsidy
field. The power sector in India is plagued by
as an issue and set the target of achievement of
untenable tariff structures, based on
“cost of supply” for all categories of
favouritism and subsidies rather than return on
consumers through progressive reduction and
rate base and cost-of-service concepts.
eventual elimination of cross-subsidy. 3 While
Consequently, cost recovery is almost non-
this position was somewhat diluted through
existent. The notion of charging users of
subsequent statutory policies (the National
resources the full costs is not yet a widely
accepted practice. The implementation of
electric tariffs based on the cost of service 2
The Statement of Objects and Reasons to the
Electricity Regulatory Commissions Act, 1998 stated
would go a long way in resolving the financial “that as the problems of the power sector deepen,
woes of the State Electricity Boards reform becomes increasingly difficult underscoring the
need to act decisively and without delay. It is essential
(Reineberg, 2006). Over last 40/50 years, in that the Government implement significant reforms by
focussing on the fundamental issues facing the power
order to placate large masses of people, in sector, namely the lack of rational retail tariffs, the high
level of cross-subsidies.…” In 2002, the Supreme
almost all the States, domestic and agricultural Court, through its judgment, for the first time
recognised cross-subsidy as a momentous problem. It
prices of power have been kept so low that, also interpreted the Electricity Regulatory Commissions
commercial and industrial tariffs have become Act, 1998 to state that “the consumers should be
charged only on the basis of average cost of supply of
excessive. Pricing for supply of power energy and tariff should be determined by the State
Commission without showing any undue preference to
particularly to rural and domestic sectors has any consumer. The statute also obligates the State
Government to bear any subsidy which if it requires to
very much become a political issue (Shahi, be given to any consumer or any class of consumers,
should be only on such condition that the Commission
2005). Pricing policies in the electricity sector may fix and such burden should be borne by the
remained far detached from market related Government.” (Paragraph 91 of West Bengal Electricity
Regulatory Commission vs. CESC Limited (2002) 8
costs. As a result of cross subsidisation the SCC 715). However, this position was not carried
through in the new Electricity Act (The Electricity Act,
price of electricity for Indian households is 2003) which repealed all other prevailing electricity
statutes (The Indian Electricity Act, 1910, the
amongst the lowest in the world whereas the Electricity (Supply) Act, 1948 and the Electricity
Regulatory Commissions Act, 1998). While cross-
price paid by Indian industry is amongst the subsidy was recognised as an issue, its total elimination
highest in the world (Peter, 2009). There is was advocated over a period of time (thus moving away
from the Supreme Court judgment, which had
serious concern on extremely slow progress on prescribed immediate abolition of cross-subsidy and
direct subsidy by the Government for the consumers, if
tariff rationalisation (Kumar and Chatterjee, necessary).
3
Sections 38(2)(d), 39(2)(d), 40(d) 42(2), 61(g)of the
2012). Electricity Act, 2003 (36 of 2003) notified vide S.O.
669 (E), June 10, 2003 read with amendments made
through the Electricity (Amendment) Act, 2007 (26 of
2007), May 29, 2007
E 231
Electricity Policy 4 and the Tariff Policy 5 ) as payments (52 percent) India-wide went to the
well as subsequent amendment of the 2003 richest 40 percent of households in 2010,
Act, the final legal position 6 stands that the underlining the potential gain to utility
ultimate objective is to arrive at cost of supply revenues from better targeting that would
based on voltage of supply. reduce household subsidies (Pargal and Ghosh
Banerjee, 2014).
There is severe criticism of subsidy leakage in
India. Findings reveal that most states Context Setting: Societal Objective of
subsidize a substantial portion of domestic Protecting Lifeline Consumers in a
consumption. While 25 percent of households Cost-to-Serve Environment
lack access to electricity and therefore receive While progression towards cost of supply /
no subsidy, more than half of subsidy cost-to-serve are mandated through legal
4
pronouncements and policy instruments, as
National Electricity Policy, February 12, 2005 issued
by the Ministry of Power, Government of India under well as opinion of industry experts, it is worth-
Section 3 of The Electricity Act, 2003 in Clause 5.5.3
states that “Over the last few decades cross-subsidies while to review literature on the subject to
have increased to unsustainable levels. Cross-subsidies
hide inefficiencies and losses in operations. There is assess its requirement and significance. In case
urgent need to correct this imbalance without giving
tariff shock to consumers. The existing cross-subsidies
the literature also suggests cost of supply
for other categories of consumers would need to be model in a reformed / competitive
reduced progressively and gradually.”
5
Tariff Policy, January 6, 2006 issued by the Ministry environment, there emerges a necessity of
of Power, Government of India under Section 3 of The
Electricity Act, 2003 in Clause 8.3, Item 2 states that discovering whether any protection is
“For achieving the objective that the tariff progressively
reflects the cost of supply of electricity, the SERC accorded to any segment of consumers in this
would notify roadmap within six months with a target
that latest by the end of year 2010-11 tariffs are within ±
competitive, cost-to-serve model, particularly
20% of the average cost of supply. The road map would to the lifeline or “Below Poverty Line” (BPL)7
also have intermediate milestones, based on the
approach of a gradual reduction in cross subsidy.” segment and marking out a path forward on
6
Judgments of the Appellate Tribunal for Electricity
started with pronouncements on gradual and progressive dealing with this protection need. Method of
reduction of cross-subsidy, and moved to a position
where it categorically stated that tariff determination assessment of the cost to serve the lifeline
should be on the basis of cost-of-supply and not average
cost-of-supply (Appeal Nos. 14, 26 and 27 of 2011,
segment is an allied question which needs to
May 10, 2012; Appeal Nos. 13 and 198 of 2010 and 42 be explored.
of 2011, July 26, 2012); Policy Direction cannot be
issued by the State Government to frustrate cross
subsidy reduction by allocating cheaper power to Literature Review
specific consumer categories (Appeal Nos. 41, 42 and
43 of 2010, January 31, 2011) and progression towards 7
“Below Poverty Line” requiring societal support has
cost of supply (Appeal No. 28 of 2005, March 29, 2006; been interpreted in Indian policy instruments as one
Appeal Nos. 20 and 77 of 2007, August 22, 2007; consuming below a specified level of 30 kWh per
Appeal Nos. 139 and 140 of 2007, May 20, 2009; month (Tariff Policy, January 6, 2006). While industry
Appeal No. 20 of 2009, February 9, 2010; Appeal Nos. experts are of the opinion that this definition needs
119 and 125 of 2009, February 9, 2010; Appeal Nos. standardisation, this definition of BPL is used for the
32, 33 and 118 of 2009, April 28, 2010; Appeal No. 193 purpose of this study as a starting point. Refinement of
of 2011, October 3, 2012) the definition is also discussed
E 232
Tariff set at levels higher than actual costs are problems. Ideally, here is a logical sequence of
not permitted in a Competitive Model: Lifeline reforms where the reforming country should
Rates for poor people can no longer be first raise prices to cost recovery levels (with
accomplished return on capital to finance investment), then
Scope of above-market costs is limited create regulatory institutions and restructure
the sector, and privatize only after these steps
With emergence of competition, the scope for
are taken. It is costly to undertake reforms in
meeting social policy objectives recedes and is
the wrong order. In many developing countries
no longer available through electricity pricing.
regulated prices were inefficiently low, where
With full competition, above market costs
liberalisation should lead to higher prices and
cannot be recovered through electricity pricing
better incentives. Historic pricing distortions
(Hunt and Shuttleworth, 1996).
in the electricity sectors of developing
Only where the regulated sector is a
countries i.e. cross subsidies from industrial
monopoly, above market costs can easily be
customers to households have been gradually
collected as the customers cannot bypass the
reduced as prices for the latter are realigned
delivery system. In an Electricity Sector
with underlined costs. Pricing reform is one of
Model with full retail competition, special
the most challenging tasks of reforming the
deals like lifeline rates for poor people can no
sector (Kessides, 2012).
longer be accomplished since markets obey
the law of one price. The retailers can no Reform Expectation: Erosion of Cross-
longer discriminate and explicit provision is Subsidy
needed by other means for these programmes. Political and welfare implications – Support
Since the ability to collect above market rates to low income consumers
is severely strained, Non by-passable levies A discussion on reform structure and
are potential solutions to these programmes. expectations reveals that programme of
This usually requires legislation to charge a reforms is expected to erode cross-subsidies
non-avoidable levy on all retail sales (Hunt and not the other way round. With the threat of
and Shuttleworth, 1996). introduction of competition, there was erosion
Standard Reform Model requires cost of cross-subsidies in U.K., which particularly
alignment as the first step of Reform impacted on elderly and low income
consumers. This has political as well as
A Standard Model of reform needs to be
welfare implications. A government may wish
adopted and departure from the text book
to consider the steps necessary to address these
reform model is likely to lead to performance
issues through additions to welfare systems,
E 233
the gradual phasing out of subsidies, the Cross-subsidies should have a minimal
provision of direct subsidies in the form of impact on price of electricity to consumers in
grants etc. (Davies, Wright and Waddams, the productive sector of the economy
UK). Large consumers do well when In analysis of electricity industries of England,
liberalisation takes place, at the expense of France, U.S.A., Canada, Scandinavian
small consumers. Unless the government countries, Japan, Germany, New Zealand,
strengthens regulations, the exploitation of Yugoslavia, Argentina, Brazil, Uruguay and
small consumers will worsen (Thomas, 2005). Chile, the conclusion is that electricity
Discouragement of Cross-Subsidy in Power industries in almost all countries price
Tariff industrial consumers at rates below rates
charged for others. Broadly consistent picture
From a World Bank Report, it emerges that
is that industrial consumers pay less than
cross-subsidies give the least help to the
domestic consumers. Burden of fixed cost
poorest. Since businesses pass on costs
recovery is borne by small consumers,
through higher prices, both poor and affluent
particularly commercial firms. Residential
indirectly pay for cross-subsidy. Net effect on
consumers, to some degree, typically benefit
the poor is unpredictable (World Bank Report,
from their political influence in the aggregate
1994).
(Gilbert and Kahn, 1996).
Rapid economic growth in Asia is leading to
A number of countries restrict the extent of
greater demand for electric power and higher
cross-subsidy viz. in South Africa; only
levels of capacity investment. Public sector is
incapable of satisfying the demand. Private specifically approved cross-subsidies must be
instituted in the tariff structure to address
sector participation requires reliance on cost
certain socio/political needs, while making
recovery mechanisms. Electricity prices
sure that such cross-subsidies should have a
should be brought in line with costs
minimal impact on price of electricity to
(PPIAF/AD Conference on Infrastructure
consumers in the productive sector of the
Development, 2002)
economy (Electricity Pricing Policy, 2008). In
International Scenario: Specifically
Russia, residential tariffs are proposed to be
approved cross-subsidies instituted in the
subject to government regulation at least until
tariff structure to address socio/political
2015 (tariffs in the regulated segment of the
needs
electricity market are set annually) and full
elimination of cross-subsidies in residential
E 234
electricity tariffs to be achieved in 2015 While regulation might have faded away with
(Sidorenko, 2009). steady progress of new technologies, which
erode economies of scale and scope, “rent-
In the context of Brazilian electricity sector
seeking” by incumbents and their supporters
reform, the view is that only the elimination of
pose a major hurdle to de-regulation. Since
cross-subsidies will push customers towards
rents are at stake, the likely form of regulation
the market-oriented outcomes that were
will continue to be regulator based, which
intended. It is the only sustainable economic
provides a semi-opaque process for dividing
solution that guarantees the desired long-term
these rents. It also provides a modicum of
expansion of this sector (Rosenzweig, Potts
protection to small consumers with no other
Voll and Pabon-Agudelo, 2002).
options against monopoly exploitations.
Power consumption, income level and
Regulator based governance structures are
country-specific features constitute important
likely to remain the vehicle of choice for
determinants of electricity price-cost margins
“public utility” regulation, as it does provide
and cross-subsidy levels
for a managed resolution of the continuing
Reform steps have different impacts in contingencies that arise when society attempts
different countries, which support the idea that to control or influence economic organisations
reform prescription for a specific country through regulation (Crew and Kleindorfer,
cannot easily and successfully be transferred 2002). Competition and choice in electricity
to another one. Therefore, transferring the appears to have a built-in bias towards large
formal and economic structure of a successful consumers (Dubash and Singh, 2005). In the
power market in a developed country to context of vulnerable consumers, the Office of
developing countries is not a sufficient Gas and Electricity Markets of UK have a full-
condition for good economic performance of fledged strategy (Ofgem, 2013). Warm home
the electricity industries in developing discounts, social tariffs, energy efficiency
countries. Power consumption, income level measures for the fuel poor, are some of the
and country-specific features constitute other initiatives encouraged (Ofgem, 2015).
important determinants of electricity price-cost
Definition and Measurement of Cross-
margins and cross-subsidy levels (Erdogdu,
Subsidy is a Contentious Issue
UK).
However, Studies are usually based on Cost
Regulation need for protection of small Allocation
consumers
Definition and measurement of cross-subsidy
is one of the most pronounced interfaces of
E 235
Management Accounting with public policy. service is not sufficient to cover the
There are difficult issues of identification, incremental cost of providing it. The
measurement and public policy response. incremental cost of a service is defined as the
While significance of cross-subsidy additional cost incurred by producing that
measurement from cost allocation has been service (in addition to the other services the
disputed by some scholars, virtually all firm produces). Another way of considering
empirical studies still start from cost allocation incremental cost is to ask what costs would be
(Heald, 1996). Costs are often not accurately avoided, in the long run, if the service were no
captured / allocated by Distribution utilities longer offered. If the revenue from each
(Joskow and Marron, 1991). There are benefits service is at least as great as the incremental
of dynamic pricing. Industries amass and cost of that service, no cross-subsidy exists
analyse real-time information about variations (Blagojevic, Markovic and Dobrodolac, 2010)
in supply and demand conditions and have Measurement of cross-subsidy in the context
used it to adopt sophisticated pricing strategies of telecommunications industry has analysed
(Joskow and Wolfram, 2012). formal economic approach to cross-subsidies
A case has been made out for cross-subsidy measurement and the study exhibited through
valuation to be between stand-alone cost and detailed analysis that difficulties exist in
incremental cost of a product for a multi- deriving a convenient measurement system
product utility company Both incremental cost from theoretical analysis. Use of current cost
and stand-alone cost are tools to define allocation procedures achieved from ordinary
subsidy-free prices (Faulhaber, 2002). This accounting data provides for a more robust
definition of cross-subsidy has wide following. method (Curien, 1991). In the context of
A formal definition of cross-subsidy has Laspeyres Price Index under stationary
developed in economic literature, comprising assumptions, which converge to Ramsey
two tests i.e. a service is a potential source of prices, the observation is that the forecasts
subsidy if the revenue generated by that require the same forbidding amount of
service is greater than the stand-alone cost of information as the derivation of Ramsey
the service. Whether such a service is an actual prices. Therefore, better approximations are to
source of subsidy depends on whether the be sought. Allocatively inefficient pricing
second test is satisfied. That is, revenue greater under the rate of return regulation which
than stand-alone cost is not, of itself, evidence implied cross-subsidisation of unregulated by
of a cross-subsidy. A service is the recipient of regulated services and suppression of
a subsidy if the revenue generated by that allocatively efficient peak load pricing is also
E 236
criticised (Vogelsang, 2002). Fundamental was sub-optimal at least for some of these
principle of incentive regulation is to offer consumers (Chattopadhyay, 2007).
practical rather than optimal regulation A Report of the United Nations Foundation
methods. The principle suggests that specific (2003) has identified the key issues that need
pricing formulas – such as marginal cost to be addressed in the context of Indian
pricing or Ramsey pricing – are not subsidy scenario as a) Which consumers to
necessarily suitable for direct implementation subsidise: At a minimum, subsidies could be
(Viljainen, 2005). provided to households and farmers that are
International Literature - Cross-Subsidy not already connected to the distribution
Criticism and Subsidy Leakage in India network. Subsidies to the poorest existing
customers may also be justified, b) Type of
Sub-optimal condition of Indian Industrial
service to subsidise: For customers without
cross-subsidy has been traced in a number of
service, it would be reasonable to subsidise
studies. Higher tariffs in industrial sector are
access to the service, c) Subsidy mechanism:
failing to induce greater cross-subsidies has
Demand-side subsidies tend to work better
been demonstrated with graphical and
than producer subsidies in ensuring that
algebraic approaches with a conclusion that
subsidies go to targeted customer groups and
that even for the purpose of garnering cross-
provide incentives for efficient service
subsidies, industrial tariffs ought to be reduced
delivery, although the management of
in India (Chattopadhyay, 2004). This study is
programmes such as distribution of connection
of the view that while Government owned or
grants can be expensive, and d) Amount of
controlled utilities may be required to charge
subsidy: In principle, subsidies should be large
prices in the subsidizing sectors that are higher
enough to provide an incentive to distributors
than average cost of supply, competition and
to extend service to poor households that
easier private entry into generation could
would otherwise not receive it, while not
encourage price competition as well as captive
undermining incentives to provide service on a
generation in the subsidizing sectors. Thus,
sustainable, profitable basis nor creating
competition may kill cross-subsidies through
unnecessary market distortions. Lifeline rates,
cream skimming. In another Study, sub-
if used, should be limited to modest levels of
optimality was tested estimating demand-
consumption such that subsidies are targeted
variant price-elasticities of demand for
effectively and not appropriated by richer
industrial consumers using Box-Cox and linear
households. Another Report by the South Asia
regressions. The finding is that cross-subsidy
team of World Bank finds that more than two-
E 237
thirds of domestic subsidies in India leak to which, however, is limited to consumer

non-poor. In spite of this generous subsidy categories and not segments.8
regime, a large majority of the domestic tariff A recent study provides some insight on the
subsidies are not reaching the poor. In 2010, subject. The Forum of Regulators undertook a
70 per cent of subsidy payments leaked to study (2015), which suggests a simplified
households living in the richest 60 per cent of approach regarding cost to serve and has also
income distribution. Only 14% of subsidies underlined the need for detailed cost of supply
went to households in the poorest income studies. It did not specifically undertake a cost
quintile. 16% went to households in the of supply study for BPL categories.
second poorest income quintile (Pargal and
Research Gap
Ghosh Banerjee).
Literature review suggests progression
Assessment of Cost to Serve
towards / attainment of tariff based on cost of
While a few Cost of Supply studies are supply in a reformed or competitive model.
available on the subject, paucity of data leads However, progression towards cost-to-serve,
to inevitable distortions. A study prior to adoption of the reform model, as
commissioned by the Forum of Indian suggested by review, was not attempted in
Regulators, for assessment of cost of service India and the problem has been compounded
for supply to agricultural consumers and by a number of issues troubling the sector,
methods to reduce cross subsidy for
culminating in a formidable Rs.3.8 trillion
agriculture category (TERI, 2010), highlights cumulative loss of the sector (3% of Indian
the problem of data inconsistency. This study GDP).
provides for a methodology to arrive at cost of
The only segment excluded from application
supply, discards marginal cost method,
of cost-to-serve tariff is the weaker or lifeline
advocates embedded cost for cogent reasons,
section, which need protection to serve social
and captures agricultural cross-subsidy on an
or socio-political objectives. The economic
overall State-specific basis (for a few States).
aspects of the support need for the lifeline or
However, the study is limited to cost of supply
“Below Poverty Line” (BPL) customers vis-à-
for agricultural consumption. Free agricultural
vis their cost of service and path forward to
electricity is discussed in other studies as well
address this issue, particularly in the context of
(Chatterjee, 2015). Some guidance on cost of
highly loss-making Indian power sector, is an
supply calculation is available in the Model
8
Regulations of the Forum of Regulators, Even the Appellate Tribunal for Electricity has
acknowledged that there is paucity of accurate data
(Judgment in Appeal Nos. 102, 103 & 112 of 2010,
May 30, 2011)
E 238
unchartered territory so far. While assessment  What is a probable treatment of the support
of cost-to-serve is a difficult terrain as a need established through the study?
number of options emerge, fraught with
Scope of Research
difficulties of paucity of data / information,
This study concentrates on the extent of
adoption of principles of cost allocation
overall support need for BPL customers. It is
through a structured process seems a viable
underscored in this context that ‘BPL’ has
option at arriving at this cost. Path forward on
been interpreted in the light of national policy
handling this support need can thereafter be
instruments. There is scope for further analysis
attempted guided by available literature on the
of this interpretation, together with issues of
subject.
subsidy leakage, which are beyond the ambit
Research Objective of this paper. Agricultural subsidy is an
 To arrive at the average tariff of “Below acknowledged problem as well as a separate
Poverty Line” (BPL) customers in India subject on its own. It has been covered in
some detail elsewhere and the same is not
 To arrive at the average cost of service for
repeated through this study. The economic
the BPL customers derived through a
aspects discussed herein are independent of
cost-of-supply model
current agricultural subsidy
 To determine and analyse the support
need for BPL customers on the basis of Research Methodology
the results of the study Step 1
Research Question s Average Tariff analysis and BPL Tariff

analysis is done, through the following steps.
 What is the average tariff of “Below
The subsidy element for BPL derived through
Poverty Line” (BPL) customers in India
this study is the intermediate result.
 What is the average cost of service for the
Population of 55 Utilities has been chosen,
BPL customers derived through a cost-of-
covering over 97% of supply met in India by
supply model
volume of sales. Remnant 3% comprises
 What is the extent of support required for
Jammu & Kashmir, which is not covered
BPL customers on the basis of their cost
under the Electricity Act
of service, with reference to the tariff
fixed by the State Regulators as well as
with reference to present subsidised tariff?
E 239
2003, Goa, Sikkim and North-eastern states Step 2

(except Assam and Tripura, which are covered A Cost of Supply Model following the
herein) and Union Territories excepting Delhi, methodology in the schematic diagram is
the National Capital Territory. These entities developed for a utility. BPL cost-to-serve is
are too small by volume for the purpose of this identified through the process
study and have not been covered. Data is
Data used for this part of the study is mostly
secondary data, primarily comprising tariff
primary data, collected at utility level. Some
orders of respective State Electricity
dependence on secondary data has been
Regulatory Commissions / corresponding
placed, primarily the tariff order / tariff
tariff schedules, notifications on fuel and
schedules of the relevant Commission and
power purchase cost adjustment and State
audited annual accounts of the utility.
Government subsidy related documents, for all
55 utilities. Smoothening was adopted for BPL Schematic diagram is developed for a utility
sales in some States, to align with National (structured on the basis suggested by TERI,
Policies. Suitable pro-ration has been done 2010 for agriculture) and BPL cost-to-serve is
where any financial impact is discussed, to identified through the process
assess the all-India figure.
E 240
Figure 1: Methodology Diagram
ASSESSMENT OF COST TO SERVE BPL CONSUMERS THROUGH

SEGMENT-W ISE COST OF SUPPLY STUDY
Schematic Process Diagram
System Statistical Data INPUT

Analysis
Recognizing
Components of Cost Level 1
(Revenue
Requirement)
Functionalisation of
Components of Cost
(Revenue Level 2
Requirement)
Generation Transmission Distribution
Classification
Classify of Cost
Components
(Revenue
of Revenue Level 3
Requirement)
Requirement Process
Components
Demand Energy Number
Allocation of Cost Level 4

Components
Net Costs by
Segments
Segment-wise Cost to Output

Serve
BPL Cost to Serve

is derived as one of
the segments
Figure 2: Schematic Process Diagram
E 241
Population of 55 Utilities has been chosen,

Step 3
covering over 97% of supply met in India by
As a final step, representative BPL cost-to-
volume of sales (the steps are detailed in
serve is plotted against average /
“Research Methodology” section). Secondary
representative BPL tariff. An assessment of
data has been extracted / computed from the
All-India real subsidy given to BPL customers
State Electricity Regulatory Commissions’
is the result of the study.
orders / corresponding tariff schedules,
notifications on fuel and power purchase cost
adjustment and State Government subsidy
Representative BPL Tariff Cost-to-Serve BPL related documents, for all 55 utilities, of which
Realistic Subsidy to BPL -
Derived through Step 1 Assessed through Step 2 an all-India approximation
2015-16 is the reference year for 49 utilities,

and earlier years for 6 utilities (last available).
Analysis and Interpretation Smoothening for consistency and pro-ration
Analysis (Step 1): Forming view on subsidy has been done where any financial impact is
offered to BPL customers vis-à-vis Average discussed, to assess the all-India figure. Data
Tariff (all-India) summary is in Exhibit 1
In the process, representative Average Tariff

and representative BPL Tariff are also
established
Chart 1 of Step 1
E 242
Chart 2 of Step 1
Chart 3 of Step 1
E 243
Analysis (Step 1): Forming view on subsidy  This is an intermediate result, bridging the
offered to BPL customers vis-à-vis Average gap of BPL tariff vis-à-vis average tariff
Tariff (all-India) … continued (and not with reference to actual cost-to-
serve BPL customers, which is derived
The finding in Step 1 is represented through
through the following steps).
three Charts (Charts 1, 2 and 3) spanning 55
utilities and about 97% of sales in India. Also, Analysis (Step 2)
refer to Exhibit 1 for details. Cost-to serve a particular consumer category is
 BPL customers are seen to constitute only demonstrated by way of dispersion with
1.4% of units sold in India. respect to the average cost of the utility in the
above table. The difference in cost incurred to
 Average representative tariff of India is
serve each category of consumers, is primarily
determined at Rs.6.04 per kWh, arrived at
driven by of voltage of service, 9 period of
with the weightage of overall sales.
consumption 10 as well as total consumption
 Representative BPL tariff of India, with
units. 11 The methodology is well-understood
BPL sales weightage, works out to
(TERI, 2010); paucity of data creates the
Rs.3.46 per kWh (no subsidy).
difficulty in determination of an acceptable
 Representative BPL tariff at Rs.2.59 per number, so simplified models are adopted
kWh (considering current State (Forum of Regulators, 2015). The cost-of-
Government subsidies). supply model developed and used for this
 The corresponding support need, to arrive process is based on real data of a utility, with
at average cost, is Rs.31.1 billion consideration of voltage level-wise costs based

(government subsidy at present level, i.e. on actual loss levels. The model is replicative.
incremental need) and Rs.41.6 billion (no

government subsidy). These figures
capture all-India perspective.
 In case a levy is considered appropriate 9

Electricity network needed for a consumer is only
(refer “Potential Solution” section), the upstream vis-à-vis supply voltage. Network cost to
serve a consumer connected at 33 kV is cost of 33 kV
same works out to 4 – 5 paise per kWh and higher voltage networks. Network cost to serve a
low voltage consumer comprises the entire distribution
(respectively at current subsidy levels and network.
10
Necessary to derive co-incidence with peak demand
without subsidy), chargeable on all and corresponding network cost.
11
categories excepting BPL, across India. Customer centric costs (e.g. cost of printing and
delivering a bill) get spread over a larger number of
units for a customer with higher consumption, as
compared to a customer with lower consumption units,
over a defined time period.
E 244
Table 1 cost-to-serve is determined at Rs.10.50 per

kWh.
Summarised Results of Cost of Supply Model
Nature of Supply with Cost of Analysis (Step 3)

Voltage Supply as
and Consumption Percentage  The corresponding support
Consideration of Average need, which recovers BPL cost-
Tariff
Lifeline 174% to-serve, is Rs.85.1 billion
Low Voltage Domestic - 111% (government subsidy at present
Low Consumption level, i.e. incremental need) and
Low Voltage Domestic - 106%
Rs.95.6 billion (no subsidy).
High Consumption
These figures are on all-India
Low Voltage Commercial - 120%
Low Consumption perspective.
Low Voltage Commercial - 111%  In case a levy is considered
High Consumption
appropriate (refer “Potential
Low and Medium Voltage 114%
Solution” section), the same
Industrial - Low Consumption
Low and Medium Voltage 110% works out to 10 – 11 paise per
Industrial - High Consumption kWh (respectively at current
High Tension 33 KV supply 65% subsidy level and without
High Tension Industrial 81%
subsidy), chargeable on all
below 33 KV supply
categories excepting BPL,
High Tension Commercial 83%
below 33 KV supply
across India.
High Tension Domestic and 82%
Housing below 33 KV supply
Interpretation
The financial problem around designing tariff

The cost-of-supply model indicates that the
of BPL customers in India does not appear
cost-to-serve the BPL category is 174% of the
insurmountable within the existing definition
average cost, whereas the cost-to-serve High
of BPL customers. At cost to serve, only
Tension 33 KV supply is 65% of average cost
Rs.85.1 billion incremental support is needed
of a utility and so on.
for this needy group on all-India basis, to serve
Through application of 174% (derived through societal needs. In the context of Rs.3.8 trillion
Step 2) upon the representative BPL tariff loss of Indian power sector, this figure is only
derived through Step 1, the representative BPL nominal. It also constitutes an insignificant
portion of Indian GDP (about 0.07%). This
E 245
incremental support can be met by 10 paise through a mechanism of external subsidy

per kWh support from all non-BPL customers. support, based on cost-to-serve models.
Potential Solution Discussion
Potential solution to this problem could be The existence of social policy obligations,
through charging of a universal levy on all even in a competitive model, is not
retail sales, which is an internationally internationally disputed. In light of review and
accepted solution (Hunt and Shuttleworth, analysis, the following points are notable -
1996). 12 This unavoidable levy / universal First, subsidy / cross-subsidy is an amorphous
charge may require appropriate legislative issue in Indian power sector. This analysis
intervention. Universal Charge model was
attempts to ‘box-up’ or give a coherent shape
successfully implemented in Philippines to the problem, as the strategic path to be
(Forum of Regulators, 2015) with protection treaded can only be developed consequently.
of ten years after removal of cross-subsidies Otherwise, the entire issue is lost in the
available under a lifeline rate to low-income overwhelming figure of Rs.3.8 trillion loss of
end-users (Cham, 2007). Indian power sector and no management
Since considerable difference exists amongst decision can emerge from this daunting state.
the States in defining BPL / Lifeline customer Second, through this process of sharpening the
category, legislative action seems a pre- focus, a figure of Rs.85.1 billion is quantified
requisite to bring in uniformity across India. as the support quantum for lifeline consumers
As discussed, indicative universal charge is in India to serve societal needs. While the
about 10 paise per kWh to render the figure can be further refined, it is a reference
necessary support. Another option, of course, point for policy-makers and stakeholders to
could be the State Governments picking up take further action.
this incremental amount of Rs.85.1 billion
Third, the economic aspect of the issue
12
emerging from the study is not a staggering
Other authors accept the book of applied economic
theory by Hunt and Shuttleworth (1996) of National figure, in the context of the Indian power
Economic Research Associates (NERA) based on
research vis-à-vis clients in six continents, as an sector. A levy of 10 paise per kWh, charged
authoritative though somewhat dated treatise. Four
Models of sector structure is discussed, starting with upon all consumers excepting the BPL
Model 1, where the sector is wholly integrated and
government controlled monopoly, to Model 4, which
segment, can address the incremental need.
has full retail competition. Social policy obligations As an alternative, there is always recourse to
which are met / expected to be met by the electricity
sector has been discussed in-depth. The usual solution additional subsidy from the State
propounded is non-avoidable levy on all retail sales
through legislation or a charge on the monopolised governments, which may not be the ideal
sector of transmission and distribution.
E 246
solution. However, even for this measure, Considerable subsidy leakage occurs through
proper identification and delivery mechanism this route. A concept of ‘BPL card’/ ‘BPL
are to be desired. family’, based on income, may eventually be
developed to weed out unintended subsidy
Fourth, the definition of BPL or lifeline
(linked with other items like say, cooking gas,
consumers needs uniformity. While many
where giving up of subsidy is still voluntary;
States have defined BPL consumption along
once implementation issues are ironed out, a
the lines of national policy instruments (30
common path might emerge, at least the view
kWh monthly consumption), there are outliers
is placed on the table as a necessity).
like 16 kWh monthly consumption in Tripura
and 200 kWh monthly consumption in Punjab Sixth, there is a connected need for
(refer “Exhibit 1”). Some States do not define identification of the target segment for
BPL, but end up subsidising a large chunk of fulfilment of societal needs. Subsidy leakage
domestic consumers (also low-end commercial whereby large chunks of non-BPL segments
etc.). The connected load of BPL is undefined are subsidised / cross-subsidised has been
in many States and varies between 120 watts identified as an issue faced by the sector.
to 1000 watts in other States. Connected load Literature also indicates that the domestic
needs to be made an essential part of BPL consumers upto a fairly high threshold level
definition. Without a “connected” load in BPL (even 300 to 400 kWh monthly consumption)
definition, industry experts opine that “second desire a subsidised tariff. Tariff schedules
homes of the rich”, “empty apartments of reveal that most States have below-cost tariffs
NRIs” etc. all end up enjoying subsidy. A for commercial / industrial in low-end low
definition of BPL from a national perspective tension category of supply as well. Once a
is advocated, which will help to retain focus definition of BPL is reached (which might be
on the specific issue. higher than 30 kWh monthly consumption)
through general consensus between the union
Fifth, is a view that monthly consumption
and the States (power being a subject in the
level, presently used in terms of policy
“concurrent list” of the Indian Constitution), a
instruments, does not serve as a good proxy
stricter regime of “no-subsidy” / “movement
for monthly income. Experts opine that misuse
towards cost-to-serve” can be established for
occurs through splitting of load by other
other consumers. If the present situation is
domestic consumers viz. a middle-income
allowed to continue, Indian power sector will
family tries to get two / three separate
keep on drifting with louder clamour for
connections / meters installed in various
support on this popular and populist issue.
names, all enjoying subsidised tariff.
E 247
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E 250
E x hi bit 1 : Ta r if f o f Ut i lit ie s a cro s s I nd ia

Gross Net BPL Overall
Gross BPL BPL Sales
Sl. Average Tariff Sales Respective Commission’s Orders
State Utility Tariff (Million
No. Tariff Charged (Million dated
(Rs. / kWh) kWh)
(Rs. / kWh) (Rs. / kWh) kWh)
Southern Electricity Supply
Odisha Electricity Regulatory
1. Odisha Company of Odisha Limited 4.15 2.64 2.64 2548 36
Commission Order dated 23.03.2015
(SOUTHCO)
Uttarakhand Power Corporation Uttarakhand Electricity Regulatory
2. Uttarakhand 4.41 1.87 1.87 10422 125
Limited (UPCL) Commission Order dated 11.04.2015
West Bengal Electricity Regulatory
3. West Bengal Durgapur Projects Limited (DPL) 4.71 2.89 2.89 2940 5 Commission Order dated 26.06.2015
(and Notification of 01.12.2015)
Damodar Valley Corporation West Bengal Electricity Regulatory
4. West Bengal 4.74 2.52 2.52 9127 130
(DVC) Commission Order dated 25.05.2015
North Eastern Electricity Supply
5. Odisha Company of Odisha Limited 4.76 2.64 2.64 4287 61
(NESCO)
Western Electricity Supply
6. Odisha Company of Orissa Limited 4.81 2.64 2.64 5909 84
(WESCO)
Central Electricity Supply Utility Odisha Electricity Regulatory
7. Odisha 4.82 2.64 2.64 6761 96
of Odisha (CESU) Commission Order dated 23.03.2015
8. Bihar North Bihar Power Distribution 4.90 1.95 4926 592 Bihar Electricity Regulatory
E 251

Gross BPL BPL Sales
(Rs. / kWh) kWh)
Company Limited 2.22 * Commission Order dated 16.03.2015
Gujarat Electricity Regulatory

Uttar Gujarat Vij Company
9. Gujarat 5.12 3.09 3.09 16848 98 Commission Order dated 31.03.2015
Limited
Himachal Pradesh Electricity
Himachal Himachal State Electricity Board
10. 5.14 3.35 1.50 8438 104 Regulatory Commission Order dated
Pradesh Limited (HPSEBL)
10.04.2015
South Bihar Power Distribution Bihar Electricity Regulatory

11. Bihar 5.18 2.08 * 1.95 6287 265
Company Limited Commission Order dated 16.03.2015
Uttar Purvanchal Vidyut Vitaran Uttar Pradesh Electricity Regulatory

12. 5.19 3.68 3.68 17244 385
Pradesh Nigam Limited (PuVVNL) Commission Order dated 18.06.2015
Kerala State Electricity Board Kerala Electricity Regulatory
13. Kerala 5.21 1.50 1.50 18494 470
Limited (KSEB) Commission Order dated 14.08.2014
Madhya Pradesh Poorv Kshetra Madhya Pradesh Electricity
Madhya
14. Vidyut Vitaran Company Limited 5.21 2.89 2.89 15897 230 Regulatory Commission Order dated
Pradesh
(East Discom) 17.04.2015
Madhya Pradesh Paschim Madhya Pradesh Electricity
Madhya
15. Kshetra Vidyut Vitaran Company 5.30 2.89 2.89 17805 236 Regulatory Commission Order dated
Pradesh
Limited (West Discom) 17.04.2015
16. Andhra Southern Power Distribution 5.33 2.28 2.28 30876 341 Andhra Pradesh Electricity
E 252

Gross BPL BPL Sales
(Rs. / kWh) kWh)
Pradesh Company of Andhra Pradesh Regulatory Commission Order dated
Limited 23.03.2015
Madhya Pradesh Madhya Kshetra Madhya Pradesh Electricity
Madhya
17. Vidyut Vitaran Company Limited 5.34 2.89 2.89 16535 250 Regulatory Commission Order dated
Pradesh
(Central Discom) 17.04.2015
Chamundeshwari Electricity Karnataka Electricity Regulatory
18. Karnataka Supply Corporation Limited 5.36 2.92 2.92 5745 50 Commission Orders dated
(CESC) 02.03.2015 and 21.09.2015
Southern Power Distribution
Telangana Electricity Regulatory
19. Telangana Company of Telangana Limited 5.43 2.69 2.28 30019 335
(TSSPDCL)
Tata Steel Limited (TSL) Jharkhand Electricity Regulatory
20. Jharkhand 5.45 2.50 2.50 3042 12
(Jamshedpur) Commission Order dated 31.05.2015
Jharkhand Bijli Vitran Nigam Jharkhand Electricity Regulatory

21. Jharkhand 5.48 2.22 * 1.70 7801 189
Limited (JBVNL) Commission Order dated 02.08.2012
Karnataka Electricity Regulatory

Gulbarga Electricity Supply
22. Karnataka 5.48 2.96 2.96 6436 57 Commission Orders dated
Company Limited (GESCOM)
02.03.2015 and 21.09.2015
Eastern Power Distribution Andhra Pradesh Electricity
Andhra
23. Company of Andhra Pradesh 5.49 2.28 2.28 16510 218 Regulatory Commission Order dated
Pradesh
Limited 23.03.2015
E 253

Gross BPL BPL Sales
(Rs. / kWh) kWh)
Paschim Gujarat Vij Company
Limited
Chhattisgarh State Power Chhattisgarh Electricity Regulatory
25. Chhattisgarh Distribution Company Limited 5.53 3.27 * 3.13 18735 263 Commission Order dated 23.05.2015
(CSPDCL) (and Notification of 10.09.2015)
Mangalore Electricity Supply
Company Limited (MESCOM)
02.03.2015 and 21.09.2015
Hubli Electricity Supply
Company Limited (HESCOM)
02.03.2015 and 21.09.2015
Jodhpur Vidyut Vitran Nigam Rajasthan Electricity Regulatory
28. Rajasthan 5.63 5.05 2.55 16776 143
Limited Commission Order dated 20.02.2015
Uttar Dakshinanchal Vidyut Vitaran Uttar Pradesh Electricity Regulatory
29. 5.64 3.68 3.68 17985 409
Pradesh Nigam Limited (DVVNL) Commission Order dated 18.06.2015
Bangalore Electricity Supply
Company Limited (BESCOM)
02.03.2015 and 21.09.2015
Tamil Nadu Generation and Tamil Nadu Electricity Regulatory
31. Tamil Nadu Distribution Corporation Limited 5.74 3.50 1.33 64844 1150 Commission Orders dated
(TANGEDCO) 11.12.2014 and 14.10.2015
E 254

Gross BPL BPL Sales
(Rs. / kWh) kWh)
Punjab Electricity Regulatory
Punjab State Power Corporation
32. Punjab 5.77 5.35 0 43200 645 Commission Orders dated
Limited (PSPCL)
05.05.2015 and 09.06.2015
Uttar Paschimanchal Vidyut Vitaran Uttar Pradesh Electricity Regulatory
33. 5.90 3.68 3.68 24337 472
Pradesh Nigam Limited (PVVNL) Commission Order dated 18.06.2015
Madhya Gujarat Vij Company
Limited
Jaipur Vidyut Vitran Nigam Rajasthan Electricity Regulatory
35. Rajasthan 6.08 5.05 2.55 21145 236
Ajmer Vidyut Vitran Nigam Rajasthan Electricity Regulatory
36. Rajasthan 6.08 5.05 2.55 14487 158
Tripura State Electricity Tripura Electricity Regulatory
37. Tripura 6.15 3.80 3.31 809 32
Corporation Limited (TSECL) Commission Order dated 25.06.2013
Northern Power Distribution
Telangana Electricity Regulatory
38. Telangana Company of Telangana Limited 6.19 7.02 2.28 11583 140
(TSNPDCL)
India Power Corporation Limited
39. West Bengal 6.44 3.67 3.67 854 12 Commission Order dated 26.12.13
(erstwhile DPSCL)
Dakshin Gujarat Vij Company Gujarat Electricity Regulatory
40. Gujarat 6.53 3.09 3.09 13910 126
E 255

Gross BPL BPL Sales
(Rs. / kWh) kWh)
West Bengal State Electricity
41. West Bengal Distribution Company Limited 6.55 3.53 3.53 27232 1193
(WBSEDCL)
Maharashtra State Electricity Maharashtra Electricity Regulatory
42. Maharashtra Distribution Company Limited 6.63 1.33 1.33 93261 113 Commission Order dated 26.06.2015
(MSEDCL) (and Notification of 31.10.2015)
Uttar Madhyanchal Vidyut Vitaran Uttar Pradesh Electricity Regulatory
43. 6.70 3.68 3.68 14435 318
Pradesh Nigam Limited (MVVNL) Commission Order dated 18.06.2015
Assam Power Distribution Assam Electricity Regulatory
44. Assam 6.87 4.60 3.29 6383 91
Company Limited (APDCL) Commission Order dated 24.07.2015
45. West Bengal CESC Limited 6.98 3.94 3.94 9424 31
46. Gujarat Torrent Power Limited (Surat) 7.00 3.65 3.65 3247 0.01 Commission Order dated 31.03.2015
Torrent Power Limited
(Ahmedabad)
Haryana Distribution Companies Haryana Electricity Regulatory
48. Haryana - Uttar Haryana Bijli Vitran 7.71 3.87 3.87 35985 401 Commission Order dated 07.05.2015
Nigam Limited (UHBVN) and (and Notification of 31.08.2015)
E 256

Gross BPL BPL Sales
(Rs. / kWh) kWh)
Dakshin Haryana Bijli Vitran
Nigam Limited (DHBVN)
Uttar Noida Power Company Limited Uttar Pradesh Electricity Regulatory

49. 7.72 3.17 3.17 1551 14
Pradesh (NPCL) Commission Order dated 18.06.2015
Delhi Electricity Regulatory
BSES Yamuna Power Limited
50. Delhi 8.54 6.08 3.80 5629 153 Commission Orders dated
(BYPL)
29.09.2015 and 12.06.2015
BSES Rajdhani Power Limited
(BRPL)
29.09.2015 and 12.06.2015
Maharashtra Electricity Regulatory
52. Maharashtra Reliance Energy Limited (Rinfra) 8.73 3.32 3.32 7767 0.02 Commission Order dated 26.06.2015
(and Notification of November 2015)
Tata Power Delhi Distribution
Limited (TPDDL)
29.09.2015 and 12.06.2015
Maharashtra Electricity Regulatory
54. Maharashtra Tata Power Limited (TPL) 9.14 1.72 1.72 4169 0 Commission Order dated 26.06.2015
Brihan Mumbai Electric Supply Maharashtra Electricity Regulatory
55. Maharashtra 11.07 1.12 1.12 5765 1
& Transport Undertaking (BEST) Commission Order dated 28.08.2013
E 257

Gross BPL BPL Sales
(Rs. / kWh) kWh)
BPL Sales = 1.4% of Overall Sales

Total /Average 6.04 3.46 2.59 821927 11699 in Million kWh
* Where Gross BPL Tariff is not available in the Tariff Schedule, Net BPL Tariff has been grossed up by Subsidy % of Gross Revenue permittedby
the respective Commissions.
The Chart is developed by the Authors from secondary data in public domain detailed above (latest Tariff / APR Order(s) and applicable
Notifications) and other government / utility sources, primarily for subsidy information. Data was scrutinised and smoothened, as outlined below.
Varied BPL definitions have been noted in the Tariff Schedule. While some have gone by the definition of the National Policy instrumenst and fixed
30 kWh monthly consumption as BPL, there are outliers (Tripura – 16 kWh monthly consumption, Punjab – 200 kWh monthly consumption). Some
others (Uttarakhand, West Bengal, Bihar) additionally have connected load built in definition. BPL category is not separately defined in the Tariff
Schedules of Andhra Pradesh, Haryana, Madhya Pradesh, , Tamil Nadu, Telengana, Jharkhand, Delhi.
1. Where separate BPL Tariff has not been specified, Domestic tariff has been selected (lowest slab)
2. BPL Sales smoothened to consumption level of 30 kWh per month (National Tariff Policy)
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Factors affecting developments of Indian Natural Gas market -

Learning from mature markets
Akhil Mehrotra*
* PhD Scholar, CoMES, UPES, Dehradun, India, Director – Downstream Business, BG India, Mumbai, India
Abstract Keywords
India needs to make available and Energy; Natural gas; reforms; gas market;
accessible, energy, to its 1.3 billion people learning
for its sustainable growth. The per capita
consumption of primary energy in India is a Introduction
paltry 0.5toe (world average of 1.8toe). Energy security is a key strategic priority
India plans to meet its energy need by for India. Securing access to adequate and
reducing its import dependence and affordable sources of energy is fundamental
increasing the share of gas in the energy to supporting India’s economic growth
mix to 20% by 2030. Infusion of enormous aspirations. (Kelkar, 2014). To achieve this,
capital is required to increase energy domestic production of oil & gas needs to
availability and accessibility. This can be increase, in order to reduce import
enabled through development of gas dependence by 10% (from current 77% to
markets. India can learn from the evolution 67%) by the year 2022. Further, the import
of the gas markets across mature markets dependence needs to be brought down to
like US, UK and EU. The key factors which 50% by the year 2030 (Indian Global
would help India develop its gas markets is Hydrocarbon Summit, 2015).
freedom to price gas, incentivize India, home to 18% of the world
development of infrastructure, break the population, (1.3 billion people) uses only
monopoly of companies, develop 6% of the world’s primary energy (IEA,
institutions which are independent, India Energy Outlook, 2015). The key
stipulate ownership unbundling and reform challenge for India is to ensure that energy
major gas consuming sector of power and is available and accessible to its 1.3 billion
fertilizer. If India can implement these with people at affordable prices. India has a low
right intention, it would see a flourishing per capita consumption of 0.5toe as against
gas market in next 10 years. the world average of 1.8toe. The thirteenth
plan document of government of India
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envisages increase in the per capita energy Table 1: Share of energy sources in the
consumption in India by more than double total primary energy consumption (India
to 1.2toe by 2030, which would further add v/s World average)
pressure on the energy availability. India Percentage share of energy
would be the driver of world energy growth source in total energy

consumed for the year
in the future due to a) Rising Income and
Energy Source 2014 ( percentage)
urban population; b) Need for large
World India
infrastructure development and c) Make in
Average
India push by the current government.
Coal 30.03 56.47
Oil 32.57 35.47

Historically, oil and coal have dominated
Gas 23.71 7.14
the world as the main source of energy.
Others (nuclear, 13.69 8.05
However, the past few decades have seen a hydro,
quantum jump in development of gas and renewable)
renewables as an energy resource. Gas

being considered a clean fuel, has an Natural gas would have to play a bigger role
increased importance in the energy map of in the Indian energy mix (20% target by
the world. Worldwide, the consumption of 2030) as envisaged by the Indian
gas has increased fivefold in the last 50 government and would be a factor in the
years, increasing from a meager 644 Billion economic growth of the country. This
cubic meters (BCM) in 1965 to 3393 BCM would be in line with the world average. To
in 2015 (BP, 2015). achieve this, the government of India needs
to attract large investment in the gas sector
In India, there are difficulties, in both the in order to enhance domestic production
availability and accessibility of gas, as an and increase accessibility. The impediment
energy source. The share of gas in the total is in the inherent structural, institutional and
primary energy consumption is only 7.1% policy issues around the oil and gas sector,
for the year 2014. Oil and coal formed the which needs to be addressed for natural gas
bulk of the energy consumed with a share to increase to world average levels.
combined share of 85%. Table 1 shows the
comparison between world and India, of the
Different countries have taken different
share of various energy sources in the total
paths for developing their markets. The
primary energy consumption. (BP, 2015)
route to energy self-sufficiency depends
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upon factors like availability of energy energy which has been nearly 35% of its
sources within the country, stage of its annual primary commercial energy demand
economic development and depth of over the last several decades. (IESS 2047,
development of its core institutions 2015)
required for governing such development. The import bill for crude oil in the year
The issues and challenges faced by the 2014-15 is $ 112.7 billion, putting pressure
Indian gas sector can be addressed by using on forex reserves. The total consumption of
the learning from developed markets and gas in 2014-15 is 51.23 BCM out of which
studying the approach they have adopted to 34% has been imported through Regas
evolve. Section 2 analyses the current state terminals. Total pipeline length is a
of the Indian gas market and its measure 6,000kms with GAIL owns the
characteristics. International experience is majority (68%) share. Additional
then drawn from key countries like US, UK 11,000kms of the pipeline is under
and European Union in Section 3. Section 4 implementation. RLNG terminal capacity
further is to understand these markets and stood at 21.25 MMTPA, while another 32
outline the factors responsible for their MMTPA is likely to be implemented by
development. In Section 5 we discuss the 2020. City gas distribution entities supply
issues and challenges faced by the Indian gas to 3 million households and operate
Gas market based on the understanding and more than 1000 CNG stations across
comparison of the Indian market with the various states (PPAC, 2015, Oct)
International market. Section 5 also The gas market in India can be divided
outlines the key factors required for into four distinct regimes / eras. These are
development of Indian gas markets. as follows
i) Nomination Regime (until 1990)
Indian Gas Markets – Overview and This regime, as the name suggests,
Analysis provided hydrocarbon acreages to the
India is not well endowed with energy national oil companies on a nomination
resources in comparison to its population. basis. The gas was used locally until GAIL
While it supports 17% of the world’s was formed in 1984 to set up gas
population, it only has 0.6%, 0.4% and 7% transportation infrastructure. The first high
of the world’s oil, gas and coal reserves pressure transportation pipeline, the Hazira-
respectively. This has led to the large Vijapur-Jagdishpur (HVJ) was fully
import dependence to meet its demand for operational in the year 1991. The price of
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gas, for the fields under the nomination era bidding basis, allowing 100% foreign direct
was determined on a cost plus basis known investment. Since then nine NELP rounds
as Administered price mechanism have awarded 294 blocks to various
(“APM”). North East of India was provided companies. Petroleum and Natural Gas
a discount of 40% on the APM price so Regulatory Board (PNGRB) was
determined. The nomination era ended in constituted in 2006, starting the phase of
1990, however the APM continued to be the liberalization in midstream and
price setting mechanism till date. downstream sector. The downstream
ii) Pre National exploration licensing regulator started international complete
policy (NELP) regime (1991- 1998) bidding for setting up transmission line and
The Directorate General of Hydrocarbons granting city gas licenses, mandated third
(DGH) was established in the year 1993, part open access for transmission pipeline
under the administrative control of the and provided accounting separation of
Ministry of petroleum and natural gas transmission and marketing business.
(MoPNG) to oversee the exploration and These measures have taken place from
production of hydrocarbons. In order to 2008 till 2012.
attract capital and latest technology in the The price under the NELP regime is based
exploration sector, the GoI provided certain on the PSC signed between government and
pre-discovered blocks to the international the contractor which envisaged that the
oil companies, based on a production contractor for such price discovery follows
sharing contract (PSC). Panna-Mukta and a price discovery process on an arm’s
Tapti fields in the Mumbai high on the west length basis with the approval from the
coast of India was awarded as part of this government. However, to determine the
regime in the year 1994. Price of gas for price of gas at the well head, the
such fields was decided based on the government has since determined the price
formula provided in the PSC, which of such gas through the devising of formula
primarily links to oil indices. with linkage to various world indices. The
current formulae devised as part of a report
iii) NELP era (since 1999) by Dr Vijay Kelkar, recommended that the
price of gas be determined through volume
The first NELP round was initiated on
weighted linkages to Henry Hub, National
January 8, 1999 (Upstream liberalization),
Balancing Point, Alberta and Russian Hubs
offering 48 oil & gas blocks under the PSC
(Kelkar, 2014). This changed the earlier
regime, on an International competitive
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formulae set up as part of the Rangarajan In the small and marginal field policy which
report (Rangarajan, 2012), dropping Japan was released in September 2015, the
LNG and local LNG import indices. government has provided freedom to the
producers to determine the price of gas
iv)New Domestic gas price regime (2013 produced from identified small and
onwards) marginal fields. These blocks are to be
Most of the gas in India, except where the auctioned as part of the tenth NELP round
PSC has got well defined formulae, is (likely by end Q1 2016). This is one step in
determined by the government through its the right direction, but this potential needs
new domestic gas price policy. Under the to be extended to larger fields also.
policy, the price of gas is determined as per In the midstream and downstream segment,
the formulae given by Kelkar, i.e. based on the regulator is planning to provide
a volume weighted average of Henry Hub, timelines for legal unbundling and
National Balancing Point, Alberta and ownership unbundling of transmission and
Russian Hubs. Thus, it is believed that the marketing business. However, the overall
government would act as a proxy in the transmission network remains
absence of a gas market and would provide underdeveloped.
remunerative returns to the exploration The key Institutions which influence oil &
companies based on certain well gas policy in India are as follows
established hubs. a) Ministry of Petroleum & natural Gas
However, the mechanism devised by (MoPNG)
Kelkar, remains at best, a proxy for the b) National Institution for Transforming
market until the government takes steps in India ( NITI Aayog)
its development. Rangarajan, in his c) Directorate General of Hydrocarbons
report(Rangarajan, 2012) stated that the (DGH)
competitive price for domestic gas does not d) Petroleum Planning and Analysis Cell
exist, and may not be expected to ensue for (PPAC)
several more years and hence the gas e) Petroleum Conservation Research
pricing policy will have to be based on Association (PCRA)
searching for the global trade transaction of f) Petroleum and Natural Gas Regulatory
gas, the competitive price of gas at the Board (PNGRB)
global level.
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g) 15 Public Sector Undertaking (ONGC, still retains power to control the retail
GAIL, BPCL, IOC, HPCL are the segment.
large players among them) b.) Unstable price and fiscal regime.
h) State governments International competitive bidding for
It is important to note that other than upstream acreages along with 100% FDI,
PNGRB which is constituted through an act but price controls at wellhead. Most oil &
of Parliament (PNGRB Act 2006), all other gas discoveries mired in litigation with the
institutions including DGH are arms of the government of India, mostly on the
government, hence unable to act and take interpretation of PSC terms and
make decisions which can be termed as fair, government approvals.
independent and in the best interest of the c.) Discussion in progress to move from a
sector. production sharing to revenue sharing
Therefore, the Indian gas market in spite of structure. Implemented for identifying
opening up of the oil & gas sector for small and marginal fields.
international competitive bidding, and d.) Risk reward in favor of government,
allowing 100% foreign direct investments, although the Indian basins are not highly
has not witnessed the development which prospective and the country has not seen
was envisaged by the government. This has large investments in the sector. Revenue
led to a situation, where there are only few sharing mechanism not prudent for
companies exploring the Indian basins, acreages in India which are mostly frontier
underdeveloped high pressure cross and deep water.
country pipeline network and no e.) Domestic gas allocation and pricing
aggregators / shippers of gas other than the determined by GoI, although the current
government companies. PSC provides freedom to determine gas
The key attributes of the Indian gas market prices on competitive arm’s length basis as
can be enumerated as below approved by GoI.
a.) No independent regulator for the f.) LNG import allowed under open general
exploration and production sector. DGH is license (OGL). No terminal currently
an arm of MoPNG. PNGRB regulates operating on a tolling basis; limiting access
midstream and downstream, but does not to market participants.
have requisite powers and expertise to g.) Plan to import gas from resource rich
exercise control over the sector. MoPNG countries like Turkmenistan, Iran and
Russia, through cross country pipelines but
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geopolitical constraints would delay such k.) Challenges in power sector reforms,
projects. under domain of state government, and
h.) International competitive bidding for hence not integrated into the federal policy.
setting up transmission pipeline, but still the Gas market in each country will have its
transmission pipeline under development own characteristics. But the basic elements/
are by a few large players with major factors for a market development would
slippages in the timeline; large population remain the same, although these elements
still not covered through pipeline; open may require customisation to fit the need of
access norm in place. Total high pressure the specific country. Countries like US, UK
pipeline stood at a meagre 16,000 kms as and European Union have seen
per PNGRB. No incentives to develop development of gas markets over the last
transmission network. few decades. Hence the learning from these
i.) Bundled entities allowed to transport and developed markets, can help India to find
market gas with accounting separation. the solutions for development of its gas
principle; discussed on the timeline for markets.
unbundling in progress by PNGRB. International Gas Markets – Overview
j.) Distribution and marketing segment not and Analysis
developing due to i) wellhead price Among the various gas markets across the
regulation ii) high LNG prices (although globe, the markets of United State (US),
considerably softened since Q1 2015) with United Kingdom (UK) and European Union
no access to terminal capacity to market (EU) are most developed and hence
participants and iii) distortions in Power, analyzed in detail to draw important
Fertilizer and transport fuel markets learning from the Indian market. The UK
market is analyzed separately to the EU
reforms.
Market development in United States Development of competitive natural gas
Market in the US has seen major markest in the united states, 1998); (Smead,
developments over last 70 years, starting 2013); (Kim, 2014);(Vany, 1994) ;
from the passage of the Natural Gas Act in (Herbert, 1996);(GAO, 2006) is presented
1938 till date. The evolution (year wise) of in Table 2 given below
US market (Pierce, 2004);(Juris,
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Table 2: Evolution of gas markets in United States of America (US)

Year Key development / Evolution
1938  Passage of Natural Gas Act to prevent the exercise of monopoly power over interstate pipelines.
 The Act established federal jurisdiction over natural gas companies operating in interstate
commerce.
 The Act placed the authority to regulate the gas industry with Federal Power commission (FPC)
later reorganized as Federal Energy Regulatory Commission ( FERC)
1950’s –  Post world war economic boom. No wellhead price regulation. Plentiful supply of natural gas.
1960’s Major expansion of interstate pipeline network
 Supreme Court ruling of 1954 brought in rate regulation for all gas producers (provided FERC
jurisdiction over wellhead prices), having a major impact on producer revenues (a retrograde
step). However, pipeline expansion accelerated by low commodity prices
 The above order created major problems in creating very higher demand for such gas even more
than unregulated oil and coal.
1970’s -  Natural gas market bifurcated in Interstate and Intrastate market; with low well head gas prices
1980’s leading to severe shortages in Interstate market while Intrastate market, having market clearing
prices for all production resulting in ample supplies.
 Natural Gas Policy Act of 1978 lifted wellhead price ceiling for all new gas resulting in a surge
in exploration & production. Gas starved interstate pipeline sign long term unregulated
contracts resulting in a take or pay liabilities. First US spot gas market created.
 FERC order 380 – Relieved the utility purchasers from any contractual obligation to the pipeline
for minimum bills for system supply they elect not to take.
 FERC order 436 – provided open access regime on pipelines (voluntary basis). Enabled
development of gas shippers. No trading of gas took place till this time. The producers sold gas
to pipeline owners, which in turn sold to local distribution companies and large industrial
consumers.
1990’s  Natural gas wellhead decontrol Act of 1989 eliminated wellhead price regulation on all gas
removing distortion from the market. Unbundling of transportation and supply on interstate
pipelines removed the impediment to open access
 1992- FERC order 636 – provided for ownership unbundling on interstate pipelines. Owners
can’t hold capacity for own use. Encouraged formation of market centers (hubs) on pipeline
intersection points. Capacity release and secondary trading of capacity allowed
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Beyond  FERC order 637 – Removes price ceiling on short term capacity release and allows peak and
2000 off peak rates
 FERC Hackberry decision –In a significant shift in its policy, FERC allowed LNG terminals to
operate without any open access requirement and charge market based rates. The regulator now
believes that the new non open access policy would encourage development of new terminal
and hence provide an alternate source of supply
 However, since then due to the shale gas boom most LNG terminals have converted into export
terminals
 An order requiring interstate and major intrastate pipelines to post on a daily basis capacity,
schedule and actual flow basis ( promoting transparency)
The US market is thus a matured market Market Development in United Kingdom

with thousands of market participants, most Similarly, the UK market has evolved over
of which have evolved over time with last 40-50 years. The pre-liberalised UK
market liberalization. There are more than market had a single dominant player
6000 producers, producing oil and gas from (British Gas) which required government
around 480,000 wells (both shallow and and regulatory interventions as outlined in
deep). The transportation system comprises Table 3 (Stern, 1997); (Simmonds, 2004) ;
of 300 000 mile length of pipelines. (Calliope, 2009);(Melling, 2010);(Thuber,
Numerous marketers supply gas 2011);(European federation of energy
to about 1200 natural gas distribution trade, 2004) to create a market.
companies, supplying gas through a
network of 2.4 million miles km pipeline.
There are around 29 different trading hubs
in the US and nine in Canada.
Table 3: Evolution of gas market in United Kingdom (UK)
Year Key developments / evolution
1948’s  Gas available before 1948 was synthetic gas manufactured from Coal (or town) gas, and the
market was run primarily by county councils and small private firms
 Gas Act 1948 - Nationalized the UK gas industry. Came into effect on May 1949 when 1046
privately owned companies were merged into 12 area gas boards or councils organized
geographically
 The above marked the beginning of publicly owned, vertically integrated monopoly for
downstream supply of gas
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 The UK remained isolated from continental Europe in the absence of any interconnector
1960’s  The UK became the first European country to import LNG (from Algeria) driven by supply
diversification strategy
 1966 – Post discovery of natural gas in the UK continental shelf, UK supply was converted from
town gas to natural gas
 A high pressure transmission system was built as a means to supply natural gas to regional boards
1970’s  The UK is facing stagflation; from oil price shocks of 1978
 Gas Act 1972 – Gas councils were renamed the British Gas Corporation
 British Gas extended monopsony powers and continued to enjoy monopoly power on supply of
gas.
 Gas prices from domestic production was negotiated at the wellhead
 Downstream prices based on cost of gas, transmission & distribution cost and a profit margin
1980’s  Oil & Gas enterprise Act 1982 – Act creates the possibility of competition. Pre-emption rights of
BG on gas purchase removed, but still it was not practically possible for entities to purchase,
transport and sell gas.
 1986 – Gas Act passed; first gas regulator (OFGAS) established. British Gas privatized,
formation of British Gas PLC. Large customers given open access on pipes ( >25,000
therms/annum)
 1988 – Monopolies and merger commission (MMC) recommends that BG cannot contract 90%
of any new gas and should publish tariff for Industrial and commercial customers.
1990’s  1990 – First contract for transportation signed (Quadrant gas)
 1992 – Office of fair trading (OFT) review reduces thresholds of customers, open for competition
to 2500 therms/annum.
 1992 – Gas release program commences (targets to reduce the share of British Gas to 40% by
1995)
 1993 – BG’s share of non-residential market falls to 70%
 1993/94 – MMC report recommends demerger of BG’s trading activity from transportation
 1994-95 – Surplus of supply over demand; spot market evolves
 1994 – Legal unbundling - British Gas was again re-organized into the British Gas (trading – gas
supply, service and retail) and Transco (National transmission system – NTS and storage)
 1995 – Gas Act 1995 passed to create a fully liberalized gas market. Paved way for competition
in residential market. A separate licensing system established for gas transportation, gas shippers
and gas suppliers
 1996 – Network code passed. Rules and procedures for third party access established, including
daily balancing
 Feb 1997 – British Gas demerged into Centrica plc (trading) and BG plc ( E&P & transportation)
 1998 – Opening of complete residential market to competition by April 1998
 UK – Belgium interconnector became operational, allowing the UK gas to be exported to Europe
and vice versa
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 The National Balancing Point (NBP) was established as the national, central trading point or hub.
2000’s  The Utilities Act 2000 – Act merged the regulatory office of the electricity and gas regulator into
a single regulatory office, the office of the gas and electricity markets (Ofgem)
 Also, it puts an end to the exclusivity in transportation, licensing and allowing a single license
for Great Britain.
2004 –  Improving security of gas supply – covers emergency situations and actions to be taken by
2008 various agencies. In shortage scenarios power stations can be asked to switch to alternative fuels
and protected customers get assured supply.
Market development in European Union EU took place through various directives

(EU) starting from the 1988 policy directive for
The European Union is based on the an Internal Energy market.(IEA, Gas
principles of the internal market, i.e. an area Pricing and Regulations - China's
without internal frontiers in which the free Challenges and OECD experience, 2012).
movement of goods, persons, services and Table 4 outlines the evolution of markets in
capital is ensured and competitive markets the EU.
exist in all sectors. The liberalization in the
Table 4: Evolution of gas market in EU

Year Key Developments / Evolution
1980’s Policy Target - Issued directive in 1988 – “ The Internal Energy Market”, i.e. to work as an area
without internal frontiers in which the free movement of goods, persons, services and capital is
ensured and competitive markets exist. European community ( now European Union) directives
have to be transposed into laws by the member states
1990’s Upstream Competition - Directive 94/22/EEC, to open up the upstream sector from 1994
onwards. The directive provides a set of common rules ensuring non-discriminatory access to the
activities of exploration & production (including prospection) of gas and aimed at greater
competition and security of supply. Authorization was granted in transparent manner, including
the parameters for prospecting, exploring and producing the acreage (geographical area)
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1998 Regulated or negotiated Third Party Access (TPA) - Directive 98/30/EC – Open access
proposed for natural monopoly owners of the transmission network, storage and LNG facilities.
Member states were allowed to choose between negotiated and regulated access, with monopoly
infrastructure allowed to remain within vertically integrated companies with the requirement of
having separate accounts (accounting separation)
The directive also allowed a choice to customers consuming more than 25 mmscm per year, i.e.
they can choose their suppliers. Thus, the directive provided suppliers not only access to networks
but also to the customers. The directive sets initial target of 20% and later 28% and 33% market
opening in 5 and 20 years respectively
2003 Set up regulators / Network Tariffs - EC 2003/55/EC & Reg. 1775/2005 - The directive
mandated the establishment of regulatory authorities in all member states. TPA based on network
tariff calculated actual cost and building efficiencies, appropriate rate of investment and
incentives to construct new infrastructure. This directive also allowed regulators to grant
exemption to infrastructure developers on a case by case basis
2004 Market opening & Security of supply - Directive 2004/67/EC - Market opened up for all non-
residential users and security of supply
2009 Ownership unbundling & Network planning - Directive 2009/73/EC – Directive stated that
ownership unbundling is the most effective way to promote investments and enable fair access to
the network of the new entrants and foster transparency. However the directive allowed two other
forms of unbundling, the creation of an independent system operator (ISO) and the Independent
transmission operator (ITO), and left it to member states to implement at least one of these
unbundling models. This directive allowed that certain risky investments can be exempted (partly
or fully) from TPA, tarification, congestion rents and unbundling. The directive also enabled
better coordination among EU states for planning
2010 Security of supply Directive - Reg 994/2010 – Planning for security of supply under exceptional
emergency condition, providing for clear roles for all agencies. Infrastructure to be developed
keeping in view certain extreme conditions
whereby the independent regulator was

In comparison to the above market formed. The PNGRB commenced
liberalizations, Indian liberalization started international competitive bidding for
in 1999, when the government started granting license to set up transmission and
international competitive bidding for distribution network. PNGRB also framed
upstream acreage, however kept control on rules to provide third party open access,
wellhead prices. Liberalization in developed access code and framed rules for
midstream and downstream started with the retail competition.
passage of the PNGRB Act in 2006,
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Learning from developed markets 5. Interdependence of liberalization of

Each country is different when it comes to power and gas market is important. While
developing its gas market and deciding on in the EU the liberalization of gas market
the trajectory of its reforms. However, the was ahead of the gas market while in US, it
important points of learning can be drawn has taken place at different times in
from the evolution of gas markets in the different states. In India the two largest
developed countries of US, UK and EU. consumers of gas, power and Fertilizer
But, it is important to understand the remains only partly liberalized.
similarities and dissimilarities between Even if the fundamentals of each market
these and Indian market before differ, there are few factors which are
implementing learning from these markets. relevant to any gas market and hence can be
They are as follows - safely adopted by any market. They are as
1. Most, EU countries and US, already had follows -
significant gas transmission, storage and 1. Policy directives from government key
distribution network in place which was for development of markets
largely or fully depreciated before they 2. A strong and independent regulator is the
started liberalization. Indian gas important pillar for any vibrant market; US
infrastructure is still underdeveloped. and UK regulators have made mistakes, but
2. In US, gas market had been already few have made course corrections as their
decades old before the start of markets evolved.
liberalization. 3. Promoting infrastructure development
3. India is a large country like US, but does key for any market to develop. US, have
not have abundant resources in place like 300,000 miles of wide diameter, high
US. In comparison, EU had similar pressure pipelines and 29 major market
resource issues and had to develop cross hubs including Henry Hub in Louisiana.
country pipeline and import terminals to 4. Prices and rates at source of supply need
meet their energy needs. to be deregulated for attracting investments
4. UK started its liberalization in 1986 (wellhead for producers and LNG terminals
when its gas market was only about 15 for imported gas). The success of the US
years old and hence can be the nearest market is evident from the fact that after
comparable for India. Gas market undergoing numerous policy changes, they
liberalization in India started in 1999. have today more than 20 major gas
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producers (in addition to 6800 independent and the key pillars for such markets. This
producers). matrix shown in Table 5 would help to
5. Granting an exemption from regulatory understand the issues emanating from each
obligations on risky infrastructure. of the elements.
6. Remunerative tariffs for transmission Indian Market is relatively young with
pipeline required to incentivize investment upstream reforms starting from 1998 with
7. Open and transparent access to cross International competitive bidding for
country pipelines necessary for competition upstream acreage and midstream and
8. Unbundling of ownership of pipeline downstream reforms starting in 2006 with
with shipping activity prerequisite to the passage of PNGRB Act 2006. Hence,
remove hurdles on open access. the market can be characterized as pretty
Unbundling can be through TSO or ISO young with only parts of the reforms under
also implementation.
9. Promoting transparency (no information The key issue and challenges associated
asymmetry in the market) important for with Indian Markets are as follows
helping develop markets which are more 1. Availability of gas
efficient India has not seen any major investment or
10. Reforms in Electricity market precede interest in its exploration & production
gas market reforms plans since the liberalization of the E&P
activities in 1998. This is primarily due to
Issues and challenges of Indian gas the fact that the price of gas at the wellhead
market is controlled by the central government.
Before adopting the learning from the Also the existing private upstream players
international market it is prudent to are in litigation with the government on the
understand the unique issues and challenges interpretation of the key terms of its fiscal
faced by the Indian market. In order to contract /regime. These issues until
understand the issues and challenges faced resolved will not attract investments for
by the gas market in India it is important to prospection and exploration in the country.
understand the key elements of gas market
development in India, which include
drivers of the gas market, demand drivers
for gas (i.e. sector influencing gas sector)
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Table 5: Elements of gas market development

Key drivers of gas market Demand drivers of gas Pillars of market development
Availability of gas Power Infrastructure

- Domestic source - Huge stranded capacity - Exploration &
- Imported gas via regas - Sectoral reforms in the Production
terminal distribution - Cross country pipeline
- Imported gas via cross - Terminals & pipelines to
border pipelines import gas
Access to gas Fertilizers Institutions

- Gas pipeline Grid - Focus on import - Central Planning
- LNG terminal/ FSRU dependency reduction agencies which are
- Cross border pipeline - LNG affordability and independent
subsidy burden - Developing capabilities
to run these institutions
Affordability Industry Policy & Regulation
- Price - Make in India; DMIC - Independent regulator
- Economics corridor - Policy & regulatory
- Growth in petrochemicals interventions which are
& refining capacity apt for the time and
requirement
Acceptability CGD Price & market mechanism
- Replacement fuel to coal - Number of cities under - Freedom to price gas at
( Green energy) the rollout increasing the wellhead
- Power Generation - Better connectivity to the - Gradual opening up of
- Road transport pipeline grid wholesale / retail markets
- Reforming electricity and
fertilizer ( main demand)
sectors.
neighbouring countries. Geopolitics of the

Moreover, India is not endowed with the region has also not benefitted India.
best resources of gas, thereby, even after 2. Accessibility of gas
resolving domestic production issues India India has got a meagre 16,000 kms of high
has to depend largely on imported gas. pressure gas pipelines which connects only
India has not done enough like China to a small part of the country. The Kochi
enter into strategic tie-ups with gas rich RLNG terminal is currently stranded
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because of no pipeline connectivity to the failed miserably in deciding the timing, the
mainland India. The current regulation for pace and the trajectory of the reforms.
setting up pipeline helps to promote 5. Reforms in key demand sectors like
competition for setting up such pipelines, power and fertilizers
however it does not incentive such Reforms in gas sector cannot be
development. This is augmented by the fact implemented unless the key consuming
that there are no volume certainties for the segments of power and fertilizer continue to
pipeline developers who also carry volume be under government control and their
risks. economics driven by subsidy. Since
3. Independence of Institutions governing electricity is the state subject, various state
the sector governments have stalled the process of
The DGH as an agency was formed in 1993, tariff reforms, thereby affecting the
as an administrative arm of MoPNG to viability of generation from gas. Such
oversee the oil & gas exploration & reforms are needed on an urgent basis
production. However, the purpose for without which gas sector would continue to
which it was formed was defeated since be under indirect control of government.
DGH being an arm of MoPNG works on
direction of the government and operated Recommendation and Conclusion
by officers from the same PSU’s it is The factors which can help in the
supposed to govern. The PNGRB in turn development of a gas market in India can
was formed as an independent regulator, now be enumerated and discussed. The
however, even this experiment has not factors are based on the state of the current
yielded desired results due to issues w.r.t. Indian market, issues and challenges faced
clarity on their powers. by the sector (i.e. gaps in the sector) and
4. Issue of timing the reform push learning from the matured markets of US,
The factors which would help to develop UK and EU which have undertaken reforms
gas markets in India is very easy to figure in their markets.
out from the learning of the mature markets. Following are the main factors which on
However, the difficult part is to make the implementation will help in the
decision of when to implement the core development of the gas market in India-
elements of such factors. The Institutions 1. Decontrol well head price
entrusted with running the sector have Price controls at wellhead has been the key
reason for market distortions in the US and
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other countries. Price control masks the 4. Incentivise development of gas pipeline
price signals and hence makes investment infrastructure
decision difficult. A decontrol of price at Gas pipeline is the backbone in absence of
wellhead will help to attract investments in which the market cannot exist. PNGRB
upstream acreage by sending correct price should come out with tariff regulations
signals. The Indian government has shown which provide remunerative returns and
its initial intent to decontrol the price for the incentivizes development of pipelines
small and marginal fields, but this intent under a scenario where gas availability is
needs to translate into a policy measure. also uncertain.
2. Enter into a strategic tie-up to import gas 5. Resolve issue of access either by
from gas rich neighboring countries ownership unbundling or setting up a TSO
It is now understood that the prospectively / ISO or both
of Indian basins is not pronounced in order Once the gas pipeline grid is set up,
to meet the large energy demand for growth competition should be enabled through
of Indian economy. Therefore, India has to ownership unbundling by PNGRB. The
depend on imports and one of the timing of such unbundling should be
sustainable routes is through cross border published upfront for all players to
pipelines. This will help to tide over the understand the trajectory of the reforms.
availability crisis as well as improve energy 6. Reform key demand sectors of Power &
security of the country. Fertilizer
3. Break Monopoly & Monopsony Powers The key demand sectors of power and
All Indian companies are currently fertilizer play an important role in the
integrated monopolies. Moreover, GAIL development of market for gas sector.
has the right to be the single buyer / Government has to now take steps to reform
aggregator for all domestic gas and a both these sectors without which the gas
market pool operator for power and sector will remain controlled indirectly by
fertilizer sectors. Such monopoly and the government.
monopsony powers need to be broken to The above factors once implemented,
allow new players to enter the sector and would set the gas market on its way to
consequently for market to have any chance liberalization. This may take much lesser
of development. time than is taken by the developed market,
however, keeping in mind the complexity
and the gradual nature of any reforms, this
can be implemented in 8-10 years’ time.
E 275
However, the timing of the implementation 13) Juris A (March 1998), World Bank Paper, The
emergence of markets in the natural gas
of individual factors/ reform measure has
industry
not been examined in the above study and
14) Juris A (April 1998), The world bank group,
is outside the scope of the above work. Development of competitive natural gas
References markets in United States
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Energy. BP retrieved from bp.com/statistical reduction in import dependency in the
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industry in the UK. International Gas Union 16) Melling, A .J (2010), Natural gas pricing and its
(IGU) – Gas market integration task force future – Europe as the battleground. Carnegie
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5) GAO (Feb 2006), Natural gas, Factors natural gas history from well head to burner
affecting prices and potential impact on tip, Energy law Journal, 57-112
consumers, GAO, Government accountability 20) Simmonds, G (2004). The UK Gas Industry
office, an investigating arm of US congress 2003/4. Centre for the study of regulated
6) GoI (2013), Indian Petroleum and natural gas Industries (CRI)
statistics, Ministry of petroleum and natural 21) Smead R (2013, May), NG market Notes,
gas, Government of India Navigany Energy practice publication
7) GoI(2014) – 12th -13th five year plan 22) Stern J.P (1997). The British Gas market 10
8) IEA (2012), Gas pricing and regulation – years after privatization: a model or a warning
China’s challenges and IEA experience for the rest of Europe. Energy Policy, Vol 25,
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hub in Asia – Obstacles and opportunities, 23) Stern J.P (2007), Is there rationale for the
International Energy Agency continuing link to oil product prices in the
10) IEA. (2015). India Energy Outlook. continental Europe long term gas contracts.
International Energy Agency. International Journal of Energy Sector
11) Indian Global Hydrocarbon Summit, G. (2015, management, 211 -339, Vol1, No3
March 27). Prime Minister Inaugurates Urja 24) Vany, A D (1994). Natural gas industry
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http://pib.nic.in/newsite/ role of regulation. Energy Policy, pg 755-763
12) IESS 2047. NitiAayog, 2015.
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Factors Affecting Open Access in Power Distribution Sector
Rajinder K Malik*, Dr. Prasoom Dwivedi**, Dr. Anil Kumar***, Shivam Mohaley****, Nikita
Das*****
*CSO, West-Central Railway, & Research Scholar, UPES, Mob:+919971397169,
e-mail: malikphd2013@gmail.com
**Professor and Head, Department of International Business and Economics,
Mob: +919720277508, e-mail pdwivedi@ddn.upes.ac.in
***Professor and Head, Department of Power & Infrastructure Management,
Mob:+917895912161, e-mail anilkumar@ddn.upes.ac.in
****Student, Masters in Energy Economics Semester IV,
Mob:8573973842, e-mail shivam.mohaley@stu.upes.ac.in
*****Student, Masters in Energy Economics Semester IV,
Mob: 7895754839, e-mail nikitadas14@stu.upes.ac.in
Abstract
The Electricity Act of 2003 talks about bidders while consumers can source their
Open Access in Section 42 which promotes needs from the most economic sellers. This
competition in distribution sector. It explains provision was made for private generators
Open Access as non-discriminatory access and bulk consumers. However there have
to network for more than 1MW consumers. been a lot of obstacles to its successful
There are many lacuna in the transmission implementation. The individual state
and distribution system which have deterred electricity regulatory commissions must be
the successful implementation of Open proactive to ensure that the usual obstacles
Access. Through this study the various can be overcome. One of the biggest
factors affecting Open Access have been problems is that of the reluctance of
studied. The study of these factors have been distribution companies to come under the
done on the basis of historical literature folds of Open Access. Energy demand
review and factor analysis that was done deficit forces distribution utilities to set
with the help of the software SPSS. many barriers to open access. Also one
major reason why utilities are weary of open
Introduction access is the anticipated losses in cross
Open Access is a mechanism that allows subsidy. According to a briefing paper by
generators to sell power to the highest CUTS, the main problems in the
implementation of open access arise due to
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the reluctance of State Electricity The various provisions of the Act, like de-
Regulatory Commissions in allowing sale of licensing of generation including captive
power by CPPs out of the state due to power generation and non- discriminatory
energy shortages in the states, lack of open access of transmission network helped
independence of state load dispatch centers in the development of bulk power market in
for scheduling, and lack of transmission the country. However, it is far from being
capacity. developed completely.
The structure of the electricity market There were a series of amendments relating
started in a vertically integrated form that to open access regulations over the years, in
was monopolistic in nature. This was 2005, 2008, 2010 that saw the change in
followed by unbundling and restructuring of transmission charges from ‘Contract path’ to
SEBs, such that the function of generation, ‘Point of Connection’, gradual development
transmission and distribution were of derivative market and e-bidding process
separated. Furthermore, the Electricity Act for congestion management. As of now the
2003 abolished the monopolistic nature of ancillary market is in the process of
bulk supply and retail supply. Figure 1, development.
illustrates the basic structure of the
wholesale market. Despite attempts made by CERC in
implementing provisions for open access,
and creation of power exchanges, open
access has still not completely been
achieved. In order to achieve competition at
the wholesale and retail level, open access is
an absolute necessity and till we cannot
achieve it we cannot hope for an efficient
Indian power sector.
Distribution utilities have not been

Figure 1: Basic structure of the wholesale incentivized correctly to ensure that open
market access can be achievable. Due to the
Source: - PGCIL, 30 Apr. 2015 difference in the basic tariff charged through
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open access and the one that is regulated, redressing many sections of the Electricity
competitive power sale cannot be done. Act of 2003.
Thus these problems must be identified and
curbed in order to ensure that open access is The right path to implementation of Open
implemented even in the distribution sector. Access would help in introducing efficient
retail competition in the distribution sector
The problem that we have addressed in our that would ensure more reliable power for
report is that of successful implementation the masses. The study analyses the
of open access in the distribution sector. apprehension of various organizations in the
This is of utmost importance as distribution sector with regard to the Proposed
companies are suffering from high levels of Amendment to the Electricity Act of 2014.
Aggregate Technical and Commercial In the previous ICMI conference of 2015 my
losses. The other major problems that are research proposed to probe the reasons and
seen in present distribution scenario are: barriers coming in the way of success of
 Low customer satisfaction Open Access. High level of cross-subsidy in
 Old and obsolete use of technologies electricity tariff could be the biggest
 Massive load shedding problem faced by industrial/ commercial
 Frequent power failure consumer in distribution sector. It was felt
 Unacceptable safety standards necessary to undertake detailed research to

identify the factors responsible for (non)
The aspect of high open access charges, high implementation of Open Access in
cross subsidies and lack of separation of distribution sector.
power supply and wire business can be

ascertained as the main reasons why Open Business Problem
Access failed. Also state governments are The current condition of the electricity
often reluctant to allow competition as industry is such that all the sectors are
captive power producers would have the plagued by problems. The generation sector
incentive to export power, in spite of power has a high installed capacity but excessive
shortages in the respective states. There are operational failures, the transmission sector
problems of transmission congestion and is a government monopoly but lacking in
competitive neutrality and need for investment and last but not the least the
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distribution sector is plagued by high Literature Review

financial losses which results in them to be India has failed to meet its power sector
unable to purchase enough power. This in targets by a significant margin and with
turn results in the power deficit. Moreover tremendous opportunities ahead, the power
the lacunas in the transmission sector have sector continues to be affected by the
created an obstacle to energy access. Open shortfall both on generation as well as
Access was an attempt at filling these transmission side. There has been significant
lacunas and ensuring a more compact power construction of transmission lines to add to
sector, but in vain. Thus the problems the transmission capacity. However
plaguing the Open Access have been the evacuation of surplus power still facing
main focus of our study. problems. (Durgesh Kumar Dubey, 2015)
Research Problem The power sector is highly capital intensive

The main area of research with the research and has a long gestation period that results
gap is to find the factors affecting the open in the long streaming revenue returns,
access in the distribution sector. Also how to especially for the distribution sector. India
work on the incentivizing of the distribution lags behind in terms of infrastructure in the
sector to prevent them from dissuading the power sector. Government is emphasizing
large consumers to enter the open access on an efficient and well performing
market. The main reason why the Distribution sector and focusing on the
distribution companies do so is because of improvement of financial health of utilities
high cross subsidy charges which in turn towards providing reliable and quality
lead to high technical losses. Thus the power supply and universal access to power.
problem lies in how to improve the financial
health of the distribution companies through Apart from a few franchisees and privatized
different distribution models like PPP and utilities, the Distribution sector is owned by
franchisee and efficient metering systems State Utilities. The recent years have been a
and so on. Thus the problems lying in the witness to growing concerns over the
implementation of open access due to the financial health of Distribution Utilities. The
distribution sector is the research problem low collections and cash deficit scenario of
that we have dealt with. the Distribution sector in turn severely
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impacts the financial viability of Generation utilities, formation of SERCs, issuance of

and Transmission sectors as well. The tariff order and PLF for thermal power plant
Transmission and Distribution losses in the under state sector, under operational
developed countries vary in the range of 4 to efficiency have the weights, 45%, 30%, 10%
8%. Countries in Europe and United States and 15% respectively. Similarly under
of America have T&D losses of about 6 to 8 service efficiency, parameters like metering
%. Developed countries have far lower loss efficiency of utility, number of distribution
levels compared to India. No other transformers per 10 Km of low tension
comparable developing country revenue distribution line, total number of consumers
loses on this scale. China at T&D loss level served, percentage of rural electrification
of approximately 6% is ahead of many done, and the operation cost per GWh (Giga
developing. (Subodh Garg) Watt-hours) of gross electricity sold for
According to the Indian Credit Rating distribution business have weights of 20%,
Agency and Credit Analysis and Research 25%, 15%,15% and 25%. Finally under
Limited, as approved by the Ministry of financial efficiency staff productivity index
Power, there are seven parameters by which (Total staff per 1000 consumers, SPI),
we can rate state distribution utilities. energy deficit, total electricity sold per year,
Theses parameters are called the key and per capita consumption of electricity,
performance indicators which are financial have weights of 30%, 20%, 35% and 15%
performance, audited accounts, cross respectively. (Seema Saxena and Tripta
subsidy, reform measures like unbundling Thakur, 2010)
and corporatization, regulatory environment,
forward looking parameters and incentives. Department of Energy and Climate Change,
(ICRA and CARE, 2013) of United Kingdom under the Electricity
Market Reforms states that Capacity Market
The distribution utilities can be rated on the will operate within the institutional
basis of three broad categories, namely framework set out in Annex A: EMR
operational efficiency, service efficiency Institutional Framework – Government, the
and financial efficiency. Under these System Operator and Ofgem. The capacity
categories weightage varies for various market is needed to secure electricity
factors like AT&C losses, unbundling of
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supplies. (Department of Energy and long-term contracts. (Michael J. Doane and

Climate Change, 2011) Daniel F. Spulber, 1994)
Brazilian Electricity Industry started a In the American electricity sector,

restructuring process that included the potentially the competitive segments (the
introduction of competition in generation, generation of electricity) are being separated
deverticalization of utilities, open access in structurally or functionally from natural
transmission and distribution grid and monopoly segments (the physical
introduction of retail competition. There transmission and distribution of electricity).
have been policy reforms by ANEEL (The Prices for, entry to and exit from the
Brazilian National Commission for competitive segments are being deregulated,
Electrical Energy) to promote the faster and consumers are given the opportunity to
implementation of these objectives. The choose among competing suppliers. Services
state cooperative and monopoly model no provided by the natural monopoly segments
longer exists and in place of it there exists a are being unbundled from the supply of
competitive model. Consumers using more competitive services, nondiscriminatory
than 10MW load are free to choose their access to "essential" network facilities man-
energy retailers under the current retail dated and prices for use of these facilities
competition model. (F. Figueiredo, I. determined by new regulation mechanisms
Camargo and M. De Oliveira, 2007) that are designed to control costs better than
traditional rate-of-return regulation
There exists open access in natural gas procedures. Work is being done on the
market with the marketing function being investor owned segment of the industry,
such that it has been taken on by which accounts for over 75 percent of U.S.
independent brokers and resellers of gas, as retail electricity sales and is the major focus
well as separate marketing affiliates of the of the reforms taking place in the United
pipelines themselves. In addition, local States. Despite these generally favorable
distribution companies (LDCs) and large performance attributes, there are a variety of
industrial customers purchase gas directly apparent inefficiencies that are targets of
from producers, under both short-term and opportunity for structural and regulatory
reforms. In the short run, the current system
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does a good job efficiently dispatching boom and bust investment cycles in
generating plants, making cost-reducing generation. They provide a useful
energy trades between generating utilities, comparison of the distinctive features of the
maintaining network reliability, and dealing different US market designs. (James M.
with congestion and emergencies. Re- Griffin and Steven L. Puller, 2006)
structuring for competition and regulatory
reform is unlikely to lead to significant The Delhi Electricity Regulatory
short-run cost savings. However, medium- Commission controls the selling price of
run efficiency gains may be associated with each unit of power that is sold and also the
improving the operating performance of the power that is purchased from power
existing stock of generating facilities and producers. In 2002 when the distribution
increasing the productivity of labor sector was privatized in Delhi, 16% return
operating these facilities (Paul L. Joskow, on equity was guaranteed to the distribution
1997). companies. AT& C loss reduction would
further add to the profits of the companies.
The 50 states of the US provide a variety of The AT& C losses have been reduced by
liberalization experiments to illustrate a 75% from 53.1% to 13.2% for North Delhi
range of issues: market power, real-time Power Limited. BSES Rajdhani has reduced
pricing, capacity adequacy, and market losses from 51% to 19% while BSES
surveillance. The most mature design being Yamuna has reduced losses from 63% to
that of the Pennsylvania-New Jersey- 23%. However, along with significant
Maryland (PJM) interconnection and from reduction in AT &C losses there has been a
which useful lessons can be drawn. significant rise in purchasing price of
Important lessons can be drawn from Texas’ consumers in comparison to the regulated
model of congestion management and the selling price. (Keshav Khanna, 2012)
importance of suitable market designs to
minimize congestion costs and opportunities Sudha Mahalingam of Prayas Energy Group
for exploiting transient market power. Texas says, that there were a number of reasons for
provides lessons on the costs of the lack of a the failure of reforms in the unbundling of
central day-ahead market and over-reliance Orissa State Electricity Board. The
on bilateral contracting, and on the risks of revaluation of the assets of unbundled
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entities showed that liabilities for them were distribution sector, which is a natural
higher than the assets. To stay afloat, the monopoly and opened to competition.
only option was to cover all costs, however Patronage-based relationships between end
the GRIDCO could not charge tariff charges users and politicians have fostered
either as that would result in the tariff hike environments in which electricity is
or tariff shock. They had an ever increasing demanded at subsidized rates or simply
debt servicing burden. There was invidious stolen with little fear of penalties. By
asymmetry in the restructuring of the state depriving distributors of revenues, these
electricity sector as generating companies norms ensure low-quality service. Based on
could charge tariffs that reflected their international experience, expanding the
revalued asset base, but the transmission and scope of private sector participation should
distribution company could not. (Sudha increase operational efficiency and reduce
Mahalingam) technical losses, provided that incentives are
well designed. Over time the Indian power
Y.P Chawla says that SERCs should suo sector has trended towards the conditions
moto move towards cost to serve tariff required for competitive and efficient
approach rather than waiting for utilities to wholesale electricity markets, which can be
file a petition or any direction from the State precursors to competitive retail markets.
Government. In Andhra Pradesh, SERC has These conditions include a spot market,
clearly said that in case the utility receives a independent system operators, open access
monthly tariff subsidy then the tariff is X to network wires and appropriate calculation
else in case no subsidy is there the tariff to and application of location-specific
be charged is Rs Y. He also talks about transmission charges. (Will Talbott, 2013)
mandated Open Access in distribution and
the problems being faced in it like uncertain According to Payal Malik the market design
availability of interconnection facilities and defines the trading arrangements that get the
exceptionally high open access charge. (Y.P buyers and sellers of the markets together in
Chawla, 2014) a competitive market. These trading
arrangements define the detailed rules of
The retailing function which is not a natural access to the transmission facility with the
monopoly should be unbundled from the right of access to these facilities being
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enshrined the law governing the electricity tracked hourly and that buyers pay prices
sector of a country. Merely by declaring the which vary hourly with system conditions.
industry deregulated and providing open (Payal Malik)
access to the transmission system cannot
produce competitive markets in electricity. The success of the liberalized market
Open access is only the starting point, where structure model of wholesale competition is
all the market participants, i.e. the producers predicated on a proper organization of the
of electricity can access the transmission and wholesale market on the basis of allocation
distribution wires without any of energy generation among suppliers and
discrimination. (Payal Malik) demanders, allocation of transmission
capacity among suppliers and demanders,
One essential ingredient of implementing and provision of reserve capacities for
open access requires the specification of generation and transmission to meet
trading arrangements, which can be contingencies and ensure the reliability and
centralized or decentralized. It can be based security of the system. The breakthrough
on bilateral contracting, a centralized was achieved with the introduction of the
exchange, or a tightly controlled pool. functioning of the Independent System
Trades can be physical or financial Operator. (Payal Malik)
obligations, and they can be forward or spot
contracts; the market can include or not Paul L. Joskow says that the application of
include financial hedges; the “official” regulatory rules and supporting network
market can be mandatory or optional and institutions to promote access to the
encourage or discourage secondary markets. transmission network by wholesale buyers
The single-buyer model is an antithesis to and sellers in order to facilitate efficient
customer choice and there is an absolute competitive production and exchange,
need for an arrangement that allows for including mechanisms efficiently to allocate
distribution companies to procure bulk scarce transmission capacity among
supply from other sources. Further, these competing network users is an absolute
buyers should be responsive to prices. For must. Apart from this The unbundling of
this to happen it is important for a retail tariffs to separate prices for retail
substantial portion of the load to have usage power supplies and associated customer
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services to be supplied competitively from

distribution and transmission services that Private owners pursue profit. They have
would continue to be provided by regulated every incentive to ensure that customers pay
monopolies is also important. This makes it their bills or face disconnection. If firms
possible for retail consumers eligible to have little influence over the market price,
choose their power suppliers competitively then the only way they can increase profit is
to purchase their power supplies from to cut costs. Competition thus provides the
competing retail suppliers. The competitive spur to efficiency and solvency. Second,
retail suppliers in turn buy their power in when more capacity is required, prices in
wholesale markets, or own generating competitive markets will rise to the marginal
facilities to support their retail supply cost of expansion (including the return on
commitments, and deliver the power for a investment). These prices will allow firms
fee over the regulated distribution network. either to finance investment out of retained
(Paul L. Joskow) profits or to borrow against future profits.
Private ownership provides motive, and
In another paper, Paul L. Joskow says that competition provides the incentive for
order 2000 of FERC articulates a number of efficient pricing and investment. For that
objectives for proper implementation of the and other reasons, competitive enterprises
wholesale electricity markets. These include should be placed in the private sector.
the creation of an independent transmission (David Newberry)
system operator, who can operate the
transmission network reliably and The key issues identified in the failure of
economically without being influenced by Open Access are allocation of capacity and
financial interests of generators, wholesalers its determination, open access charges and
and retailers; creation of a common excessive wheeling losses. Internationally,
transmission access and pricing rules; and both network service as well as point-to-
creation of a set basic wholesale market point service is provided by transmission
institutions, to support buying and selling of service providers. Network service would be
power economically and allocating scarce preferred as it would provide more
transmission capacity more efficiently. (Paul flexibility to the players and would in any
L. Joskow, 2006) case be required as the systems move
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towards dynamic markets. Such a service or transformers are overloaded and this
would require the transmission and prevents the system operators from
distribution system to be robust with dispatching additional power from a specific
adequate reserve margins and systems and generator. This may be prevented to some
processes to provide it. (Dhir Singh, 2013) extent by means of reservations or rights.
These rights are used to guarantee an
Open access is the key to a free and fair efficient use of transmission system capacity
electricity market. Power producers (sellers) and to allocate transmission capacity to
and dealers/customers (buyers) have to share users who value it most. (Prabodh Bajpai
a common transmission network for and S. N. Singh, 2004)
wheeling the power from the point of
generation to the point of consumption. According to FOR, competition is the
Thus, interconnected transmission system is cornerstone of the Electricity Act 2003 and
considered to be a natural monopoly so as to the six main themes under it are:
avoid the duplicity, the problem of right-of-  Reorganization of the state owned
the-way, and huge investment for new vertically integrated electricity
infrastructure and to take the advantage of boards;
the interconnected network viz. reduced  De licensing of power generation to
installed capacity, increased system enable higher investments;
reliability and improved system  Trading and market development;
performance. Managing risk is primary tasks  Tariff and subsidies;
of any trading system. This task is perceived  Consumer interest; and
harder for electricity being a non- storable  Open Access
commodity. In competitive environment, the
price is determined by stochastic supply and After implementation of the Act, as of
demand functions. The price can change at today, distribution companies and open
any time. As a consequence of increased access consumers have the option of buying
volatility, a market participant could make power from any generation company located
trading contracts with other parties to hedge at any place in the country, which offers
possible risks and get better returns. favourable prices. In contrast, competition in
Congestion occurs when transmission lines power distribution has been very limited.
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The spirit of competition and private benefit in its implementation. Moreover, we

participation in the Indian electricity used the tools of testing reliability of
distribution sector is still in the nascent questions and factor analysis on final data
stages. (FOR Report, 2013) collected to arrive at our results. Thus it is
quantitative in nature as well. The optimum
The MERC states in its notification of sample size for our survey was taken to be
Distribution Open Access Regulations of 120.
2014 the eligibility to seek open access with
the various details of procedures to be After the pilot testing was done, we carried
followed for the same. (MERC, 2014) out a Reliability and Validity test. Under
reliability test, an internal consistency test
Research Methodology was carried by using the Cronbach’s Alpha
For the analysis of data the following Test, the latent variable used, being ‘Open
coefficients and tests were carried out Access can be implemented in a more
through the reliability test and the factor improved way, in the Indian Electricity
analysis: Distribution Sector’. On collection of the
 Cronbach’s Alpha Coefficient- This final data we carried out factor analysis
helps in validation of questionnaire. using a principal component analysis, with
 Bartlett’s Sphericity Test- This help the help of the SPSS software. We have thus
to check redundancy of the matrix by constructed the basic factors affecting open
checking whether the population access in the distribution sector.
matrix is an identity matrix or the
covariance matrix is a diagonal one. Sampling Procedure
 Kaiser- Meyer- Olkin Measure of We used a probabilistic stratified sampling
Sampling Adequacy procedure to collect the samples for our
survey. The categories on the basis of which
Research Design the samples were stratified were:
The research report is exploratory in nature.  Generators (Public Enterprises, IPPs
The report throws new insight on to the and CPPs)
already existent framework of Open Access  Distribution Utilities
along with possible changes that could  Transmission Utilities
E 288
 Non-Governmental Organizations questionnaire comprises of 30 close ended

 State Electricity Regulatory and undisguised questions on a 5 point
Commissions Likert Scale, with options being:
 Open Access Consumers  Strongly Agree
 SLDCs, RLDCs  Agree
 Power Exchanges  Indifferent
 Indian Utilities  Disagree
 Consulting Agencies  Strongly Disagree
 State Energy Departments The questionnaire was divided into three
 Educational Institutions parts, namely:
 Individual Power Experts  Electricity Industry Structure
(Government Senior Officers,  Distribution Sector

Academicians and Retired Power  Open Access
Officers) e carried out a pilot test on 32 respondents
on the basis of which we tested reliability of
Sampling Frame the questions. The Cronbach’s Alpha was
The population we took into consideration very high implying a high validity and thus
for collecting the primary data was the entire not much of a need in the questionnaire. We
electricity industry that comprises of made a few modifications based on the
organizations and eminent persons from the suggestions from industry experts followed
Ministry of Power. This is our sampling by which we carried out our final data
frame. collection.
Questionnaire Design Date Collection Instrument

In order to frame our questionnaire we had We mostly sent out emails and carried out
to gather information on the current status of telephonic conversations for filling out our
the industry and the problems plaguing it. survey along with a few personal interviews.
This information we obtained from
secondary data. But the results and the Determination of Sample Size
conclusion of this report is solely based on In order for a good and reliable result for
the primary survey done by us. Our factor analysis we need ‘ten times the total
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number of statements in the questionnaire’ es
number of responses. 7. Load 30 135/33 1 5

Despatch 89*30
Total number of questions: 30
Centers
Thus ideal sample size: 30 * 10 = 300
8. Power 3 135/33 1 2
For a fairly reliable result the sample size: exchange 89*3
100 – 150 (Table 1 shows the samples from s
different categories taken). 9. Open 1 135/33 1 1

Access 89*1
Table 1: Samples from different categories
Associati
Sl. Source No. % of Calcula Actual
on
No. Sampl ted Sampl
10. Generato 600 135/33 24 36
e Sample e size
rs 89*60
size
0
1. Governm 100 135/33 4 12
Total 3389 138 120
ent 89*10
Thus, keeping in mind the time constraint
Senior 0
Officers we obtained a total sample size of: 120
(Director
and Scope
above)
The study can help us to analyze the areas of
2. NGOs 5 135/33 1 2
the power sector that need considerable
89*5
3. Electricit 30 135/33 1 3 improvements in order to make open access
y 89*30 a successful reality. The main challenge lies
Regulato in incentivizing the distribution sector so
rs
that they can encourage third party access
4. Open 2500 135/33 100 44
and not dissuade bulk consumers from
Access 89*25
consume 00 participating.
rs
5. Financial 50 135/33 2 2 Reliability Analysis
Institutio 89*50
Cronbach’s Alpha is a tool for assessing the
n
internal consistency and reliability of a
6. Distributi 70 135/33 3 13
on 89*70 scale. It is computed by using the formula:
Compani
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α = (k/ (k-1)) * [1- Σ (s2i)/s2sum], where Table 4 shows the Item total statistics. This
table indicates the Cronbach’s Alpha
α is the Cronbach alpha coefficient coefficient in correlation with each question,
k is the number of respondents, such that if the question is deleted the
s2i is the variance for k individual items, coefficient value either increases or
s2sum is the variance for the sum of all items. decreases.
Table 5 shows the questions which provide a
If there is no true score but only error in the higher Cronbach’s Alpha, if the questions
items (which is esoteric and unique, and, are eliminated.
therefore, uncorrelated across subjects), then
the variance of the sum will be the same as Table 2: Case Processing Summary
the sum of variances of the individual items.
Therefore, coefficient alpha will be equal to
zero. If all items are perfectly reliable and
measure the same thing (true score), then
coefficient alpha is equal to 1.
We carried out a reliability analysis on the
30 close ended questions asked to 32
respondents on SPSS software. Table 3: Reliability Statistics
The results were as follows shown in Tables.

2, 3 and 4.
Table 2 shows the Case Processing
Summary in which of the 32, 31 responses
were valid.
Table 3 shows the reliability statistics. The
Cronbach’s Alpha was calculated to be
0.842.
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Table 4: Indicates the Cronbach’s Alpha coefficient in correlation with each question
E 292
Table 5: shows the questions which provide a higher Cronbach’s Alpha, if the questions are
eliminated
.
 Cronbach’s Alpha : 0.842 changes were made in the questionnaire for

This implies a high rate of internal the final data collection.
consistency of the questions.
 For the questions 10, 14 and 29 the Factor Analysis
Cronbach’s Alpha if those items are The basic assumption used, to carry out
deleted are more. This implies that factor analysis is that the items must be
eliminating these questions would linearly related to each other and be at least
lead to a higher internal consistency. moderately correlated to each other.
However, since the reliability is high Otherwise the number of factors would be
the questions are show high validity almost the same as the number of items
and thus we will not eliminate which would render the factor analysis
questions based on the above redundant.
findings.
Based on the suggestions and
recommendations of industry experts a few
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Theory  Principal axis factoring: This is a

The factor analysis model can be written method which tries to find the lowest
algebraically as follows. number of factors which can account
If we have p variables X1, X2, . . . , Xp for the variability in the original
measured on a sample of n subjects, then variables that is associated with these
variable i can be written as a linear factors (this is in contrast to the
combination of m factors F1, F2, . . . , Fm principal components method which
where, as explained above m < p. looks for a set of factors which can
account for the total variability in the
Thus, Xi = ai1F1 + ai2F2 + . . . + aimFm + original variables).
ei,
Where the ais are the factor loadings (or These two methods will tend to give similar
scores) for variable i and ei is the part of results if the variables are quite highly
variable Xi that cannot be ’explained’ by the correlated and/or the number of original
factors. variables is quite high. Whichever method is
There are three main steps in a factor used, the resulting factors at this stage will
analysis: be uncorrelated.
Calculate initial factor loadings Factor rotation

This can be done in a number of different Once the initial factor loadings have been
ways. The two most common methods are: calculated, the factors are rotated. This is
 Principal component method: As the done to find factors that are easier to
name suggests, this method uses the interpret. If there are ’clusters’ (groups) of
method used to carry out a principal variables — i.e. subgroups of variables that
1 components analysis. However, the are strongly inter-related — then the rotation
factors obtained will not actually be is done to try to make variables within a
the principal components (although subgroup score as highly (positively or
the loadings for the k th factor will negatively) as possible on one particular
be proportional to the coefficients of factor while, at the same time, ensuring that
the k th principal component). the loadings for these variables on the
remaining factors are as low as possible. In
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other words, the objective of the rotation is between large and small
to try to ensure that all variables have high Eigenvalues. In some statistical
loadings only on one factor. There are two packages (e.g. SPSS) this choice is
types of rotation method, orthogonal and actually made at the outset. The
oblique rotation. In orthogonal rotation the second method, choosing
rotated factors will remain uncorrelated Eigenvalues over 1, is probably the
whereas in oblique rotation the resulting most common one. The final factor
factors will be correlated. There are a scores are usually calculated using a
number of different methods of rotation of regression-based approach.
each type. The most common orthogonal
method is called varimax rotation. Correlation Matrix and Determinant
The correlation matrix is used to check the
Calculation of factor scores pattern of relationships between the
When calculating the final factor scores (the statements. We must make sure that the
values of the m factors, F1, F2, . . . , Fm, for significance values of the statements are
each observation), a decision needs to be below 0.05 and the correlation coefficients
made as to how many factors to include. should not be too high. A case of otherwise
This is usually done using one of the may indicate a problem of multicollinearity.
following methods: Also the problem of singularity should be
 Choose m such that the factors avoided by checking whether the
account for a particular percentage determinant is greater than 0.00001. Table 5
(e.g. 75%) of the total variability in shows the correlation matrix for the 30
the original variables. questions taken from the questionnaire.
 Choose m to be equal to the number
of Eigenvalues over 1 (if using the In this case most of the variables have a
correlation matrix). [A different significance level below 0.05 while the
criteria must be used if using the inverse is not positive definite. Hence there
covariance matrix.] is no problem of singularity.
 Use the scree plot of the
Eigenvalues. This will indicate
whether there is an obvious cut-off
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Bartlett’s Sphericity Test KMO index compares the values of

The Bartlett’s sphericity test compares the correlations between variables and those of
observed correlation matrix to the identity the partial correlations. If the KMO index is
matrix. In other words, it checks if there is a high ( 1), the PCA can act efficiently; if
certain redundancy between the variables KMO is low ( 0), the PCA is not relevant.
that we can summarize with a few number Historically, the labels in Table 7 are given
of factors. If the variables are perfectly to values of KMO (Kaiser 1974).
correlated, only one factor is sufficient. If
they are orthogonal, we need as many The KMO index for our data is 0.756, as
factors as variables. In this last case, the seen in the Table 6. This is a middling KMO
correlation matrix is the same as the identity result and very much acceptable for a
matrix. If the values outside the main reliable PCA result.
diagonal are often high (in absolute value), Table 6: KMO results
some variables are correlated; if most these
values are near to zero, the PCA is not really
useful. Table 6 illustrates the results of the
Bartlett’s Test. The level of significance is
less than 0.05 in the test. From this we can Table 7: Decision Values of KMO
conclude that we can perform PCA KMO Index Decision
efficiently on our dataset. 0.00 to 0.49 Unacceptable

0.50 to 0.59 Miserable
0.60 to 0.69 Mediocre
KMO Measure of Sampling Adequacy
0.70 to 0.79 Middling
The KMO index checks if we can factorize
0.80 to 0.89 Meritorious
the original variables efficiently. But it is 0.90 to 1.00 Marvelous
based on the idea of partial correlation. The
variables are more or less correlated, but the Scree Plot
correlation between two variables can be A scree plot displays the Eigenvalues
influenced by the others. So, we use the associated with a component or factor in
partial correlation in order to measure the descending order versus the number of the
relation between two variables by removing component or factor. We can use scree plots
the effect of the remaining variables. The in principal components analysis and factor
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analysis to visually assess which rotation. If it is more that 75% then we must
components or factors explain most of the follow what the scree plot states, or else we
variability in the data. must go according to the condition that
those components with an Eigen value
However, the plot, Figure 2 shows that the greater than 1 is chosen. In our case, the first
curve levels off after the third component. If three components explained approximately
we go according to the scree plot, then we 47% of the variance. Thus we keep the
must keep 3 components. But we also fourth component as well. As, the scree plot
checked the percentage of variance being is not too reliable.
explained by the first three components after

Extraction
Prior to extraction the Eigen values were Table 8 illustrates all the components with
generated for all the questions. However varying Eigen values. Of these only those
after extraction we finally settled on those components are extracted which have an
factors whose Eigen value is greater than or Eigen value greater than one. This is shown
equal to 1. Thus using the method Principal in Table 9. We finally conclude the results
Component Analysis four components were with four components.
finally extracted. Of these, component 1 has
the highest percentage of explained
variance.
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Table 8: Components with varying Eigen values
Table 9: Rotated Component Matrix access are defined on the basis of these
questions.
Table 10: Categorization of Variables in
Factors
Component Questions Factor
1 18, 5, 22, Reduction of Cross
28, 26, 17, Subsidies and its
16, 7 corresponding
impacts
2 25, 16, 13, Promotion of
28, 1 Retail Power
Market
3 1, 7, 17, Promotion of
18 Wholesale Market
4 4, 9, 17 Reduction of Open
Table 10 shows the components and the Access Charges
questions as categorized under each

component. The factors affecting open
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Components with a load of 1 MW as Open Access

Component 1: Reduction of Cross consumers, further directions should
Subsidies and its corresponding impacts be given by the Government to the
18. Lack of specific timeline for Regulators for introduction of Open
elimination of cross subsidies Access to the consumers below 1
detrimental to Open Access MW load, gradually in phases
5. Distribution companies don’t 7. Partial Open Access is the
encourage Open Access because of immediate step to be taken in those
anticipated losses from cross states where the distribution
subsidies companies are running exceptionally
22. Lack of specific timeline for high losses, thereby incentivizing
elimination of cross-subsidies is them to not only supply certain
forcing the open access consumers to amount of the power to open access
continue to source power through consumers under market determined
distribution licensees prices but also selling power through
28. Rationalization of Cross Subsidy the contracts with the distribution
Surcharge to choose the type of company under a regulated tariff
generator i.e. Open Access, Captive Component 2: Promotion of Retail Power
Power Producer or continue with Market
dist. licensee 25. Introduction of competition in
26. Introduction of competition in retail sale of electricity facilitate
retail sale of electricity would bring separation of technical and
the electricity prices down and open commercial losses leads to focused
access consumers find it economical efforts on reduction of losses
to tie up with a supplier 16. In continuation to the earlier
17. Further tightening of cross direction for treatment of consumers
subsidy bandwidth from the present with a load of 1 MW as Open Access
+/- 20% will actually further help consumers, further directions should
Open Access be given by the Government to the
16. In continuation to the earlier Regulators for introduction of Open
direction for treatment of consumers
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Access to the consumers below 1 high losses, thereby incentivizing

MW load, gradually in phases them to not only supply certain
13. Provisions contained in Section amount of the power to open access
11 of the Electricity Act, 2003 are consumers under market determined
indiscriminately used by various prices but also selling power through
State Governments against providing the contracts with the distribution
the Open Access to consumers company under a regulated tariff
28. Rationalization of cross subsidy 17. Further tightening of cross
surcharges through amendments to subsidy bandwidth from the present
the Electricity Act and Tariff Policy +/- 20% will actually further help
needs to be carried out to facilitate Open Access
the consumers to choose from “Open 18. Lack of specific time line in for
Access”, “Captive Generation” or elimination of cross subsidies has
“to continue with distribution proved detrimental for success of
licensee” Open Access
1. All generating companies should Component 4: Reduction of OA Charges
mandatorily sell a part of their 4. SLDCs must be made independent
generation through the wholesale in decisions pertaining to monitoring
market for deepening the Open and reducing transmission losses
Access to consumers in the country 9. The cross subsidy surcharges as
Component 3: Promotion of Wholesale specified by the appropriate
Market commission are adequate to mitigate
1. All generating companies should the losses projected to be incurred by
mandatorily sell a part of their the distribution companies on
generation through the wholesale account of migration of high value
market for deepening the Open consumers to the fold of Open
Access to consumers in the country Access
7. Partial Open Access is the 17. Further tightening of cross
immediate step to be taken in those subsidy bandwidth from the present
states where the distribution +/- 20% will actually further help
companies are running exceptionally Open Access
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Under Open Access, the large consumers of

Analysis of Factors Identified power (consuming power more than 1 MW)
Reduction of Cross Subsidies and its are unable to shift to cheaper alternative
corresponding impacts sources of power due to high cross subsidy
The Electricity Act 2003 has in Section 62 surcharge they have to pay to the
(3) has enabled provision of cross subsidies distribution licensee. The cross subsidy
based on load factor, voltage, power factor, surcharge is as high as 52% in some states
total consumption of electricity the nature of like West Bengal.
supply and the purpose for which the supply
is required. As and when retail competition becomes a
reality in the Indian power sector, with a
High cross subsidies have led to wastage of great chunk of bulk consumers moving away
economic resources. In the subsidized to other retail suppliers of power, which
sectors it encourages high consumption would lead to distribution network operators
while the tariff is much lower than half of to run losses due to erosion of significant
the average cost of supply. APTEL had cross subsidies.
envisioned a cross subsidy target of +/- 20%
of the average cost of supply, which is yet to An efficient cross subsidy regime can be
be achieved as of 2015. On the other hand implemented by the use of a cost reflective
the cross subsidy raises the cost of products tariff, along with the concept of cost of
of commercial and industrial users, services being included. Many states are yet
rendering them uncompetitive. Moreover, to carry out studies on the front of cost of
those consuming power in bulk get the services. Thus there is a great deal of scope
incentive to set up captive plants instead of for improvement.
paying the cross subsidy charge, thereby
depriving State Utilities of revenue. In order to avoid cross subsidy charges,
MSEDCL accounted for a loss of 1860 crore wealthy users take to captive generation,
as of June 2015 for various reasons in which is a highly expensive alternative to
relation with Open Access. open access. Moreover the imposition of the
cross subsidy is based on the assumption
that large consumers are wealthy. But this is
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not always true. On the other hand there are determined electricity market. They have
wealthy residential users who do not come developed a set of rules to govern all the
under the foray of cross subsidization. Thus aspects of the electricity industry, including
a new regime should be implemented on the generation, transmission, distribution,
basis of income and not the degree of system operation, security of supply,
consumption. market arrangements, metering and retail.
They support the development of the
Even if cross subsidies cannot be completely industry through education, guidelines,
eliminated in a country like India, we should information and model arrangements. The
implement a somewhat more efficient form country also has an Electricity Market
of the same. The effect would be a gradual Information website which contains a
fall in the electricity prices, thus making wide range of information and data
them a lot more competitive. collected as part of market monitoring
such as retailer market share, monthly
According to FOR, for the payment of switching reports and wholesale final
consumer subsidy, scope lies also in pricing.
differentiating consumers on the basis of
‘unwarranted commercial consumption’ or In the electricity sector of United
‘huge capacity to pay’ or ‘have the potential Kingdom, the retail sector was
to conserve energy’. established through the electricity pool of
England and Wales. The customers were
Promotion of Retail Power Market divided into ‘franchise’ and ‘non
The first step towards retail market is the franchise’ in the retail side of the market.
deregulation of the electricity market in all The market was extended to individuals
the states. The Electricity Authority of New with a load consumption of 100kW and
Zealand has the aim to promote competition above annual demand. The system was
in, reliable supply by, and the efficient highly successful as more and more
operation of, the electricity industry in New consumers opted for a company as
Zealand for the long-term benefit of opposed to a public electric supplier.
consumers. The organization only provides This was also followed by a great deal of
regulatory support to the otherwise market mergers and acquisitions that led to a
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consolidation of the electricity market now India has approximately 200 million
with increasing competition. Policies number of meters that are currently
were implemented for suppliers, deployed, while USA has 150 million. Of
providing them licenses to supply power these 150 million, 46 million are smart
to customers nationwide. Thus any meters, which is nearly 31%, while in India
company holding an electricity supply it is less than 1%. (Yamanaka, 2014)
license could now sell electricity, and all
customers became free to choose their own India’s tryst with retail sector has been in the
supplier. Price controls were present as well, states on Maharashtra, Madhya Pradesh,
for those consumer categories that could not Gujarat and Kerala. Maharashtra has the
take advantage of the retailing. Thus country concept of parallel distribution licensing
saw a very methodical movement towards a while Madhya Pradesh, Gujarat and Kerala
retail market. have the concept of SEZs (Social Economic
Zones) for allowing generation, transmission
Learning from the experiences of the and distribution related activities in special
above countries, we can encourage area at special retail tariffs.
competitive pricing and consumer choice
is by promoting the benefits to consumers Promotion of Wholesale Market
of comparing power companies. Wholesale market involves a successful
Moreover in order to facilitate working model of Open Access. For
competition at the industry level, it is making the wholesale power market a
necessary to remove barriers to entry, full-fledged working entity there are a
expansion and exit from the industry. number requirements that must be like
the unbundling of the activities and
In order to implement retail competition, vertical integration of the same. Along
initiatives are needed from the side of with this steps must be taken to identify
distribution companies. First and foremost the stakeholders in this market.
distribution companies must improve their
financial health by reducing their AT&C United Kingdom developed a wholesale
losses. One potential solution that India has market in as early as 1990. India on the
recognized is that of smart metering. As of other hand is struggling to manage its
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greater than 1 MW load consumers due to Reduction of Open Access Charges

various problems like transmission Open Access charges are the charges paid
congestion, failing financial conditions of by the open access consumers to the
distribution companies and lack of distribution licensees, transmission licensees
incentives for private investment. and other such entities. Its main components
Although the market of bilateral are:
transactions have been started, which  Wheeling Charges: These charges
involves bids to buy and offers to sell are paid by the open access
electricity; the prices are quite non- consumer to the distribution
competitive while the collective licensees for using their distribution
transactions that are handled by the system. These charges are applicable
power exchanges have very low prices to generating stations, captive
due to the distress sales happening there. generating plants, and consumers
There is a need to balance both these who are connected to the distribution
transactions to ensure that prices are companies at 11kV or 33kV.
neither too high nor too low. Thus in  Wheeling Losses: These are the
order to increase efficiency agents must technical losses borne by the
be allocated only that much risk, which distribution companies. It is
he can handle. calculated by the State Commissions
on the basis of the voltage.
Purchase of power must be made  Transmission Charges: It is the
mandatory from the pool. Moreover, charge paid by the open access
there must be a gradual step taken consumer to the transmission
towards the independence and flexibility licensee for using their transmission
of market operators and the power system.
exchanges. Thus in order to ensure a  Transmission Losses: They are those
greater promotion of the wholesale losses which are there in the
market, we need to stress more on the transmission system. The buyers and
various aspects of power trading. sellers shall absorb apportioned
energy losses in the transmission
system in accordance with the
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provisions specified by the Central Rs.2,000/- per day in general or part

Commission. of the day has to be paid by a short-
 Point of Connection Charges and term open access customer for each
Losses: It is the transmission pricing transaction to the SLDC or as
methodology that is used sharing the determined by the Commission from
Inter State Transmission Systems time to time. The operating charge
charges and losses of Designated includes fee for scheduling and
ISTs Customers, depending on their system operation, energy accounting,
location and sensitive to their fee for affecting revisions in
distances from load centers schedule on bonafide grounds and
(generators) and generation collection and disbursement of
(customers) and the direction of the charges. This charge is payable to
node in the grid. both drawing and injecting SLDC.
 Cross Subsidy Surcharges: If open  RLDC Charges: It is a composite
access facility is availed of, by a operating charge at the rate of
subsidizing consumer of a Rs.2,000/day per RLDC which is
distribution licensee of the State, payable by a short-term open access
then such consumer, in addition to customer for each transaction to the
transmission and/or wheeling RLDC or as determined by the
charges, shall pay cross subsidy Commission from time to time. This
surcharge determined by the charge must be paid to all the
Commission. RLDCs whose network is used.
 Application Fees: A person seeking  Other Charges: These charges form a
Open Access shall make an very small part of the total charge.
application in the prescribed format These include NLDC application
to the Distribution Licensee to which fees, NLDC scheduling and
it is connected. The application fees Operating Charges, trading margin,
in general for short term open access exchange charges, and service tax.
consumer is Rs 5000/application.
 SLDC Charges: A composite Open Access Charges vary from state to
operating charge at the rate of state. The differences in the charges occur
E 305
because of various reasons. Although, it is Conclusion and Recommendation

not feasible to consider a pan India approach India is well on its way to be a super power.
to Open Access charges, the charges can be However, the power sector is still far from
reduced to one single charge to as much of developed. The main reasons are the over-
an extent as possible. Losses should also be riding of laws, lack of infrastructure,
considered at the technical level only at the excessive government intervention and lack
relevant voltage levels, to avoid excessive of incentivized private participation.
voltage-wise loss. There should also be a However with the setting up of a wholesale
gradual reduction of cross subsidy market along with a bilateral and collective
surcharge, with it being applicable only to a trade market there is a gradual opening up of
few categories of consumers. the market.
According to the Electricity Act Bill Section Open access is considered to be a boon in
42(4), “the Open Access consumers many ways as it is the advent of a power
procuring electricity from renewable energy sector reforms in the country. It saw a rush
sources shall not be required to pay the of great degree of transparency in pricing
surcharge for open access for such period as with a market flexible. However, given the
may be prescribed by the Central vastness of our country, every individual
Government”. Thus RE generators are state in India has unique problems of their
subject to various concessions on open own, which make the implementation of
access charges. For example, Rajasthan’s Open Access on a large scale, a highly
solar policy exempts solar projects under cumbersome task. Open access charges must
open access from CSS spurring it to have be made a lot more transparent with a
one of the highest installed solar capacity. somewhat consolidated singular charge that
Similar provisions exist in many state differs from state to state. There is
policies. This, in a way has helped to information asymmetry while processing
promote the greater generation of renewable Open Access transactions. Along with that,
energy and also promoted its use through lack of transmission capacity is a matter of
open access. concern that must be addressed. Intra-state
ABT metering must be made an all India
reality. Keeping in mind all these factors,
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the findings of the factor analysis we have competitive markets, when buyers
set up an alternative suggestive framework and sellers are free to decide on their
as follows: source of buying and selling,
efficiency comes into the system
Open Access Charges resulting in market determined prices
 Prima-facie the cross subsidies as and further efficiency gains.
being charged by distribution  Imposition of a singularized open
companies appear to be a constraint access charge that differs from state
towards development of a to state to prevent pancaking of the
competitive power market. A shift different charges.
from completely regulated and state  Rationalization of tariff with more
run distribution companies’ based stress on cost reflective tariff that
scenario to Open Access practices is also includes the concept of cost of
a major change. To bring this services.
change, it is highly important to  Strong monitoring to ensure
implement them in steps, in that mandatory bandwidth of getting
sense phasing out of cross subsidy cross subsidy to +/-20% of the
over a planned timeframe in line average cost of supply is a highly
with the guidelines of the NEP and needed requirement.
NTP is desired. At the time of  Cross subsidization for consumer
enactment of Electricity Act 2003 it categories must be made different.
was envisaged that this would be Large consumers are not necessarily
brought down to zero in five years’ wealthy which makes them, unable
time, which was later brought down to absorb additional tariff to
to 20% of the initial amount by implement cross subsidies to the
2010-11. However this hasn’t been extent that the political process may
achieved yet. Reduction and want. It also maybe be the case that
subsequent elimination of cross much of the load is accounted for
subsidy would bring the power through smaller residential loads,
market a step closer to competitive though many of these customers may
market. As witnessed earlier in other be wealthy. If this is the case, a
E 307
mechanism may be evolved to state level, will help to increase

determine who will be providing the trading volumes.
subsidy and who will receive the  If open access consumers want to
subsidy, based on income. procure power from other states, they
 Wheeling charges must be charged must enter into bilateral contracts on
only to the extent of using the the round the clock basis of trading.
distribution network and not be  For a lower price in wholesale
charged on the entire distribution market more attention has to be paid
network. on adequate regulation in exchange
 There is no consistency in market as improper structure will
regulations followed by state lead to market failure. This is
regulators in determination of because the market will rely on
wheeling charges and cross subsidy market forces and competition and
surcharge. Due to unavailability of not regulations which in turn, will
voltage wise data on cost and minimize generation costs and build
distribution losses, state regulators trust in companies for long term
have to allocate costs and losses finance for power systems.
between the wheeling and retail  Gradual opening up of the market to
supply functions on the basis of consumers who consume lesser than
assumptions. Moreover, in the 1 MW can help to promote the retail
absence of proper data, cost of market. Thus even if not now, in the
supply cannot be properly near future, open access must be
determined which affects the mandated for consumers consuming
estimation of cross subsidy a load below 1 MW.
surcharge. Thus collection of such
data is necessary. Improvements in the distribution sector
 Privatization of utilities through the
Promotion of a wholesale and retail market PPP model and Franchisee Model
 Buying renewable energy and can be a way to implement more
injecting it into the grid at the inter- efficient distribution system, as the
relatively small size of the
E 308
distribution areas brings the entities must use their networks through
closer to the consumers, leading to Open Access.
transparency and accountability, also  Partial Open Access can help to bi-
it does not need high amounts of furcate the discom’s revenue from
capital expenditure. consumers on the basis of time based
 The development of Smart Grids is contracts for open access and
essential to efficient management regulated tariff, so that neither the
and sustainable energy. Also energy consumer has to pay a large open
efficiency can be increased by access charge, nor should the
stronger attempts at demand side discoms have to pay a skewed cross
management. The problems of subsidy. This is an immediate
financial health of distribution solution for those distribution
companies can be addressed through companies which have very high
installation of AMR. This can solve financial losses.
the problems of high non paid bills,
theft of electricity, high distribution Policy reformations
losses, illegal consumer connections  There is a lack of proper
and high costs of reading meters. implementation of provision in
 Also the implementation of smart electricity bill regarding direct sale
meters can help in a more smart of surplus power by captive power
distribution system. A smart plants outside states, as CPP needs
metering can help in cost benefit permission from state government as
analysis. well as require approval for usage of
 Isolation of defaulters who evade SEB’s Transmission network. Thus
payments and default on bill provisions must be made to ensure
payments. the same.
 Incentives must be provided such  The independence of Load Despatch
that distribution licensees which Centers is a necessary condition for
have a greater percentage of the health of the power market.
reduction of AT&C losses are given SLDC should be ring-fenced from all
first preference when consumers generation, transmission and
E 309
distribution utilities of the State. This  SERCs shouldn’t discourage

can be done through metering and generators from entering the open
creation of an electrical boundary. access market. Their actions to force
Apart from this introduction of a IPPs and CPPs to sell their surplus
system of certification of system power only to state utilities, as stated
operators by an independent body is by the Electricity Act 2003, Section
necessary as well, along with laying 11, has created inefficiencies in the
down of standard operating power market. Thus a modification
procedures which would be adopted of that policy is a great necessity.
by the SLDCs.
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E 312
Energy Infrastructure and Transport
Factors Influencing the Establishment of Natural Gas Storage for CGD

Industry in India
Narendra Kumar *, Dr.Anirban Sengupta**, Dr. Neeraj Anand ***
* Managing Director, Indraprastha Gas Limited, New Delhi
**Dean - College of Management & Economic Studies (CoMES), UPES, Dehradun
*** Professor and HOD- LSCM & Operations (CoMES), UPES, Dehradun
Abstract providers and academia) having experience in

Oil and Gas field. The respondents were both
CGD industry is developing at fast pace in India
from public sector companies and private sector
considering environmental concern and priority
companies. Survey was carried out by uploading
given by government. Considering industry
questionnaire on Google docs and by sending
problem about uncertainties of gas supply due to
same via email to various experts in the industry.
various reasons and making CGD industry more
After receiving responses of the questionnaire,
efficient, gas storage in any form is essential. The
factor analysis was carried out. Result was also
objective of the study is to identify the factors
verified through Scree Plot by plotting Eigen
influencing the establishment of Natural Gas
Value with Component numbers. By using
Storage for CGD Industry in India. Exploratory
rotated component matrix table six major factors
research (Qualitative Research) is used for this
emerged out. These are Economic Factor, Legal
study where extensive literature survey has been
& Techno Operational, Geographic/ Political,
done and input from the peers is obtained. With
Awareness & Importance of gas storage,
the help of extensive literature survey and experts
Technical & Labour Skills as well as
opinion, twenty nine variables have been
Environmental factors. These factors are to be
identified that influences the establishment of
taken in to account while taking decision for
natural gas storage for city gas distribution in
setting up of gas storages for CGD industry in
India. For carrying out the survey a detailed
India or carrying out further study.
questionnaire was prepared and administrated
with thirty respondents and subsequently tested Keywords
through Cronbach’s Alpha, reliability of City Gas Distribution, Geographical Area,
questionnaire was checked which was found Petroleum and Natural Gas Regulatory Board,
acceptable. For carrying out survey, Compressed Natural Gas and Piped Natural Gas
questionnaire was administered to respondents
belonging to different categories (upstream,
midstream, downstream, consultancy, service
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CGD Scenario in India network in additional 34 cities. 6th Round of

City Gas Distribution (CGD) is a fast emerging bidding is likely to be finalised by mid of year
industry catering natural gas to Automobiles, 2016. With PNGRB and Ministry of Petroleum
Households, and Commercial and Industrial & Natural Gas aiming to develop CGD network
units. CGD network in India increased in more than 200 cities and considering Prime
exponentially at Compound Annual Growth Rate Minister’s mission of 1 Crore PNG connections
(CAGR) of 21.44% during 2010-2014 (source: in 5 years, CGD offers vast opportunities in
TechSci research published in June 2015). various business segments.
According to “Vision 2030” Natural Gas
 For supplying gas to more domestic
Infrastructure in India Report by Industry Group
consumers and to promote CNG based public
for PNGRB, total CGD demand is expected to
transport, Government of India has started
grow to 85.6 MMSCMD in 2029-30, at CAGR of
giving 100 percent requirement of natural gas
10.3%.In India the CGD business is regulated by
for compressed natural gas (CNG) and piped
the Petroleum and Natural Gas regulatory board
natural gas for households (PNG). Further,
(PNGRB) constituted under the PNGRB Act,
for the encouragement of natural gas usage in
2006.
these two segments, Government has also
PNGRB has authorized 28 entities to operate decided to provide 10 percent extra domestic
CGD activities in 57 Geographical Areas in India gas to meet growth requirement and
(Source: www.ppac.org.in ; www.pngrb.gov.in ) fluctuating demand of city gas distribution. In
Presently, there are 2.55 million vehicles running percentage terms, gas consumption in India is
on CNG that are catered by more than 1000 CNG depicted in the pie chart given below which
stations set up in various cities of India. In Delhi- indicate that out of total consumption of
NCR itself, more than 350 CNG stations are natural gas CGD has 14% share. (source:
operating to supply CNG to more than 1 million MOPNG annual report 2014-15)
vehicles. CGD companies are also supplying
piped natural gas (PNG) to 2.86 million
Total Consumption
households, and 28,274 Industries & 2014-15
13%
14% CGD
Commercials units in India. To expand CGD 3%
network across India, PNGRB has so far already 11% Fertilizers

covered 55 Geographical Areas in 5 Rounds of 35%
24% Power
th
CGD bidding and has recently announced 6
round of bidding for development of CGD Figure 1 MOPNG annual report 2014-15
E 314
Challenges in CGD Operations  Provide security of supply in case of

In India, National Gas Grid is yet to be fully interruption in gas supplies
developed. A natural gas storage facility also  Supporting tool to trading
does not exist to meet emergency demand of  Supplementary function to cover variability
Natural gas for PNG and CNG segments. In fact, in gas demand where gas is used as a back‐up
majority of Geographical areas in India are to intermittent power supply for renewable
connected with single pipeline having single energy sources.
source of gas supply. Since few lakhs of domestic Natural gas can be stored in number of ways
households and CNG dependent public transport depending upon the requirement as well as
is supplied natural gas from single source of gas geographical considerations. Following are the
pipeline, CGD companies may face problems types of facilities most commonly used to store
related to:- natural gas:- (Source :
http://naturalgas.org/naturalgas/storage/)
 Un-interrupted gas supply for PNG and CNG
 Depleted oil and gas underground reservoir
Consumers
 Aquifers underground reservoir
 Insurance against supply disruption due to
 Salt cavern formations reservoir
any breakdowns, shutdowns, etc. caused by
third party damage, maintenance or any  Above ground LNG storage tank
natural calamity  Vertically buried large diameter pipes storage
 Wide Natural Gas price fluctuation  Above ground Natural Gas spheres storages
 Large daily and seasonal demand variations

 Take or pay penalties from major gas supplier There are ample numbers of gas storage facilities
in the world which are responsible for meeting
For coping up with increased demand of natural
base load and peak load demand of natural gas
gas in city gas distribution, companies have to
consumers and also provide the security in case
seriously consider increasing efficiency of gas
of any future disruption in gas supply. As India
distribution network. Natural gas storage is a
doesn’t have any gas storage facility presently,
vital component of the natural gas chain that
the future is not properly secured and thus “in the
increases the efficiency of gas distribution
event of any disruption in consistent gas supply,
system. Natural Gas storages are developed to:-
due to non–existence of Gas Storages will lead to
 Balance gas supply and demand
actual and opportunity loss to CGD industry in
 Optimize the transmission network size
India”.
E 315
Research Methodology After the preparation of questionnaire a pilot test

is carried out and to check the reliability of the
In order to go forward with the research and to
questionnaire, Cronbach’s Alpha test was
answer the research questions, an appropriate
applied. Once this test result was found suitable,
research model is framed out. First of all, the
data collection started in the form of surveys.
variables are identified with the help of review
Data captured from the surveys is processed with
and expert opinion. For collection of data, a
the help of statistical techniques i.e. factor
questionnaire was prepared by taking inputs from
analysis, inferences are drawn and conclusion
literature survey and expert views. Each question
and recommendation are made based on the
in the questionnaire is assessed on a 7 point
analyzed data. The research model has been
Likert scale for better accuracy.
explained in the flow diagram as below:
Figure-2: Research Method Process
E 316
Exercise reduced these traits in 29 variables 23. Storage connectivity with pipeline
forming building blocks of research infrastructure
questionnaires. From the literature review and 24. Employment
experts opinion following variables were 25. Awareness about storage and CGD industry
identified that will influence the establishment of 26. Consumer’s satisfaction
gas storage in CGD industry in India. 27. Experience
28. Skilled labor
1. War
29. Technology
2. Natural calamities like earthquake, hurricane
etc.
3. Pipeline design to withstand high pressure Questionnaire Designing
4. Injection/Deliverability rate A Questionnaire was prepared based on the
5. Pipeline damage variables identified from literature survey and
6. Land requirement structured interviews from industry experts. A
7. Land availability seven point “Likert Scale” is used in designing
8. Platform/pipeline breakdown the questionnaire for better accuracy. Pilot study
9. Terrorist attack has been conducted to ensure the internal
10. Third party damages consistency of the questionnaire using
11. Price fluctuations Cronbach’s Alpha test. Cronbach’s Alpha test
12. Availability of alternate/conventional fuel value ranges from 0 to 1; the more it is close to
13. Interruptions in trans-nations pipelines due to 1, higher is the internal consistency and higher is
Geopolitical reasons the reliability of questionnaire. In pilot testing,
14. Supply and demand the survey on 30 respondents was conducted and
15. Storage Capacity then the reliability was checked which came out
16. Investment to be 82.2 % (0.82). The Cronbach’s Alpha test
17. Non utilization of cushion gas and the result obtained in pilot testing are
18. Safety explained in the next section. Further, when the
19. Government policies and regulations Cronbach’s Alpha test was successful, the
20. Strategic location considering geology and questionnaire was sent to many industry
geography representatives including upstream, midstream,
21. Production of Shale gas, CBM etc. in India downstream, consultants and various academic
22. Environment institutes as well. A total of 395 responses were
E 317
received and after that factor analysis is used to Table-2

reduce the number of variables.
Cronbach’s Alpha test - Cronbach’s Alpha test

is used to check the internal consistency i.e. how
closely a set of variables are related as a group
and the extent to which all the items in a test
measures the same concept. It is considered to a
The Cronbach’s Alpha coefficient of 0.822
measure of scale reliability. Technically
signifies a high level of internal consistency.
speaking, Cronbach’s Alpha test is not a
This score proves reliability of the instrument.
statistical test. It is coefficient of reliability or
consistency. Cronbach’s Alpha test is present in Questionnaire for Data Collection finalized after
the SPSS software. SPSS software is used here the pilot study.
for further evaluation as well. As the correlation

between the items increases the Cronbach’s Sample size determination
Alpha value increases. Commonly accepted rule Sample size determination is the act of choosing
of thumb for describing internal consistency is as the number of observations. The sample size is
follows:- an important feature of any empirical study in

which the goal is to make inferences about
Generally, if the instrument’s internal
population from sample. Yamane formula given
consistency in Cronbach’s Alpha comes out to be
below has been used so as to determine the
0.7 or more than 0.7; the reliability of that
sample size for the research. Yamane provides a
instrument is considered to be very high. The
simplified formula to calculate sample sizes.
result obtained in the analysis of pilot testing on
30 persons is shown below:
n = N/ (1+ N (e)2)
Table-1
Where n = Sample size, N = Population size, e
= Level of precision
The target population identified was 3000. After

using Yamane equation and considering N=3000
and e=0.05, sample size of 353 was calculated.
Valid survey of 395 people who had knowledge
or experience in the Natural Gas Industry,
E 318
directly or indirectly was taken. Upstream,  Principle Component Analysis

midstream, downstream, academia, consultancy  Unweighted least squares
services, etc were the categories of industrial  Generalized least square
domain from where responses were received.  Maximum likelihood
Details of respondents are given below  Principal axis factoring
Analysis and Interpretation  Alpha factoring

 Image factoring
Factor Analysis Factor Analysis is done on set of
In the factor analysis done here, Principle
output collected. Factor analysis is a method of
Component Analysis (PCA) method is used.
data reduction. There are many methods which
Before using the PCA method, sampling
can be used for the purpose of extraction in factor
adequacy also needs to be checked. Kaiser-
analysis. Some of them are listed below -
Meyer-Olkin (KMO) and Bartlett’s test is used
Table-3
Percentage of the
Types of Respondent No.of respondent
Total
Upstream & Midstream 68 18%
Downstream 217 54%
Academia(Students, faculties) 69 18%
Consultants and Service
34 8%
providers
Miscl. 7 2%
Total 395 100%
E 319
Here to test Sampling Adequacy. In the KMO As the sampling adequacy is 0.910, hence PCA
and Bartlett’s test, sampling adequacy came out method of factor analysis can be applied. In PCA
as 0.910. This signifies that the variables are method, Eigen value method is used to determine
dependent on each other and are correlated, the factors. With the help of PCA, 6 factors were
which is a necessary condition to proceed with determined whose cumulative percentage of total
factor analysis. The sampling adequacy of more variance is explained by 60.045%. In simple
than 0.90 is excellent, while below 0.50 it is words it implies that the total variance is
unacceptable. explained by the 6 factors is shown in the below
table:
Table-4
Table-5
E 320
Scree Plot
Scree Plot is the plot between Eigen value and the for the rotation is Varimax with Kaiser
number of factors, in order of their extraction. It Normalization. It is an orthogonal method of
is a graphical way of extracting the number of factor rotation.
factors. In the figure, it can be clearly seen that
Rotated component matrix
the curve drops sharply at first and then it flattens
after factor 6, this signifies that 6 factors are The rotated component matrix table shows that
sufficient to explain the variance in the variables. which items or a variable loads on which
components after rotation. This is used to
After determining that 6 factors will be enough
identify which variable will come under which
to explain the 60.045% of variance, rotated
factor. The rotated component matrix is shown
component matrix is generated. The method used
below:
E 321
Table-6
Concluded Factors establishment of gas storage in CGD industry in

India are as given below:
Based on rotated component matrix following
factors concluded which can affect the
-
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Table -7
Factor
S.NO Factor Variables included in the factor
Loading
0.732
Support from government bodies and local gas authorities,
Establishment of gas storage facilities by CGD companies will

0.693
increase the Revenue generation of CGD companies
Gas storage will help in maintaining adequate level of price of gas at
0.737
the time of gas price fluctuation.
Establishment of gas storage facility will add value to the customers’
0.754
satisfaction by ensuring continuous availability of gas to them.
Developing gas storage facilities will help in creating employment
0.676
opportunities.
Gas storage should be promoted considering the current and future
0.773
supply and demand scenario of natural gas in India.
International bodies like MNCs will invest in the establishment of
0.622
gas storage facility in India.
Gas storage will help in catering fluctuating seasonal and peak gas
0.740
demand.
Alternative sources of gas production in India like Shale Gas, CBM,
0.691 Gas Hydrates etc. will increase the requirement of gas storage
1 Economic Factors
facilities.
In case of any disruption in the pipeline like burst/leak/third party
0.629
damages, gas storage will prove to be a viable option for storing gas.
In case of Interruption in trans-national pipelines in future due to geo
0.616
political reasons, storage will prove to be very handy.
0.693 Storage capacity of gas storage is of primary concern
Land requirement will be a concern for the establishment of gas

0.755
storage facilities.
Land availability and acquisition can create a problem for
Legal & Techno 0.728
2 establishment of gas storage facilities.
Operational
Safety will be a concern while developing and operating gas storage
0.661
facilities.
If gas is stored in a pipeline, then the pipeline design should be
0.693
optimized to sustain high pressure
Geographic &political Location of gas storage facility near the consumer market will play
3 0.667
Concerns an important role.
E 323
In case of natural calamities like hurricane, earthquakes etc. gas

0.704 storage facilities will prove to be a good option for maintaining
adequate level of gas supply.
In unforeseen conditions like war, terrorist attack etc. which may
0.741
lead to disruption in supply, gas storage will play an important role.
0.827 People are aware about the CGD scenario in India.
Awareness & People acknowledge CNG & PNG as suitable replacement of
0.695
Importance of Gas conventional fuels.
4 Storages People are aware about the gas storage and the purpose it is solving
0.611
worldwide.
CGD companies can find adequate technology in India for the
0.685
establishment of gas storage.
5 Technical & Labor Skills There is an availability of skilled labor in India for construction,
0.777
operation, maintenance and management of gas storage facilities.
Environment will be adversely affected by the establishment of gas

Environmental Concerns
6 0.691 storage facilities.
Discussion on Factors demand and how storage will act as a bridge so

By using Factor Analysis six major factors as to overcome the gap between supply and
emerged from the analysis. These are: demand. Further the economic factor also covers
the aspect of international player’s investment in
Economic factors
storage projects for CGD along with the need for
This factor covers the economic aspect of gas
storage while keeping in mind the growth of
storage in CGD business in India. The focus is on
alternative fuels like CBM, Shale Gas etc. in the
different economic aspects like the government
future coming time. The economic factor also
aspect i.e. whether government will support the
encompasses the geo political reason which leads
gas storage activities or not in India along with
to disruption in gas supply and in this scenario
regional authority supports, financial aspect i.e.
how storage will help in maintaining continuous
revenue generation and price fluctuation effect
supply of gas.
on storage, customer satisfaction, employment
opportunities etc. The economic factor also Legal & Techno Operations:
encompasses the supply and demand scenario of India is a developing nation and in today’s time
natural gas i.e. how the supply is lagging behind land availability and acquisition is one of the
E 324
major problems faced by any new project. Legal Awareness & Importance:
factor includes the land availability and Without proper awareness and acknowledging
requirement issues related to gas storage for city the importance of gas storage, it is very unlikely
gas distribution in India. So as to overcome with that some of the people whose support will be
this issue the underground vertical line pack needed in establishing the gas storage will get
storage is the method which is promoted and convince. As most of the people are reluctant to
requires the least space for creating gas storage new things by nature hence prior to the gas
as compared to other types of gas storages storage it is necessary to get to know the basic
available. Techno factors include the Storage questions regarding the awareness of people
capacity and connected pipeline design variables. about the CGD scenario in India. Without
These two aspects greatly determine how much awareness it will be difficult for a person to
gas can be stored and delivered at a particular understand the importance of gas storage in
period of time. The operational part includes the present and future scenario. Another variable
safety aspect during the construction of the gas included here is ‘alternate fuels’, which is
storage facilities. mentioned in the questionnaire as whether people
acknowledges CNG and PNG as suitable
Geographic &Political Concern: replacement of conventional fuel or not.
The demand of gas in India is increasing day by Developing gas storage for CGD companies will
day and so as to cope up with this demand it has develop confidence of people who are willing to
now become essential that the storage facilities shift away from conventional fuel in the future as
should be constructed near to the consumer large scale storage will help in increasing the
market so that at times of peak demand the extra natural gas supply and consequently the increase
gas required can be extracted from the storage so in CNG and PNG supply by CGD companies.
as to fulfill the consumer demand and when there Hence the three variables i.e. Awareness of CGD
is less requirement of gas additional gas can be scenario, alternate fuels and importance are
stored. The geographic factor has covered this described in this factor as ‘Awareness and
aspect whereas political aspects covers variable Importance’.
like when there is a terrorist attack or war there
are chances that gas supply could be disturbed, so Technical & Labor Skills:
in this scenario again gas storage could be used This factor includes the two variables namely,
as a good option for maintaining adequate level technology and availability of skilled labor. New
of supply. technology is very much required for
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establishing storage facilities as presently no gas Conclusion

storages are available in India. With the help of With the help of extensive literature survey and
new technology one can increase the efficiency, experts opinion, twenty-nine variables have been
decrease the chances of failure and increase the identified that will influence the establishment of
feasibility of the project. Apart from technology, gas storage for city gas distribution in India. A
availability of skilled labor is also a major detailed questionnaire was prepared and
variable which will impact the establishment of administered to 395 respondents who belong to
gas storage facilities. One major question is different categories (Upstream, Midstream,
whether it is available in India or not. As India Downstream, Consultancy, Service providers
doesn’t have any prior experience in establishing and Academia). Further the respondents were
gas storage facilities, hence it can be inferred that both from public sector companies and private
we might face shortage of skilled labor in India sector companies. The survey was carried out by
for the construction, operation, maintenance and uploading questionnaire on Google docs and by
management of gas storage facilities, thus we sending via email to different expert people in the
might need some foreign hands for both in industry. A hardcopy of the questionnaire was
technology and in workforce as they are having given to the expert people for their opinion. After
prior experience and gas storage facilities are getting the responses of the questionnaire,
currently operational. responses were analyzed with the help of Factor
Environmental Concerns: analysis. Six factors emerged in this process.
We have many environmental issues that are These factors are Economic Factor, Legal &
going on like air pollution, water pollution, water Techno Operational, Geographic/ Political
scarcity, poor waste management, land/soil Concerns, Awareness & Importance of gas
degradation etc. Thus it is of paramount storage, Technical & Labor Skills as well as
importance to check whether environment will Environmental concerns. All factors are equally
be adversely affected by the establishment of gas important and challenging. These factors are to
storage facilities or not. And also if environment be taken in to account while taking decision for
will be adversely affected than how much severe setting up of gas storages for CGD industry in
the impact on the environment would be. For this India or carrying out further study. These factors
regards experience from different countries who also need to be taken in to consideration while
have experience in building gas storage facilities making policy on gas storages or making a
should be taken under consideration. conceptual frame work for setting gas storages in
India for the City Gas Distribution industries.
E 326
Abbreviations 636. By Jerry R. Fish and Robert A. Nelson,

Portland, Oregon
CGD-City Gas Distribution
 BP Statistical Review of World Energy June 2015
GA- Geographical Area
 Commercial potential of Natural Gas storage in lined
PNGRB- Petroleum and Natural Gas Regulatory
rock caverns by Sofregaz US Inc. and LRC,
Board November 1999.
CNG- Compressed Natural Gas  “Gas storage facilities Eastern and South Eastern
PNG- Piped Natural Gas Australia”, February 2015, Core Energy Group
 Gas storage in Great Britain, Chris Le Fevre, NG 72,
NCR- National Capital Region
January 2013, The Oxford Institute for Energy
MoPNG- Ministry of Petroleum and Natural Gas
Studies
References  Gas holders and their tanks by Dr. Russell Thomas
 www.pngrb.gov.in  Introduction to underground storage study by energy
 www.ppac.org.in delta institute 2012
 http://www.business-standard.com/article/pti-  International Gas union, World LNG Report 2014
stories/ongc-to-cut-gas-production-by-40- edition
115070300738_1.html  Oil & Gas Industry, India , A study by PWC 2012
 http://www.newindianexpress.com/states/telangana/  Quantifying the risk of underground natural gas
Fire-Breaks-Out-as-Reliance-Gas-Pipeline-Leaks- storage, June 2014, by Michaela Jellicoe and
in-Medak-District/2015/03/03/article2695443.ece Michael S. Delgado (Purdue University).
 http://www.thehindu.com/todays-paper/gail-  Study on Underground Gas Storage in Europe and
pipeline-explosion-in-ap-kills-15/article6156994.ece Central Asia, United Nations Geneva, 2013
 http://www.pngrb.gov.in/pdf/ERDMP/Analysis%20o  TechSci research published in June 2015
f%20incidents%20reported%20to%20PNGRB%20f  Underground Gas Storage in the world-2013,
rom%20July%202013%20to%20Dec%202014.pdf CEDIGAZ
 A New Concept for CNG carriers and floating  Underground Gas Storage scenario in India,
CNG/OIL processing and storage offshore Abhinav Sharma, Abhishek Chaudhary
platforms,2011, Regu Ramoo, Mohan Parthasarathy,
 “Vision 2030” Natural Gas Infrastructure in India
Thomas Lamb. Report by Industry Group for PNGRB
 Building your own underground gas storage project:
 http://naturalgas.org/naturalgas/storage
From leasing to open season under FERC order NO.
E 327
Financial Analysis of Solar Energy Infrastructure in India: A

study of Uttarakhand
Anshul Thakur *, Ujjwal Anand*, Dr. Sumeet Gupta**
*Integrated B.Tech Energy Technology & L.L.B. (IPR) 5th year

**Associate Professor and Head Centre for Infrastructure & Project Finance
Abstract financial feasibility of solar power plant of
Solar energy is the best available source of 1MW in the state of Uttarakhand.
renewable energy which can be harnessed. The study is focused on the financial
With the increase in power demand this is analysis of the solar power plant. The study
the gradual shift of people from non- aims on the financial variables referring to
renewable to renewable. Solar is a clean feasibility status of the solar power plant.
and green energy. Its abundance has made The study is based on different
us focused on the solar power. Another management and financial points like
aspect which has gained our attention is its interest, working capital, CDM benefits,
significant application. This is a simple revenue, cash flow, cost of generation etc.
concept of directly conversion of heat The study is descriptive in nature and based
gained from the sunlight into current by on the data taken from CERC and SERC.
using solar photovoltaic cells. The principle This study will give the idea to an investor
governing this conversion of heat into whether to accept the project or reject the
electricity is photo electric effect. India’s project and all other financial norms related
total present power generation till is to installing a solar power project.
1
274,818MW in which solar contributes
4096MW2. The contribution of Keywords
Uttarakhand in solar is 5MW3, which can Project management, economic feasibility,
be enhanced to greater extent. Therefore financial analysis, payback period, equity
this study aims to target technical as well as debt ratio, Fixed and Variable Cost.
1 3
http://mnre.gov.in/file-manager/UserFiles/grid-
http://www.cea.nic.in/reports/monthly/inst_capa connected-solar-power-project-installed-
city/jul15.pdf capacity.pdf
2
http://mnre.gov.in/file-manager/UserFiles/grid-
connected-solar-power-project-installed-
capacity.pdf
E 328
Introduction about the financial feasibility of solar

Developing countries like India always power plant in Uttarakhand (Northern state
have a major concern about their power of India) which has more than 300 sunny
sector. Power sector is directly related with days and an average solar radiation of 4.5 to
the economic and social development of a 5.5Kwh/m², which simply indicates the
nation. The conventional source of power potential of solar energy in Uttarakhand5.
generation mainly coal based, which is not The state has classified the solar projects
going to be everlasting. India is a country into three categories we have suggested the
with a huge power or energy requirement to financial feasibility model of 1 MW for
feed the demand of this huge nation. To Type 1 Project. Type 1 Projects are those
overcome this situation we are mainly projects in which the solar power is
concerned about the power management generated for direct sale to DISCOM of the
technique like demand side management, state. Presently uttarakhand is contributing
load shifting, load cliffing. Instead of being 5MW of solar power which can be
concerned about all these techniques, we enhanced to a greater magnitude6. This
should work to explore different renewable study is basically to support the solar power
energy sources available on the earth. generation in uttarakhand. It will be a
Another important thing for which we motivation for different investing
should concern about the financial companies to work and invest in the field of
feasibility of that process involved in the solar power generation.
generation of power.
The concept of harnessing solar energy is
India is country blessed with one of that very simple. The principle of photoelectric
renewable source, for which we are having effect is the basic principle governing the
enough state of art technology for concept of solar harnessing. The photons
harnessing that energy source. India has are the basic particles of the sun light, is
above 300 sunny days out of 365 days allowed to strikes the solar panel which is
which simply shows that India is blessed made of semiconductor material. As the
with solar energy4. The average solar photon strike the solar panel the electron get
radiation in India varies from 4 to 7 excited, which becomes a free electron. The
Kwh/m². This study is focussed mainly electron moves from valence band to
4 6
Solar Energy Policy of Uttarakhand, 2013 http://mnre.gov.in/file-manager/UserFiles/grid-
5
Solar Energy Policy of Uttarakhand, 2013 connected-solar-power-project-installed-
capacity.pdf
E 329
conduction band and hence current is or technical feasibility of the power plant,
produced. This concept is conversion of as reviewed in many literature. This study
light into electricity. focuses on financial feasibility of a power
plant. It discusses about the cash flow, cost
With the aim to analysis the financial
of generation, power generation, revenue
feasibility of the solar plant we need to
collection, equity-debt amount, interest
know about some technical aspects of the
amount, CDM benefits, working capital,
solar energy harnessing. The technical
operation & maintenance cost. These all
specification also defines the financial
financial terms result into the net cash flow,
feasibility of a solar plant. There are three
net present value and payback period,
different types of panel like mono
which give the idea to an investor whether
crystalline, ploy crystalline and thin film
to accept the project or reject the project and
used for energy production. These different
all other financial norms related to
types of panel have their own efficiency,
installing a solar power project.
which directly affects the financial
feasibility. Other technical aspect which Literature Review
affects the financial feasibility is the
 Joshi, Juhi, “A RESEARCH STUDY ON
capacity utilization factor, which depends
DEVELOPING SOLAR POTENTIAL
upon the irradiation of location; it is the
MAP USING GIS”, 2013, International
measurement of incident solar energy per
Journal of Emerging Trends &
sq. meter, which depends upon the location,
Technology in Computer Science, has
optimum tilt, latitude, shade of the tilted
discussed about the geographical
array and the inclination angle of the
information system to determine the
module. All the requirement of technical
amount of radiation in each district of
and financial data are done by help of
Uttarakhand. The amount of radiation
annual report of IREDA, UREDA, CERC
determines the potential of solar energy
and SERC norms.
and will help in the installation of solar
Financial feasibility is the major concern power system.
for installing any project. And for the solar Research Gap- Present paper does not
power project environmental, climatic and elaborate the technical and economic
infrastructural conditions, that would affect potential of solar energy and its
the financial terms. It is necessary to feasibility.
analysis and satisfying all these factors.
This study does not monitor for designing
E 330
 Sharma, Vikrant; Chandel, s.s.,  Chandel, Mevin; Agrawal, G.D.;

“Performance analysis of a 190 kWp Sanjay, Mathur; Mathur, Anuj,
grid interactive solar photovoltaic “Techno-economic analysis of solar
power plant in India”, 2013, photovoltaic power plant for garment
ELSEVIER, has elaborate about 190 zone of Jaipur city”, 2014, ELSEVIER,
kwp solar power plant installation at Pg:1-7, has defined about the technical
khatar- kalan in India in comparison feasibility and economic viability of a
with other available solar power 2.5MW capacity solar photo voltaic
harnessing system in different power plant considering on-site and off-
countries. The paper is only based on site options. It also discuss about plant
technical grid interactive analysis of capacity factor, Levlised cost of energy
solar power generation. and Financial performance indicators
Research Gap - Present paper does not (internal rate of return (IRR), net
discus about the financial feasibility of present value(NPV) and payback
the solar project or solar power periods) are analysed for four financial
generation in India. cases i.e.pre-tax analysis, post-tax
analysis, equity analysis pre-tax and
 Soni, M.S.; Gakkhar, Nikhil, “Techno- equity analysis post-tax.
economic parametric assessment of Research Gap- This paper does not
solar power in India: A survey”, 2014, designate about the parameters required
ELSEVIER, has discussed about the on installation of power plant such as
technical as well as economic aspects Interest rate, O&M cost, working
for the establishment of a solar power capital, CDM benefits, depreciation rate
plant. It also discuss about PV and CSP and others.
technologies, direct investment cost and
insurance cost.  Purohit, Ishan; Purohit, Pallav;
Research Gap - Present paper does not “Techno-economice valuation of
discus many financial attributes such as concentrating solar power Generation
O&M cost, working capital, CDM in India”, 2010, ELSEVIER, has
benefits and other financial parameters described the technical and economic
on installing the power plant. assessment of concentrating
solarpower(CSP) technologies in India,
analyzed the two projects namely PS-10
E 331
(based on power tower technology) and Data Collection

ANDASOL-1 (based on parabolic After a research problem the task of data
trough collector technology) in collection begins. The data collection is
different places. It also disused carbon done by two methods:
trading benefits under clean
development mechanism of the Kyoto Secondary data
protocol. The data is mainly collected from CERC,
Research Gap- Present paper does not SERC, IREDA and UREDA
discus about many financial attributes
such as Interest, O&M cost, working Data Analysis
capital and other financial parameters The data analysis is done after the
on installing the solar power plant. collection of data. It follows the plans of the
research design. It is analysed by applying
Research Methodology various filters by means of different
The research is descriptive in nature. formulas. Data analysis is important for

scientific study and to ensure the data is
Research Design
relevant for comparison and analysis
This research design is the basic structure
Data analysis & interpretation
of the financial analysis of power plant. It
Assumption
constitutes the blue print of the data
The following assumption has been taken
collection, data calculation, measurement
as per UREDA, IREDA, CERC and SERC
and analysis. This research design includes
norms (Appendix Table 1)
the outline of the work what the researcher
intends to perform from writing the
Net Power Generation
hypothesis and its operational inferences to
the final analysis of data. The Net power generation is the actual
amount of power generated from the power
Sample plant, which is supplied to the grid. The Net
The samples taken grid connected solar power generation is less than the gross
photo voltaic power plant in India and power generation. It is the difference
especially in Uttarakhand, which includes between gross power generation and

various data as per the requirement. auxiliary power consumption. Gross power
generation is the product of Capacity
Utilization Factor, Installed capacity and
E 332
number of hours in a year. Auxiliary power 4.24 crore. The interest rate is assumed as
consumption is the power consumed within 11.65% and the tenure for instalments is
the plant i.e. in the transformer, cooling assumed as 120 months.8 The instalment
load, lighting load, pumps, control room amount is decreasing gradually from 1st to
etc. In this study the Capacity Utilization 120th month. And the instalment paid on
Factor is assumed as 19%7 and also monthly basis and the total amount paid
auxiliary power consumption is assumed as yearly is shown in the chart. ( Appendix
negligible. Therefore, the Net power Table 3)
generation is equal to the Gross power
Operation & Maintenance
generation. Gross power Generation=
Operation & Maintenance is the concept to
CUF*Installed Capacity*No. of hours in a
increase the life of a power plant. This
year.
concept of operation & maintenance
Net Power Generation= Gross power includes various processes like plant
Generation - Auxiliary power consumption. monitoring, preventive maintenance,
In this study, the net power generation is preventive inspection, fault identification &
calculated for 25 years, which is assumed to analysis etc. In this study, operation &
be life of the solar power plant as per CERC maintenance cost is assumed as 0.123 Crore
norms. The net power generation for 1st per MW annually and it is gradually
year is 1.6644 MU. It has been assumed in escalating from the 2nd year at the rate of
this study as per CERC norms the 5.72%. It is shown for 25 years on yearly as
performance decline of 0.005 per year. well as monthly basis in the chart
Therefore, net power generation is (Appendix Table 4)
gradually declining for 25 years. (Appendix
Working Capital
Table 2)
Working Capital is the day to day capital
Interest
required for effective functioning of the
The Interest is the amount paid at plant. Working capital which can be
particular defined interest rate with the use variable or fixed subjected to requirement.
of debt amount. Generally the debt-equity
Working Capital is be financed by short
ratio is 70:30 of the installation cost. The
term loans carrying rate of interest.
installation cost for this project as assumed
as 6.05 crore, therefore the debt amount is
7 8
www.cercind.gov.in/2015/orders/SO4.pdf “Financing Norms and Schemes”, IREDA, 2015
E 333
In this study, Interest rate for working Emission Reductions (CER)” for use by the
capital is assumed as 11.65% and the investor9.
maintenance spare is 15% of operation &
CDM Benefits can be categorised under
maintenance cost. The total working capital
four section:- Environmental, Social,
for 25 years is shown in the chart (Appendix
Economical, Sustainable development. In
Table 5)
this study the built margin and operating
margin is taken as 0.68 and 1.02, where
Depreciation
Operating margin
Depreciation is the gradually reducing
The OM Emission Factor is calculated as
value of assets with respect to time. It is
the average emission rate of all power
basically a decrees in the monetary value of
plants serving the grid based on data on net
the fixed and tangible assets due to wear
electricity production, plants efficiencies,
and tear of machines, failure of equipment
and the fuel types.10
and obsolescence of the equipment’s. In
this study the deprecation rate for first 12 Built Margin
years is taken is 5.83% and for next 13 The set of five power units that have been
years, it is taken as 1.54%. For the first 12 built most recently were selected in
year differential method is used and there is calculating the BM emission factor using
gradual decrease for 12 years as per the said the following formula.11
rate. And for next 13 years straight line
method is used for the said rate, therefore Further the CO2 rate has been assumed as
there is a constant depreciation value. The 12$ where 1$=Rs.65 and the CDM benefit
calculation and the values were shown in is calculated in Indian rupee. The total
chart.(Appendix Table 6) benefit is calculated for 25 years as shown
CDM Benefits in the chart (Appendix Table 7)
The Clean Development Mechanism is a

cooperative mechanism that allows Revenue
emission reduction projects that assist in Revenue is the amount of money which you
creating sustainable development in earn in the course of business. It includes
developing countries to generate “Certified the benefits arising from the generation and
9 11
www.cdm.unfccc.int/about/dev_ben/index.html Deenaparay, Dr. Prakash, “Calculating of the
10
Deenaparay, Dr. Prakash, “Calculating of the Grid Emission Factor of Mauritius”, 2013
Grid Emission Factor of Mauritius”, 2013 (www.cdm.unfccc.int)
(www.cdm.unfccc.int)
E 334
the CDM; It also includes the profit before expansion in the form of increasing the
depreciation, Interest & tax, profit before plant capacity. So, huge amount of fund is
tax, profit after tax, net cash inflow and required for which company is required to
others. These revenue calculations shown make a budget for fund procurement and
in the chart. The feed in tariff is assumed as capital procurement
Rs.8/unit and tax rate for first 10 years is
Net cash flow is the difference between the
0.1633 and from 11th year it is .3399.
cash inflow and cash outflow. In this study
(Appendix Table 8)
net cash flow is calculated by applying this
formula and net cash flow is continuously
NPV
increasing for 25 years, which represents
The NPV is the Net Present Value, which
the financial feasibility of this project
means the difference between the present
(Appendix Table 9
value of cash flow after tax and present
value of outflow, which is normally initial
Cost of generation
investment. NPV is calculated to determine
Total cost of generation is defined as the
the feasibility of project. If NPV comes
sum of operation & maintenance cost,
positive the project is accepted and when it
depreciation cost, interest on loan term,
comes negative the project is rejected. In
interest on working capital and return on
the case of multiple projects of same class
equity. Per unit cost of generation is defined
or category we should select a project
as the ratio of total cost of generation to the
having higher NPV, higher NPV represents
amount of power generated. In this study
higher NPV. In this study the NPV is
the per unit cost of generation is decreasing
calculated by applying above equation and
continuously up to 13th year, and then again
on a result it is 78lakh, which shows the
it started to increase from 14th year. All the
financial feasibility of this project.
varying values can be seen in the
chart(Appendix Table 10)
Cash Flow
Cash flow also known as investment
Pay Back Period
decision, which is defined as the benefit of
Pay back is defined as number of years for
which may arise for more than a year.
the original investment to be recovered, it is
Investment is made in present time for the
the minimum time required for the recovery
expected future benefit. Investment may be
of an initial investment. It is also defined as
done for setup a power plant or its
the future value, when we start the project,
E 335
we calculate what the recovery time of that Then from the cumulative profit the
investment. In this study the profit is payback period is resulted as 7years 8days.
calculated, which is the difference between (Appendix Table 11)
the incoming tariff and cost of generation.
have not considered the technical aspects
Findings:
instead, all attributes related to financial
This case study based on financial analysis
analysis from installation to life of the
for solar pv plant. The various calculations
power plant have been considered. For this
has been done for finding the net power
all the data collection has been done as per
generation, interest, operation &
CERC, SERC, IRDEA and UREDA norms,
maintenance cost, working capital,
environment condition of Uttarakhand are
depreciation, CDM benefits, Revenue
taken into the consideration as per the
collection, Net present value, cash flow,
requirement of the power plant.
cost of generation and payback period.
Financial cash flow and revenue collection
The following are the findings which
has been analysed for different cases i.e.
decide the financial feasibility of solar pv
interest, depreciation, profit before tax and
plant:
profit after tax. Other financial parameters
 Average Net generation for 25 after analysis like net cash flow, net present
years= 1.568 MU/year value and payback period which explains
 Average cost of generation for clearly about the feasibility of the solar
25years = Rs. 2.80/kwh power generation in Uttarakhand. This
 Average CDM Benefits for project will be helpful for the investor to get
25years= Rs. 5.44 Lakh/year a clear idea about the financial

establishment of a solar power plant.
 Net cash flow for 25years= 23lac/-
Energy sector is a backbone of a country.
per year
Renewable energy is the best available
 NPV= 78lakh Rs.
option on which we can rely.
 Payback Period= 7years 8days
References
Conclusion and Recommendation
1. Besarati, S.M, et al. “The potential of
This study has been done to assess the
harnessing solar radiation in Iran:
financial feasibility of 1MW solar plant generating solar maps and viability study
specifically in Uttarakhand. In this study we of PV.” Elsevier 53 (2013): 193-199.
E 336
2. Chandel, Mevin, et al. “Techno-economic 8. Prasanna, M. Ganga, S. Mahammed

analysis of solar photovoltaic power plant Sameer and G. Hemavathi. “Financial
for garment zone of Jaipur city.” Elsevier Analysis of Solar Photovoltaic Power plant
volume 2 (2014): 1-7. in India.” IOSR Journal of Economics and
Finance 2 (n.d.): 09-15.
3. Deenapanray, Dr Prakash (Sanju).
“Calculating of the Grid Emission Factor 9. Purohit, Ishan and Pallav Purohit.
of Mauritius.” 2013. “Techno-economic evaluation of
concentrating solar power.” Elsevier
4. Determination of generic levellised
(2010): 3015–3029.
generation tariff under Regulation 8 of the
Central Electricity Regulatory Commission 10. Sharma, P.P., S. Chatterji and Balwinder
(Terms and Conditions for Tariff Singh. “Techno-economic analysis and
determination from Renewable Energy modelling of stand-alone versus grid-
Sources) Regulations. New Delhi: Central connected small hydro-power systems – a
Electricity Regulatory Commission, 2015. review of literature.” International Journal
of Sustainable Energy 32 (2013): 1-17.
5. FINANCING NORMS AND SCHEMES.
New Delhi: Indian Renewable Energy 11. Sharma, Vikrant and S.S. Chandel.
Development Agency, 2015. “Performance analysis of a 190 kWp grid
interactive solar photovoltaic.” Elsevier
6. “Jawaharlal Nehru National Solar
(2013): 476-485.
Mission, Guidelines for selection of new
grid connected solar power projects.” July 12. Solar Energy Policy of Uttarakhand.
2010. Dehradun: Uttarakhand Government,
2013.
7. Poullikkasa, Andreas and Mohamed
Gadallab. “Assessment of solar electricity
production in the United Arab Emirates.”
International Journal of Sustainable
Energy 32 (2013): 631–642.
E 337
Appendix
Table 1
ASSUMPTION SHEET FOR TARIFF CALCULATION
S.No Assumptio Sub Head Sub Head 2 Unit cerc

. n head value
1 Power Generation
capacity
Installed Capacity MW 1
Capacity Utilization Factor % 19%
Project Start Date mm/year Jun-15
Commercial Operation Date mm/year Sep-16
Time Involved in Construction 1.25
Useful Life years 25
Auxilary consumption % 0%
2 Project Cost
Capital Cost / MW
Normative Capital Cost Crore/M 6.05
W
Capital Cost Rs. Crore 6.05
Capital Subsidy, if any Rs. Crore 0
Net Capital Cost Rs. Crore 6.05
3 Financial Assumption
Tariff Period Years 25
Debt: Equity
Debt % 70%
Eqity % 30%
Total Debt Amount Rs. Crore 4.235
Total Equity Amount Rs. Crore 1.815
Debt Component
Loan Amount Rs. Crore 4.235
Moratorium Period Years 1
Repayment Period (incl. Years 12
moratorium)
Repayment Schedule Quarterly
Intrest Rate % 12%
Number of Installments 44
E 338
Equity Component
Eqity Amount Rs. Crore 1.815
Return on Equity for first 10 years % p.a 20%
Return on Equity 11th year onward % p.a 24%
Discount Rate % 10.67%
Depreciation
Depreciation rate for first 12 years % p.a 6%
Depreciation rate 13 year onward % p.a 1.54%
Salvage Value % 10%
Depreciable Limit % 90%
Method of depreciation Calculation Differenti
for First 12 Years al
Method of depreciation Calculation St. Line
for next 13 Years
4 Operation & Maintenance
Normative O&M Expense Rs. cr/ 0.123
MW
O&M Expense per Annum Rs. cr/ 0.123
MW
Escalation Factor for O&M % 5.72%
Expense
5 Working Capital
O&M Expense per Month Rs. Lakhs 0.0103
Maintenance Spare % of 15%
O&M
Cost
Recievables for one and half month Rs. Crore
Intrest Rate on Working Capital % 12%
7 Performance decline
Annual 0.005
8 Feed In Tariff
For First 12 yrs Rs/unit 8
fter 12 yrs Rs/unit 8
9 INCOME TAX PROVISION
E 339
tax Rate for first 10 16.330%

years
Tax Rate from 11th 33.990%
year onwards
Table 2
E 340
Table 3
YEAR 1 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 TOTAL
OPENING BALANCE Rs . 4.24 Rs . 4.20 Rs . 4.16 Rs . 4.13 Rs . 4.09 Rs . 4.06 Rs . 4.02 Rs . 3.99 Rs . 3.95 Rs . 3.92 Rs . 3.88 Rs . 3.85
INSTALLMENT - PRINCIPAL Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs. 0.42
INSTALLMENT - INTEREST Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs . 0.04 Rs. 0.47
CLOSING BALANCE Rs . 4.20 Rs . 4.16 Rs . 4.13 Rs . 4.09 Rs . 4.06 Rs . 4.02 Rs . 3.99 Rs . 3.95 Rs . 3.92 Rs . 3.88 Rs . 3.85 Rs . 3.81
YEAR 1 2 3 4 5 6 7 8 9 10 11 12
YAER ENDING Rs cr. 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
INTREST PAYMENT Rs cr. Rs. 0.47 Rs. 0.42 Rs. 0.37 Rs. 0.32 Rs. 0.27 Rs. 0.22 Rs. 0.17 Rs. 0.13 Rs. 0.08 Rs. 0.03 0 0
PRINCIPLE PAYMENT Rs cr. Rs. 0.42 Rs. 0.42 Rs. 0.42 Rs. 0.42 Rs. 0.42 Rs. 0.42 Rs. 0.42 Rs. 0.42 Rs. 0.42 Rs. 0.42 0 0
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Table 4
OPERATION & MAINTENANCE COST

O&M COST PER MW Rs.cr p a 0.123
TOTAL O&M COST Rs.cr p a 0.123
ESCALATION PER YEAR IN O&M COST %pa 5.72%
YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
ANNUAL O&M COST Rs. Cr 0.123 0.1300356 0.137474 0.145337 0.15365 0.162439 0.171731 0.181554 0.191939 0.202917 0.214524 0.226795 0.239768 0.253483 0.267982 0.28331 0.299516 0.316648 0.33476 0.353909 0.374152 0.395554 0.418179 0.442099 0.467387
MONTHLY O&M COST Rs. cr 0.01025 0.0108363 0.011456 0.012111 0.012804 0.013537 0.014311 0.015129 0.015995 0.01691 0.017877 0.0189 0.019981 0.021124 0.022332 0.023609 0.02496 0.026387 0.027897 0.029492 0.031179 0.032963 0.034848 0.036842 0.038949
Table 5
WORKING CAPITAL CALCULATION

INTREST RATE FOR WC 12%
MAINTENANCE SPARE 15%
YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
O&M COST Rs.lakh 12.30 13.00 13.75 14.53 15.37 16.24 17.17 18.16 19.19 20.29 21.45 22.68 23.98 25.35 26.80 28.33 29.95 31.66 33.48 35.39 37.42 39.56 41.82 44.21 46.74
MAINTENANCE SPARE Rs.lakh 1.845 1.950534 2.062105 2.180057 2.304756 2.436588 2.575961 2.723306 2.879079 3.043762 3.217866 3.401928 3.596518 3.802239 4.019727 4.249655 4.492735 4.74972 5.021404 5.308628 5.612282 5.933304 6.272689 6.631487 7.010808
TOTAL WORKING CAPITAL Rs.Crore 0.1415 0.1495 0.1581 0.1671 0.1767 0.1868 0.1975 0.2088 0.2207 0.2334 0.2467 0.2608 0.2757 0.2915 0.3082 0.3258 0.3444 0.3641 0.3850 0.4070 0.4303 0.4549 0.4809 0.5084 0.5375
Table 6
PLANT COST Rs. Crore 6.05

DEPRICIATION RATE 6% FOR FIRST 12 YEARS
1.54% FOR 13 YEAR ONWARDS
DEPRICIATION METHOD Differential FOR FIRST 12 YEARS
ST line FOR 13 YEAR ONWARDS
YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
RATE OF DEPRECIATION 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54% 1.54%
WDM opening balance cr 6.05 5.697285 5.365133 5.052346 4.757794 4.480415 4.219207 3.973227 3.741588 3.523453 3.318036 3.124594 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05 6.05
depriciation cr 0.352715 0.332152 0.312787 0.294552 0.277379 0.261208 0.24598 0.231639 0.218135 0.205417 0.193441 0.182164 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317
WDM closing balance cr 5.697285 5.365133 5.052346 4.757794 4.480415 4.219207 3.973227 3.741588 3.523453 3.318036 3.124594 2.942431
E 342
Table 7
Operating margin: The OM Emission Factor is calculated as the average emission rate of all power plants serving the grid based
on data on net electricity production, plants efficiencies, and the fuel types.
Built Margin: The set of five power units that have been built most recently were
capicity of Plant Mw 1 selected in calculating the BM emission factor using the following formula.
CUF 19%
Total Unit Generation mu 1.6644
Operating Margin tCO2/Mwh 1.02

Built Margin tCO2/Mwh 0.68
Combined Data tCO2/Mwh 0.85
Total Emmision Reduction tCo2 1414.74
Expected CO2 rates dollar /tCo2 12
counsultancy fees first year (cr) 0.045
yearly (%) 4%
performance decline % 0.005
UNITS GENERATION
YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
INSTALLED CAPACITY MW 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
GROSS GENERATION U 1664400 1656078 1647797.6 1639558.6 1631360.8 1623204 1615088 1607012.6 1598977.5 1590982.6 1583027.7 1575112.6 1567237 1559400.8 1551603.8 1543845.8 1536126.6 1528445.9 1520804 1513200
NET GENERATION kwh 1664400 1656078 1647798 1639559 1631360.8 1623204 1615088 1607012.6 1598977.5 1590982.6 1583027.7 1575112.6 1567237 1559400.8 1551603.8 1543845.8 1536126.6 1528445.9 1520804 1513200
total emmision co2 saved by project tco2 1414.74 1407.6663 1400.6283 1393.6252 1386.6567 1379.7234 1372.8248 1365.9607 1359.1309 1352.3352 1345.5735 1338.8457 1332.1514 1325.4907 1318.8632 1312.2689 1305.7076 1299.179 1292.683 1286.22
Percentage OF Beneficary 100% 90.0% 80.0% 70.0% 60.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0%
Percentage of STU 0% 10.0% 20.0% 30.0% 40.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0%
cdm benefit in INR cr 0.1103497 0.0988182 0.0873992 0.0760919 0.0648955 0.0538092 0.0535402 0.0532725 0.0530061 0.0527411 0.0524774 0.052215 0.0519539 0.0516941 0.0514357 0.0511785 0.0509226 0.050668 0.050415 0.050163
counsultancy fee per certificate 0.049414 0.0039527 0.003496 0.0030437 0.0025958 0.0021524 0.0021416 0.0021309 0.0021202 0.0021096 0.0020991 0.0020886 0.0020782 0.0020678 0.0020574 0.0020471 0.0020369 0.0020267 0.002017 0.002007
Total benefit lakh 6.0935731 9.4865447 8.3903238 7.3048256 6.2299712 5.1656845 5.1398561 5.1141568 5.088586 5.0631431 5.0378274 5.0126382 4.987575 4.9626372 4.937824 4.9131348 4.8885692 4.8641263 4.839806 4.815607
per unit benefit rs/kwh 0.37 0.57 0.51 0.45 0.38 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32 0.32
E 343
Table 8
REVENUE
feed in tariff Rs/unit 8 for first 12 yr tax Rate for first 10 years 0.1633
Rs/unit 8 after 12 yrs Tax Rate from 11th year onwards 0.3399
year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
INSTALLED CAPACITY MW 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
GROSS GENERATION U 1664400 1656078 1647798 1639559 1631361 1623204 1615088 1607013 1598978 1590983 1583028 1575113 1567237 1559401 1551604 1543846 1536127 1528446 1520804 1513200 1505634 1498106 1490615 1483162 1475746
NET GENERATION U 1664400 1656078 1647798 1639559 1631361 1623204 1615088 1607013 1598978 1590983 1583028 1575113 1567237 1559401 1551604 1543846 1536127 1528446 1520804 1513200 1505634 1498106 1490615 1483162 1475746
Tariff Incoming Rs cr 1.33152 1.3248624 1.318238 1.311647 1.305089 1.298563 1.29207 1.28561 1.279182 1.272786 1.266422 1.26009 1.25379 1.247521 1.241283 1.235077 1.228901 1.222757 1.216643 1.21056 1.204507 1.198484 1.192492 1.18653 1.180597
Revenue Calculation
year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Generation u 1664400 1656078 1647798 1639559 1631361 1623204 1615088 1607013 1598978 1590983 1583028 1575113 1567237 1559401 1551604 1543846 1536127 1528446 1520804 1513200 1505634 1498106 1490615 1483162 1475746
Genration Revenue cr 1.33152 1.3248624 1.318238 1.311647 1.305089 1.298563 1.29207 1.28561 1.279182 1.272786 1.266422 1.26009 1.25379 1.247521 1.241283 1.235077 1.228901 1.222757 1.216643 1.21056 1.204507 1.198484 1.192492 1.18653 1.180597
CDM BENEFIT cr 0.11035 0.098818174 0.087399 0.076092 0.064896 0.053809 0.05354 0.053272 0.053006 0.052741 0.052477 0.052215 0.051954 0.051694 0.051436 0.051178 0.050923 0.050668 0.050415 0.050163 0.049912 0.049662 0.049414 0.049167 0.048921
TOTAL REVENUE cr 1.44187 1.423680574 1.405638 1.387739 1.369984 1.352372 1.345611 1.338883 1.332188 1.325527 1.3189 1.312305 1.305744 1.299215 1.292719 1.286255 1.279824 1.273425 1.267058 1.260722 1.254419 1.248147 1.241906 1.235696 1.229518
O& M cost cr 0.123 0.1300356 0.137474 0.145337 0.15365 0.162439 0.171731 0.181554 0.191939 0.202917 0.214524 0.226795 0.239768 0.253483 0.267982 0.28331 0.299516 0.316648 0.33476 0.353909 0.374152 0.395554 0.418179 0.442099 0.467387
PROFIT BEFORE INT & DEPN & TAX cr 1.31887 1.293644974 1.268164 1.242402 1.216334 1.189933 1.17388 1.157329 1.140249 1.12261 1.104375 1.08551 1.065976 1.045732 1.024737 1.002945 0.980308 0.956777 0.932297 0.906814 0.880267 0.852593 0.823727 0.793597 0.762131
DEPRECIATION cr 0.352715 0.332151716 0.312787 0.294552 0.277379 0.261208 0.24598 0.231639 0.218135 0.205417 0.193441 0.182164 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317
TERM LOAN INTEREST cr 0.470764 0.421426615 0.372089 0.322751 0.273413 0.224076 0.174738 0.1254 0.076062 0.026725 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
PROFIT BEFORE TAX cr 0.49539 0.540066644 0.583288 0.625099 0.665541 0.704649 0.753162 0.80029 0.846053 0.890468 0.910934 0.903346 0.972806 0.952562 0.931567 0.909775 0.887138 0.863607 0.839127 0.813644 0.787097 0.759423 0.730557 0.700427 0.668961
TAX PROVISION cr 0.080897 0.088192883 0.095251 0.102079 0.108683 0.115069 0.122991 0.130687 0.13816 0.145413 0.309626 0.307047 0.330657 0.323776 0.31664 0.309232 0.301538 0.29354 0.285219 0.276558 0.267534 0.258128 0.248316 0.238075 0.22738
PROFIT AFTER TAX cr 0.414493 0.451873761 0.488037 0.52302 0.556858 0.58958 0.630171 0.669602 0.707892 0.745054 0.601307 0.596299 0.642149 0.628786 0.614927 0.600542 0.5856 0.570067 0.553908 0.537086 0.519562 0.501295 0.48224 0.462352 0.441581
CUMULATIVE PROFITS cr 0.414493 0.866366872 1.354404 1.877424 2.434282 3.023863 3.654033 4.323636 5.031528 5.776582 6.377889 6.974188 7.616337 8.245124 8.860051 9.460593 10.04619 10.61626 11.17017 11.70725 12.22682 12.72811 13.21035 13.6727 14.11429
NET CASH INFLOW cr 0.414 0.452 0.488 0.523 0.557 0.590 0.630 0.670 0.708 0.745 0.601 0.596 0.642 0.629 0.615 0.601 0.586 0.570 0.554 0.537 0.520 0.501 0.482 0.462 0.442
FOR CUMULATIVE CASH POSITION

ADDING DEPRECIATION BACK cr 0.352715 0.332151716 0.312787 0.294552 0.277379 0.261208 0.24598 0.231639 0.218135 0.205417 0.193441 0.182164 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317
NET CASH ACRUALS cr 0.767208 0.784025477 0.800824 0.817572 0.834238 0.850788 0.876151 0.901241 0.926027 0.950472 0.794749 0.778463 0.735319 0.721956 0.708097 0.693712 0.67877 0.663237 0.647078 0.630256 0.612732 0.594465 0.57541 0.555522 0.534751
LOAN PAYMENT cr 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
NET CASH ACRUALS (After Loan Payment) cr 0.343708 0.360525477 0.377324 0.394072 0.410738 0.427288 0.452651 0.477741 0.502527 0.526972 0.794749 0.778463 0.735319 0.721956 0.708097 0.693712 0.67877 0.663237 0.647078 0.630256 0.612732 0.594465 0.57541 0.555522 0.534751
Discounting Rate 10.67%

Discounting Factors 0.90 0.82 0.74 0.67 0.60 0.54 0.49 0.44 0.40 0.36 0.33 0.30 0.27 0.24 0.22 0.20 0.18 0.16 0.15 0.13 0.12 0.11 0.10 0.09 0.08
PRESENT VAL OF NET CASH ACRUALS cr 0.69 0.64 0.59 0.55 0.50 0.46 0.43 0.40 0.37 0.34 0.26 0.23 0.20 0.17 0.15 0.14 0.12 0.11 0.09 0.08 0.07 0.06 0.06 0.05 0.04
CUMULATIVE CASH POSITION cr 0.69 1.33 1.92 2.47 2.97 3.43 3.87 4.27 4.64 4.98 5.24 5.47 5.67 5.85 6.00 6.14 6.26 6.37 6.46 6.54 6.62 6.68 6.74 6.78 6.83
NPV(crores) 0.78
E 344
Table 9
year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
CASH INFLOW
PROFIT AFTER TAX 0.414493 0.451874 0.488037 0.52302 0.556858 0.58958 0.630171 0.669602 0.707892 0.745054 0.601307 0.596299 0.642149 0.628786 0.614927 0.600542 0.5856 0.570067 0.553908 0.537086 0.519562 0.501295 0.48224 0.462352 0.441581
ADD DEPRECIATION 0.352715 0.332152 0.312787 0.294552 0.277379 0.261208 0.24598 0.231639 0.218135 0.205417 0.193441 0.182164 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317 0.09317
ADD TERM LOAN INT 0.470764 0.421427 0.372089 0.322751 0.273413 0.224076 0.174738 0.1254 0.076062 0.026725 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
WORKING CAP LOANS
TERM LOANS
TOTAL INFLOW 1.237972 1.205452 1.172913 1.140323 1.107651 1.074864 1.050888 1.026641 1.002089 0.977196 0.794749 0.778463 0.735319 0.721956 0.708097 0.693712 0.67877 0.663237 0.647078 0.630256 0.612732 0.594465 0.57541 0.555522 0.534751
CASH OUTFLOW
FIXED ASSETS
TERM LOAN principal 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0.4235 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
TERM LOAN INTEREST 0.47 0.42 0.37 0.32 0.27 0.22 0.17 0.13 0.08 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
WORKING CAPITAL 0.14145 0.149541 0.158095 0.167138 0.176698 0.186805 0.19749 0.208787 0.220729 0.233355 0.246703 0.260814 0.275733 0.291505 0.308179 0.325807 0.344443 0.364145 0.384974 0.406995 0.430275 0.454887 0.480906 0.508414 0.537495
INTEREST ON WC 0.016479 0.017422 0.018418 0.019472 0.020585 0.021763 0.023008 0.024324 0.025715 0.027186 0.028741 0.030385 0.032123 0.03396 0.035903 0.037957 0.040128 0.042423 0.04485 0.047415 0.050127 0.052994 0.056026 0.05923 0.062618
PRELIMINARY EXP
TOTAL OUTFLOWS 1.052193 1.011889 0.972102 0.93286 0.894197 0.856144 0.818736 0.782011 0.746007 0.710766 0.275444 0.291199 0.307856 0.325465 0.344082 0.363763 0.384571 0.406568 0.429824 0.45441 0.480402 0.507881 0.536932 0.567644 0.600113
OPENING BAL 0 0.19 0.38 0.58 0.79 1.00 1.22 1.45 1.70 1.95 2.22 2.74 3.23 3.65 4.05 4.41 4.74 5.04 5.29 5.51 5.69 5.82 5.91 5.94 5.93
NET CASH FLOW DURING YR 0.19 0.19 0.20 0.21 0.21 0.22 0.23 0.24 0.26 0.27 0.52 0.49 0.43 0.40 0.36 0.33 0.29 0.26 0.22 0.18 0.13 0.09 0.04 -0.01 -0.07
CLOSING BALANCE 0.19 0.38 0.58 0.79 1.00 1.22 1.45 1.70 1.95 2.22 2.74 3.23 3.65 4.05 4.41 4.74 5.04 5.29 5.51 5.69 5.82 5.91 5.94 5.93 5.87
Table 10
Cost of generation year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

O&M Expenses lakh 12.30 13.00 13.75 14.53 15.37 16.24 17.17 18.16 19.19 20.29 21.45 22.68 23.98 25.35 26.80 28.33 29.95 31.66 33.48 35.39 37.42 39.56 41.82 44.21 46.74
Depreciation lakh 35.2715 33.21517 31.27873 29.45518 27.73794 26.12082 24.59797 23.16391 21.81346 20.54173 19.34415 18.21639 9.317 9.317 9.317 9.317 9.317 9.317 9.317 9.317 9.317 9.317 9.317 9.317 9.317
Interest on term loan lakh 0.47 0.42 0.37 0.32 0.27 0.22 0.17 0.13 0.08 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Interest on working Capital lakh 0.016478925 0.017422 0.018418 0.019472 0.020585 0.021763 0.023008 0.024324 0.025715 0.027186 0.028741 0.030385 0.032123 0.03396 0.035903 0.037957 0.040128 0.042423 0.04485 0.047415 0.050127 0.052994 0.056026 0.05923 0.062618
Return on Equity lakh 0.363 0.363 0.363 0.363 0.363 0.363 0.363 0.363 0.363 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356 0.4356
Total Cost of generation lakh 48.42 47.02 45.78 44.69 43.76 42.97 42.33 41.83 41.47 41.32 41.26 41.36 33.76 35.13 36.59 38.12 39.74 41.46 43.27 45.19 47.22 49.36 51.63 54.02 56.55
Per unit Cost of generation rs/kwh 2.91 2.84 2.78 2.73 2.68 2.65 2.62 2.60 2.59 2.60 2.61 2.63 2.15 2.25 2.36 2.47 2.59 2.71 2.85 2.99 3.14 3.29 3.46 3.64 3.83
Table 11
Pay Back Period calculation

Capital Cost 605 lakh
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Tariff Incoming Rs in lakh 133.152 132.4862 131.8238 131.1647 130.5089 129.8563 129.207 128.561 127.9182 127.2786 126.6422 126.009 125.379 124.7521 124.1283 123.5077 122.8901 122.2757 121.6643 121.056 120.4507 119.8484 119.2492 118.653 118.0597
cost of genration Rs in lakh 48.42 47.02 45.78 44.69 43.76 42.97 42.33 41.83 41.47 41.32 41.26 41.36 33.76 35.13 36.59 38.12 39.74 41.46 43.27 45.19 47.22 49.36 51.63 54.02 56.55
Profit Rs in lakh 84.73026 85.46566 86.04424 86.47061 86.74889 86.88274 86.87525 86.72899 86.4461 85.95562 85.38129 84.64712 91.61745 89.61725 87.54162 85.38607 83.14583 80.81585 78.39082 75.86511 73.23276 70.48749 67.62265 64.63121 61.50575
Cumulative Profit Rs in lakh 84.73026 170.1959 256.2402 342.7108 429.4597 516.3424 603.2176 689.9466 776.3927 862.3484 947.7296 1032.377 1123.994 1213.611 1301.153 1386.539 1469.685 1550.501 1628.892 1704.757 1777.99 1848.477 1916.1 1980.731 2042.237
Pay Back period 7YEAR 8DAYS
E 345
Forecasting Coal Demand of India
Anmol Yadav*, Sumeet Gupta**, Hiranmoy Roy***
*MBA – International Business, UPES,

** Associate Professor, Department of Finance & Head Centre for Infrastructre Finance, UPES,
*** Assistant Professor. Department of Economics and International Business, UPES.
Abstract production growth rate of 8 percent to be

The demand of coal in India is increasing achieved by the year 2020, i.e. 877.19
day by day, and its fulfilment is not MMT of coal while the forecasted demand
matched by the coal extracted from Indian for the same year is 1077.86 MMT. Serious
mines. To fulfil the demand of coal, India attention is required, how to bridge this gap
imports coal from foreign countries. between demand and supply.
Compare to previous years the production
for coal has been increasing by 2.85 Keywords
CAGR. And as a result of poor domestic Demand, coking, non-coking, electricity,
coal
coal production, exports have been
increasing at a steady rate of 29.11 CAGR Introduction
and the overall consumption also has risen The demand of coal in India is increasing
by a hefty margin of 6.86 CAGR. In this day by day, and its fulfilment is not
context this paper attempts to forecast the matched by the coal extracted from Indian
demand of coal in India in the next five mines. To fulfil the demand of coal, India
years, covering both coking and non- imports coal from foreign countries. From
coking coal and mainly focusing the the last five years the production for coal
estimation on the power sector, as it has the has been increasing by 2.85 CAGR. And as
highest demand of coal in India. The study a result of poor domestic coal production,
also focuses on demand of coal with exports have been increasing at a rate of
emphasis on the installed capacity of 29.11 CAGR and the overall consumption
electricity in the power sector. The study also has risen by a hefty margin of 6.86
will use the secondary data from published CAGR.
sources. The research design is analytical

and descriptive. The study will include
quantitative assessment of coal demand. As
envisaged by the ministry of coal the
E 346
Table-1 The coal scenario in India is not so bad

201 201 201 201 14-
0-11 1-12 2-13 3-14 15 considering the fact that 8% of the worlds
Coal 533. 540. 557. 579. 597. coal reserves are in India. But the hurdle
Productio 0 0 0 0 0
n in India comes in the form of technology used in the
Coal 105. 140. 168. 190.
Imported* 70.0 0 5 5 0 mines, the quality of Indian coal which is
Estimated 603. 645. 697. 747. 787.
total 0 0 5 5 0 poor and the political scenario surrounding
Consumpt
ion
the coal mines in India.
This paper forecasts the demand of coal Indian coal is not of high quality (ash
India will have in the next five years, content: 45%) when compared to other
covering both coking and non-coking coal coals (ash content: 15%) around the world
and mainly focusing the estimation, on the and hence it fails to meet the energy
power sector as it has the highest demand requirement in India. So, currently what the
of coal in India, through emphasis on the Indian government does is that it imports
installed capacity of electricity in the power coal from outside countries such as
sector. The study will use the secondary Indonesia, South Africa, Australia, Russia
data from published resources. The and partly from USA. Now the Indian coal
research design is analytical. The study will is of low quality and has inferior heating
include quantitative assessment of coal ability when compared to the foreign coal.
demand. This shortage in Indian coal is covered by
blending the Indian coal with imported
Review of existing literature
coal. Now all over the country this practice
India is home to more than a billion people
of blending is followed and electricity is
and not everyone has the privilege of
being generated.
having electricity at their home. There are
many reasons for this shortcoming, and one Also, another factor affecting the decision
of the such is not having enough installed on import of coal is the growth in yearly
capacity of electricity all over the parts of production of domestic coal. The Indian
the nation. And also, the installed capacity government has set a target of 8% annual
has to be backed by constant coal supply, growth rate to be reached by the domestic
70% to be precise, and this coal is supplied coal producers in India by the year 2020.
by CIL (Coal India Limited) and other Last year the growth rate recorded was
suppliers, which also includes the importers 5.6% for the year 2014-15. To escalate the
of high quality coal from outside to India. growth rate of domestic production, the
E 347
Indian government has freshly started to Share of power generation through coal
allocate coal blocks to private companies fired power plants in world’s total
through competitive bidding, this process is electricity generation is around 41%. Two
to select the highest bidder and give him the third of the power generated in India is coal
license for coal mining for a number of based and these power plants are facing
years. This bidding process is only coal shortage as growth in domestic coal
conducted after exploring the the production is lower than annual growth rate
geographically coal rich area and preparing of demand in electricity. The country is
the report which provides the better and experiencing an energy shortage of 10 %
clear picture of the coal capacity of the area. and the peak load shortage is even
higher. Even though India has third largest
The Indian power plants also face a
reserves of coal, the actual consumption
problem in infrastructure and logistics, the
exceeds the overall domestic production.
connectivity between the ports to the power
The total consumption of coal during 2013-
plants is poor and it takes long time for the
14 was 739.42 million MT against the
coal to reach the power plants. Many a
supply of domestic coal of 571 Million MT.
times the coal passes through the harsh
The gap between total consumption &
weather conditions during the transport and
domestic supply was met through import of
it loses its qualities. Railway connectivity is
coal to the extent of 215 million MT out of
the best alternative for such a problem, but
which India imported around 190 million
the number of railway wagons and railway
MT Non-Coking Coal in 2014-15, as
routes allocated for coal mines are very less
compared to 135 million MT imported in
and hence the issue remains unsolved.
2013-14.
Coal is themost cheapest and vastly Indian coal is characterised by high ash
available fossil fuel in world. World’s total content and low energy content. Imported
coal reserves are estimated to be 890 billion coal is blended with domestic coal to
metric tons. India is third largest producer increase plant load factor of coal-based
of coal with reserves of around 270 billion thermal power plants, which also adds
MT. Major coal producing countries are: pressure on imported coal demand.
China, US, India, Indonesia & Australia
and major exporting countries are:
Indonesia, Australia, Russia, US &
Colombia.
E 348
Research Methodology (7) Data analysis is done using scenario

analysis: Three scenarios are used to
(1) Data source: The source of data
illustrate the possible demand of coal in the
collected is secondary, collected from the
future.
data base of MMTC and official
government websites. Data analysis and Interpretation
In this report we have based our analysis on
(2) The research design is descriptive.
demand of imported non-coking thermal
coal in future and also the coal produced
(3) The calculation was done using simple
domestically in India:
calculation, with step by step change of
(1) As per total electricity generation
units from megawatt (MW) to Million
capacity: the calculation is based on
Metric Tons(MMT), converting the units of
a) Thermal electricity Generation
installed capacity of electricity into the
Capacity in India.
units of quantity of coal required.
b) Thermal Electricity Generation
(4) Scope of study: The study illustrates the capacity is around 69 % of total
demand of coal in India for the next five capacity generation.
years with emphasis on the installed c) So the net coal requirement can be
capacity of electricity in thermal power calculated:
plants. The final figures stating the demand d) Efficiency of thermal power plant is
of coal are cumulative figures of coking and 35% on average of power plants all
non-coking coal, shown in three scenarios over India.
which are based on different (1) As per the coal consumed by the other
CAGR(compound annual growth rate) (non-electricity) sectors in India.
domestic production of coal. (a) Currently the other sectors form 23%
of the total non-coking coal
(5) Time Zone: The study covers the
consumers.
demand of coal in India for the years 2015
(b) This 23% can be calculated from the
to 2020.
77% that has been calculated based
on the installed capacity of electricity
(6) Objective of the study:
generation in India.
1. To study the coal scenario in India.
(2) Coking coal has
2. To forecast the demand of coal in India (3) a growth rate of 2-3%.
for the next five years.
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Thermal coal Requirement as per the Let Efficiency of thermal Power plant in
Installed capacity of coal run power plant: India is 35% (coal conversion efficiency of
power plant)
Installed capacity of power plant in India
=189313.56MW
Efficiency: Conversion of coal into heat
Installed capacity in
energy.
watt=189313560000W
India : 35%
Power plant load factor is
Such that net coal Requirement =
75%=141985170000
192.09*100/35 = 548.82
(189313560000*75/100=141985170000)
Here we take plant load factor 75% which Calculation of overall demand of coal as
is given in CEA website. per forecasted growth rate in the domestic
Plant Load Factor: The ratio of the total production of coal in India:
number of kWh supplied by a generator
Basis the Coal Ministry optimistic
approach to increase production we may
Coal requirement:
analyze coal demand under three scenarios:
Coal calorific value generally we take
1. Pessimistic Scenario: At 2.95% Based
5500.
on current domestic production of coal,
Gross calorific value of India coal is 5500
CAGR(5 years)
to 6000 (source CIL)
2. Medium growth rate Scenario : At a
Cal per kg =5500000
5.6% growth rate in production of
In joule per kg=22990000
domestic coal(Previous year)
1 calorie = 4.184 joules
3. Optimistic Scenario : At 8% , as
5500000*4.184 = 22990000
envisaged by Ministry of Coal
Thermal Coal Requirement = installed

Estimation of coal demand for the next five
capacity/coal calorific value
years, Based on the growth rate of demand
Kg/sec= 6175.95345
of coal for the year 2014-15:
Kg/day=533602373
Kg/yr= 192096856080 From the above calculation of demand of
MT =192096856.080 coal based on the installed capacity for the
In MMT=192.09 month of May, 2015, the demand of coal
for the power utilities sector comes at
548.82 MMT, i.e; for 2014-15.
E 350
Now to explain things in plain simple 7.5% per annum will have the following
words, coal produced in India is 597 MMT figures.
during 2014-15(542+55). Out of which
Thermal Electricity Capacity (MW)
449(542) MMT was given to power plants
assuming growth @7.5%
to produce power and the rest 93 MMT to
other sectors using non coking coal. Table-2
Year Installed capacity

Now the requirement is 548 MMT and the growing @ 7%
supply is limited to only 449 MMT and 2014-15 189313.0 MW
2015-16 203512.1 MW
there is a supply gap of nearly 100 MMT. 2016-17 218775.5 MW
Also there is an additional requirement of 2017-18 235183.6 MW
2018-19 252822.4 MW
another 65 MMT by other sectors such as 2019-20 271784.1 MW
cement, steel etc.
Now calculating the requirement of non-
Now that makes it a total of 165 MMT coking coal based on the principal
import of non-coking coal and add to that calculation of requirement of coal for
an import of 25MMT of coking coal. In 189313.0 MW i.e. 548.8 MMT.
total India imported 190 MMT of coal in
548.8MMT/189313.0 MW = 0.002899
2014-15.
MMT/MW
Now to calculate for the upcoming years
i.e. 0.002899 Million Metric Ton of non-
unto 2019-2020.
coking coal is required per Mega Watt to
So 548 MMT of non-coking coal produces capitalize on the overall installed capacity
189503 MW of power i.e. one MW requires of power plants in India.
0.00299MMT of coal. And it would be safe
Now this figure of 0.002899 MMT/MW
to assume a growth rate of 7.5% per year
will be multiplied by the envisaged
for the installed capacity of power plants
installed capacity of power plants in India
unto 2019-2020, which is well below than
@ 7.5% for the next five years (shown in
the growth rate recorded in the past year i.e.
above table).
9%.
So for the next five years the installed

capacity of power plants @ growth rate of
E 351
Table-3 technology used, the logistics available and

Year Installed Requirement of
time taken.
capacity non-coking coal
growing @ by power plants
7.5% We must take three scenarios into
2014-15 189313.0 548.80 MMT
MW
consideration, which perfectly illustrate the
2015-16 203512.1 589.89 MMT amount of coal that could be produced in
MW
2016-17 218775.5 634.83 MMT India in the coming five years. These
MW scenarios represent the growth rate at which
2017-18 235183.6 681.80 MMT
MW the coal production in India can grow.
2018-19 252822.4 732.93 MMT
MW Scenario 1: Pessimistic scenario:
2019-20 271784.1 787.90 MMT
MW
Here the growth rate taken is the average of
Now there are also other sectors in the the growth rate of last five years. I.e.
Indian market that require non coking coal 2.95%.Now at a growth rate of 2.95% the
for their daily functioning such as cement figures that come up for the next five years
industry, steel industry which are heavily are illustrated in the following table.
dependent on the supply of non-coking
Table-4
coal.
Year Envisaged production
@ 2.95%
The cement sector has consumption at 23% 2014-15 597.00 MMT
which comes around at 219.06 MMT for 2015-16 614.61 MMT
the year 2014-15. This sector mainly 2016-17 632.74 MMT

2017-18 651.41 MMT
requires non coking coal for its ash content
2018-19 670.62 MMT
which is required in making cement. 2019-20 690.41 MMT
And the steel sector has a requirement of Compound annual Growth rate of Coal
coal for its heating power, as steel Production during last five years in India is
manufacturing requires high degree of heat 2.95%.
temperatures.
The following table will illustrate the total
Now the import of coal is totally dependent requirement of coal in India in the coming
on how much quantity of coal can the five years; hich will be a collective of
Indian coal mines extract from the available coking and non-coking coal.
resource. And the extraction of coal from
mines is again dependent on the kind of
E 352
These figures will represent the (23%) is calculated in the following table.
requirement of coal in power sector, And it has a growth rate of 6%.
cement industry, steel industry and other
Table-6
small and medium sectors which consume
Year Non-coking coal
small amounts of coal on yearly basis. required by other
sectors
Coking coal requirement in the country is 2014-15 219.16 MMT
2015-16 232.23 MMT
very marginal compared to non-coking coal 2016-17 246.45 MMT
and has a growth rate of 2 percent only. 2017-18 263.65 MMT
2018-19 281.93 MMT
India is self-sufficient in the department of 2019-20 300.35 MMT
coking coal, as the coking coal produced in
Now the total coal requirement will be
India is enough to tackle the demand for
derived on adding the year wise figures of
coking coal.
coking coal and non-coking coal.
Coking coal requirement in India @ growth
Table-7
rate of 2% per year.
Year Total coal requirement
2014-15 787.00
Table-5
2015-16 822.21
Year Requirement 2016-17 880.68
2014-15 55.0 MMT 2017-18 945.45
2015-16 56.1 MMT 2018-19 1014.86
2016-17 57.2 MMT 2019-20 1088.25
2017-18 60.0 MMT
2018-19 63.0 MMT The import of coal will be derived from
2019-20 65.0 MMT
subtracting the figures of the table of total
Now coming to the requirement of non- coal produced in India from total coal
coking coal. requirement. The figures that come out of

the subtraction will represent the figures of
Mainly the power sector has a major coal to be imported by India in the next
requirement of non-coking coal (77%) in coming five years.
India. And the demand of non-coking coal
by the power sector based on the installed
capacity of these power plants has been
calculated above. The rest of the non-
coking coal that is required by other sectors
E 353
Table-8 Import of coal to be made by Table-9 Production of coal in India @

India. 5.6%.
Year Import of coal to be
Made Year Production of coal in
2014-15 190.00 MMT India @ 5.6%
2014-15 597.00 MMT
2015-16 207.60 MMT
2016-17 247.94 MMT 2015-16 630.43 MMT
2017-18 294.04 MMT 2016-17 665.74 MMT
2018-19 344.24 MMT 2017-18 703.02 MMT
2019-20 397.83 MMT 2018-19 742.39 MMT
2019-20 783.96 MMT
The above table gives us the data about the
imports to be made in the next five years if At a growth rate of 5.6%, as achieved in the
the production of coal grows at a rate of year 2014-15, then the production of coal
2.95%. will be as in previous table:
Scenario 2: Medium growth rate Scenario Requirement of total coal in India as
In the second scenario the growth rate of calculated in the previous table:
production of coal is 5.6%, which is the

Table-10
growth rate of the previous year (2014-15).
Year Total coal requirement
This growth rate is a very moderate one, 2014-15 787.00
given that it is of the previous year and can 2015-16 822.10
2016-17 878.21
be expected to be the same in the current
2017-18 937.68
year unless any major disruptions are 2018-19 1005.45
caused in the production of coal in India. 2019-20 1077.86
Now here we are in no need to calculate the Import of coal to be made in the next five
years based on the figures calculated in the
requirement of coal on a separate basis, as
above two tables:
it is already calculated in the scenario 1.
Although we will need to calculate the Table-11
Year Imports of coal to be
production of coal in India separately at made
5.6%. 2014-15 190.90 MMT
2015-16 191.78 MMT
2016-17 214.94 MMT
2017-18 242.43 MMT
2018-19 272.47 MMT
2019-20 304.29 MMT
E 354
Now looking at the import figures of the Table-14

scenario 2, we can see that the amount to be Year Import to be made
imported has gone down. This is because 2014-15 190.00 MMT

2015-16 177.45 MMT
the production of coal has increased in this
2016-17 184.33 MMT
scenario as compared to scenario 1.
2017-18 193.40 MMT
2018-19 202.65 MMT
Scenario 3: Optimistic scenario
2019-20 211.06 MMT
The final third scenario takes into account
an growth rate of 8%, which is mainly So from all the calculations in all the above
envisaged by the ministry of coal to be three scenarios we can find the coal demand
achieved by the year 2020. Now in the of the country in the next five years along
following table we will have the figures of with the production that can take place at
coal production at a growth rate of 8%. three different growth rates.
Table-12
Year Coal produced @ 8% And the difference between these figures
2014-15 597.00 MMT gives us the amount of coal that could be
2015-16 644.76 MMT
2016-17 696.34 MMT imported in the future by India, if it fails to
2017-18 752.05 MMT increase its production.
2018-19 812.21 MMT
2019-20 877.19 MMT
Findings
Now the next table will have the figures for

1. The requirement of coal is going to
the coal required in the next five years, as
increase year by year and also the
calculated previously.
dependence on it for electricity.
Table-13 2. Increase in production of coal, by

Year Total coal requirement maximum utilization of the coal
2014-15 787.00 resources available.
2015-16 822.10
3. Increase in GCV value of coal.
2016-17 878.21
2017-18 937.68 4. Increase in the plant load factor. I.e.
2018-19 1005.45
35% currently.
2019-20 1077.86
5. Technology to increase the efficiency
Import of coal to be made in the nexfive of coal utilisation.
years based on the figures calculated in the 6. Import of high quality of coal.
above two tables:
E 355
7. Use of alternate resources to produce • http://coalinvestingnews.com/15311-coal-

types-uses-lignite-bituminous-anthracite-
electricity should be considered.(hydro,
nuclear) Metallurgical-thermal.html
Suggestions • http://www.cercind.gov.in/
• http://pib.nic.in/newsite/mainpage.aspx
Ways to reduce dependence on import of
• http://coal.nic.in/content/production-supplies
coal:
• http://www.indiastat.com/minesandminerals/2
1. Increase in production of coal, by 3/coalmines/63/offtakedemandandsupplyofcoal
maximum utilization of the coal andlignite19702014/722528/stats.aspx
resources available. • http://www.indiastat.com/power/26/consumpti

onandsale/70/stats.aspx
2. Increase in GCV value of coal.
• http://www.slideshare.net/manojjhawar56/revi
3. Increase in the plant load factor. I.e. ew-of-indian-coal-sector
35% currently.
• http://coal.nic.in/content/annual-report-2014-
4. Technology to increase the efficiency 15
of coal utilisation. • http://articles.economictimes.indiatimes.com/2

015-04-17/news/61253458_1_coal-blocks-
5. Import of high quality of coal. coal-production-coal-imports
6. Use of alternate resources to produce • https://en.wikipedia.org/wiki/Electricity_sector

_in_India#Thermal_power
electricity.(hydro, nuclear)
• https://www.globalcoal.com/Brochureware/sta
ndardTradingContract/specifications/
References
• http://www.adanimining.com/indian-coal-
mining
• http://articles.economictimes.indiatimes.com/2
015-05-20/news/62413316_1_coal-output-
coal-india-coal-supply
• http://westerncoal.nic.in/?q=node/114
• http://thesciencedictionary.org/plant-load-
factor/
• http://www.rrecl.com/PDF/Energy%20Basics.
pdf
• https://en.wikipedia.org/wiki/MMTC_Ltd
E 356
Go Green – By Greening the Human

*Deepak Bangwal
*Department of Management Studies, DIT University, India
Abstract
Keywords
Development is always growing need in the
Green HRM, Green Initiatives, Sustainable
past or in the present, this raise rapid
development
economic growth and urbanization but on the
same side this also increases the exploitation Introduction
of resources, pollution and ecological hazard Twenty-first century has been showing great
that cause the degradation of environment. interest on manufacturing, industrialization
The Green Human Resource Management and development. Make in India is an
will act as driver for successful of sustainable initiative taken by the government of India to
development. Green Human resource encourage government as well as domestic
management is multi-faceted and requires companies to manufacture their product in
constant monitoring. It is important that India. It was launched by Prime Minister
sustainability plans are tied into a strong Narendra Modi on 25 September 2014. This
evidence base and to recognize their potential initiative accelerates the industrialization that
impact on HRM issues. The present paper increases business production, technology
reviews the existing research on green HRM and other business activities. This was not
and sustainable development. However, less only increases human convenience, but also
research has focused on Green HRM increases its standard of living. But on the
Practices and sustainable development and other side, it also increases ecological hazard
what makes them successful. The paper focus that resulted ecological threats to human
upon the Green HRM and its role in being. So this initiative will be proceed with
sustainable development in Indian sustainable development to accelerate the
perspective. So that we can save natural make in India concept with greening the
resources for our present and future environment for sustainable business
generation. environment.
E 357
Sustainable development, at present implement any corporate environmental

Sustainable development is a most concern strategies, program or event on various units
phenomena. Across the globe every country of an organization Human Resource,
developed as well as developing country like Marketing, Information Technology,
India and China takes sustainable Finance, and so on, there is need to work
development very seriously due to together to put forward a positive joint effort
continuous and excessive exploitation of and among them, the most cardinal
resources. This continuous and excessive contributor is the human resource
exploitation of resources will create critical management unit.
problem for our present or future generation. Human Resource Management (HRM) is an
Due to the hazardous consequences of important division of management that deals
industrial pollution and waste materials, with the most valuable and important assets
including toxic and hazardous chemicals, of an organization which is human resources.
governments and NGOs across the world Green Human Resource Management is the
promoted green regulations and policies to most important element of sustainability. In
minimize the effect on environment and to this paper, we generally focused on green
reduce the destruction of natural resources human resources management and how it
and its negative effect on the human being helpful for business and environment
and the society as a whole (Christmann & sustainability. Mampra (2013) defines Green
Taylor, 2002; Shrivastava & Berger, 2010). HRM as the use HRM policies and practices
It is the direction of thinking by which we can for sustainable use of resources and promote
protect our present and future generation. The the cause of environmentalism. The study
right to development means the right to aim to simplify the meaning of Green HRM,
evolution and furtherance of economic, Green HRM function and how it works for
social, cultural and political conditions that the sustainability of business as well as
can be enhanced the global quality of life. environment.
To resolve the present situation the

Make in India
organizations have also focused to find out
Make in India is an initiative taken by the
procedure and techniques to deal with
government of India to encourage
reduction in ecological footprints besides
government as well as domestic companies to
dealing with the economic issues. To
E 358
manufacture their product in India. It was energy requirement for running plant and
launched by Prime Minister Narendra Modi requirement of resources. Government is
on 25 September 2014. Make in India looking forward to fund the infrastructure
concept actually want to boost the project through ppp model and merge some
manufacturing sector to generate or raise the of larger bank to fund the infrastructure
greater contribution to overall GDP. But on project.
the certain parameter we are lacking like
infrastructure, transportation of raw material,
Make in India project generally focuses on these 25 sectors:
E 359
Sustainable Development Clark, 2003), Fayyazia et al. (2015) said that

Firstly it is very essential to know the there is a need of integration of
conceptual meanings of sustainable environmental management in Human
development. Sustainability is the process or Resource Management (HRM) to achieve the
practice of conserve resources for future goal of sustainable (Rothenberg, 2003).
generation without any harm to the
A study done by Harvey et al. (2012)
environment (Leopold. A, 1949; Hendrix
concluded that HRM plays very important
M.K, 2014). Sustainable development bound
role in implementation of green practices and
together concern for the carrying capacity of
indicates the contribution of HRM to the
natural system with political, social and
green performance. Green performance can
economic challenges faced by the humanity.
be depends upon employee involvement and
This is responsibility of the present
participation not only in their work place but
generation to conserve, regenerate and
also implement it on work life o private life
improve the planet resources for our future
this will result Green outcome have a result
generation (Finn, 2009). It is the way of
of Green innovations: new environmental
securing the resources for present and future
initiatives, new techniques for efficient use of
generation.
resources, solutions for waste reduction,
Green HRM pollution reduction, etc. (Callenbach et al.,
The Human resource management function is 1993; Ramus and Steger, 2000; Ramus,
act as driver of sustainability by placing or 2001; Ramus, 2002; Govindarajulu and
implementing its policies and practices with Daily, 2004),
the objective of sustainability (Mandip,
Green HRM function and process
2012; Cherian and Jacob, 2012). Callenbach
Human resource department is the major area
et al. (1993) has convoluted that in order to
for circulating green policy and practices
transform green management, employee
(Renwick, 2008) and help to create
must come with some innovative ideas and
sustainable environment for the present and
they have power and authority to do
future generation (Harmon et al., 2010),
something innovative for suitable
hence such green initiatives and practices
environment (Ichniowski et al., 1997;
Mendelson and Pillai, 1999; Collins and
E 360
Fig. 01 represents the general consequences of usually established HRM practices in

organizations, Sources: Vij. P et al (2013)
Fig 02.represents some green practices and their possible outcomes in organizations
implementing Green HRM, Sources: VijP et al (2013).
E 361
Facilitate in accomplishment of green of the renowned company who followed the

objectives right through the HRM process green recruitment for sustainable
from employee entry to exist (Dutta, 2012). development.
Cherian and Jacob (2012) identified in their
Green performance management
study the every organization are involved for
Performance management is the process
taking green initiative or implementing green
evaluating the performance of the employee,
initiatives within association for sustainable
so there is a need of integration between
development but these green objectives will
performance management and environment
successful accomplished only by the equal
management it improve the quality and value
participation of the individual employee of
of environmental performances (e.g. Jackson
the organization. HRM process from green
et al., 2012; Renwick et al., 2013).
recruitment to pay and reward will further
describe.
Green training and development
To sustain in the race market there is need to
Green recruitment
every organization to change themselves
Green recruitment is process of recruiting
according to the scenario of the market those
new talent who are aware of sustainable
who can run with scenario they can sustain
process, environmental system and familiar
themselves but those who cannot resist that
with words of sustainable development. This
change they flow out from the race. So it is
recruitment make it sure that new employee
necessary to every organization to change
are aware or familiar with term green policy
themselves with the change in the scenario.
and practices that will help in managing
Every change brings some hurdles but these
effective sustainable development
hurdles can be solved by training and
(Wehrmeyer, 1996) because In this scenario
development.
companies are tracking t creative and
Green compensation and reward
innovative employees, companies increase
Eeryone should follow any policy and
their recruiting potential, hiring quality staff
practices either by force or either for getting
is the very important task in the war of talent
some reward and compensation. Green
(Renwick et al., 2013; Phillips, 2007;
Compensation and reward is one the major
Stringer, 2009). Some of the companies are
and significant tool for supporting
example of green recruitment Google is one
E 362
sustainable development to attain the goal resources not only to save the resource but to
and objective in green manner (Milliman and save the planet and the most important
Clair, 1996). Ramus (2002) conclude in his resource of the earth i.e. Human. HR
research that Green Compensation and professionals definitely see the benefits of
reward motivated the green behavior and HR’s engagement with sustainability in
attitude of employee for sustainable general but mainly facilitate employees,
development rather than enforce sustainability onto them.
Green Compensation and reward can be HR professionals who wish to contribute to
given in many forms such as Tailor packages their organization’s sustainability by
to reward green skills acquisition, Use of practicing Sustainable Green HRM, should
monetary-based EM rewards (bonuses, cash, strive to be involved with the sustainability
premiums), Use of non-monetary based EM strategy from the beginning, which will
rewards (sabbaticals, leave, gifts), Use of positively influence their perceived
recognition-based EM rewards (awards, possibilities for putting sustainability on the
dinners, publicity, external roles, daily map and their role in enthusing, facilitating
praise), Develop negative reinforcements in and motivating employees for sustainability.
EM (criticism, warnings, suspensions for Ultimately, this will not only benefit the
lapses) and Develop positive rewards in EM environment, but –according to HR
(feedback). professionals- also the employees and
organization itself.
Conclusion
The aim of this paper is to give direction how
References
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E 365
Challenges and Ways Forward
Harmonics Mitigation: An Initiative by a Power Utility to enhance

Customer satisfaction &Business Sustenance
Mr. Nilesh Kane*, Dr. Tarun Dhingra**
* Research Scholar, UPES, Dehradun
**Associate professor, UPES, Dehradun
Abstract the Utility to Ensure Power Quality and to
In the Modern world due to Technology provide reliable and cost effective power to
break through many Electrical and the above segment and adhering to the
Electronics equipment’s were in the market regulator guidelines.
which were of Non Linear Loads and is This paper would brief about the Harmonics
inevitable. Due to the rise of Nonlinear load Mitigation Initiative by a Power distribution
in the system harmonics were generated Utility by creating a win-win situation for
creating nuisance to the utilities in terms of Power Utility and Consumers through an
overheating of equipment’s like ESCO based approach thereby mitigating
Transformers, cables& Motors, Increased the harmonics as well as enhancing the
Core loss in Transformers, Capacitors customer satisfaction in open access era.
failure and also a major threat to Grid

Keyword
stability.
TPDDL (Tata power Delhi distribution
Indian Industry segment consumes around
limited, THD (Total Harmonic Distortion),
46 % of the Power and commercial sector
WRI (World resource Institute), KCG (Key
consumers around 8% of the Energy.
consumer Group), AT&C (Aggregate
Combined Overall Energy savings Potential
Technical and Commercial Losses, Isc (Short
available in both the segment is around 30-
circuit level), DT (Distribution Transformer),
35% as per World resource Institute survey
PF(power factor), VTHD (Total Voltage
(WRI).
harmonic Distortion), ITHD (Total Current
As the harmonics are generated from the
Harmonic Distortion), ESCO (Energy
Load, the Industry and Commercial segment
servicing Companies, IEDs (Intelligent
are key contributors in polluting the Power
Electronic devices, SEB (State Electricity
Quality. In the Era of open access and
Board)
Competitive environment, it is the need of
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Introduction About TPDDL
Presently in India Many of the Power TPDDL is a power distribution company

distribution Utility has switched to kVAh working in North Delhi area. Company is
billing to maintain strict standards of part of TATA Organization and established
reactive drawals from the Grid and to ensure as a performing organization in Power
proper Power Factor (PF) correction at load distribution within a short period of ten
level. This forces the consumer to install years. It has achieved a customer and
Capacitors at the load end to ensure Power industry recognition through various Awards
factor at Unity. at National and international level.
Even after installing capacitor bank at their Tata Power Delhi has successfully reduced
end still consumers face issue of Low Power their AT&C Losses by 75% in last ten years
factor due to failure of capacitors. The main through continuous improvements in area of
reasons behind the failure of Capacitors are technology adoption, customer satisfaction
due to Harmonics. This Harmonics not only and network improvement.
damaging the Electrical equipment’s TPDDL is also a member of a Global
installed at consumers but also the Utility. Intelligent Utility Network Coalition
This paper is an attempt of a Power (GIUNC) and Indian SMART Grid forum
Distribution Utility to mitigate Harmonics which is working towards accelerating the
through an Esco based approach thereby development of common standards,
creating a Win- win situation for consumer technology solutions and processes for
and Utility. intelligent networks.
Drivers for Harmonics Mitigations: TPDDL has enhanced its customer
• Increase in Non- linear Load satisfaction through Various Consumer
• Premature failure of Electrical centric approach and always one step ahead
Equipment’s to meet the Consumer requirements. In
• Increase in Technical Losses in DT due Continuation with the above this paper
to rise in Eddy current losses and Core would describe about the TPDDL approach
losses toward the mitigation of Harmonics.
• Grid Instability
• Rising electricity costs
E 367
Harmonics with increase in Total Harmonic distortion
Harmonics are sinusoidal Voltage or as depicted in Figure-3
currents having frequencies that are whole

multiple of the frequencies at which the
system is designed to operate either at 50 or
60Hz as depicted in Figure-1.
Figure-3 Transformer Expected life

Figure-1 Harmonics
Effects of Harmonics
Some of the Effects of harmonics are Reasons for Non-Mitigation of Harmonics
premature failure of Transformers, Failure by Consumer
of Cable to Hot spots, increased technical  Lack of awareness
losses due to Hot spots & high resistance as  Human Psychology – Addressing only
depicted in Figure-2 immediate problems

 Lack of skilled manpower – No proper
assessment of the situation
 Capital involvement( in lakhs ) with
Long term ROI
Harmonics Standards & Regulation

CEA Guidelines
 The Total Harmonic Distortion for
Current drawn from the transmission
Figure-2 Effects of harmonics system at the connection point shall not
As a serious concern to Utility the exceed 8%.
transformer expected life is reduced to 50%
E 368
 The Total harmonic distortion for the Harmonics analysis of TPDDL

Voltage drawn from the transmission Data Collection
system at the connection point shall not
TPDDL extensively used the harmonics data
exceed 5% and the Individual harmonics from IEDS installed in Grid station stations as in
not exceeding 3%. Figure-4
IEEE Std-519
Table 1: Voltage harmonic limits for
distribution system:
Maximum System voltage

distortion (2.3 - 69 KV)
Individual harmonics 3%
THD 5%
Figure-4 Harmonic data from IEDS

Table 2: Current harmonic limits for
distribution system
In location where the IEDS don’t have the
Maximum harmonic current distortion in % of facility it uses the Power Analyzer (Figure-5)
IL
Individual harmonic order ( Odd harmonics
Isc / IL <1 11< 17<=h< 23<=h< 35<= TD

1 = 23 35 h D
h<1
7
<20 4 2 1.5 0.6 0.3 5
20<50 7 3.5 2.5 1 0.5 8
50<100 10 4.5 4 1.5 0.7 12
100<10 12 5.5 5 2 1 15
00
>1000 15 7 6 2.5 1.4 20

Figure-5 Harmonic data from power
analyser
For the consumers with the non-dedicated
feeders the harmonics is measured at the
E 369
Point of common coupling between utility

Based on the analysis of current harmonics
and Consumers with help of Power analyzer.
of various consumers (Figure-7) 42% of the
Inference from Analysis
consumers were breaching the CEA
Voltage harmonics
guidelines with respect to current harmonics
and also polluting the quality of Power
supply.
As per the guidelines it is the role of
consumers to mitigate the Harmonics from
the load end.
SEB’s approach toward harmonics

Figure-6 Voltage harmonics of various
Various SEB’s across India adopts a
consumers
punitive approach by imposing a penalty
Voltage harmonics of various consumers
clause for the Consumers or disconnect the
connected to TPDDL is well below the
supply for violating consumers.
guided level by CEA which infers the
 Tamilnadu Electricity regulatory
quality of supply fed by utility to the
commission has a penalty clause of
consumer is perfectly alright.
charging 15% of their electricity
Current harmonics
consumption and by 3 months the
consumers’ needs to take corrective
action to mitigate the harmonics.
 Maharashtra Electricity regulatory
commission directly disconnects the
consumers if the violation is breached.
TPDDL approach
TPPDL instead of punitive approach had
chosen this issue as a Business opportunity
to provide Win-win solution for Utility and
Consumer through an ESCO based
Figure-7 Current harmonics of various
approach.
consumers
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Strength of TPDDL
• Registered ESCO-Energy service

Company
• A readymade consumer base of more
than 1 million
• No involvement of third party between
utility and consumers.
• Mutual trust between consumers and
Figure-8 Third Party Financing Model
TPDDL.
• Existing workforce comprising of
around 74 energy managers/ auditors
As per WRI survey 30-35% Energy savings

potential is available in Industry and
commercial segment
As the Mitigation plan for Harmonics will
be cost intensive TPDDL with its strength Figure-9 Customer Funded Model
carried out an Energy audit in the consumer
Key Findings of the Energy audit
premises and propose a low cost Energy
• Power factor is in the range of 0.85 to
savings solution which would help in
0.91
investing in Harmonics mitigation.
• Reported failure of capacitor in the
factory
ESCO Model
• Current THD were generally above 8%
TPDDL offers two models to the consumers
and in some factory above 15%
for this harmonics mitigation exercise either
• 35% of the motors installed were
through a Third party financing Model
drawing more current than the rated with
(Figure-8) or Consumer Upfront model
high noise level
(Figure-9) such that consumers are not
• Scope for Lighting systems
burdened through this initiative.
improvement with a consumption
reduction up to 50%
E 371
Energy savings Potential for a consumer model (Figure-11) where the harmonics are
 Average Running Load 500 kW getting mitigated through the design.
 Cost required to Improve Pf from 0.88 to

0.95 with harmonic filter is 13 lakhs
 Average running cost with 0.88 Pf per
year is Rs 1.36 Crores
 Average running Cost with 0.97 Pf per
year is Rs. 1.26 crores
 Saving with Improved Pf is 10 lakhs Figure-11 Design Validation by MATLAB
 ROI is within 15 months with a model
reduction in failure of equipment to 15-
20% Results validations
Sample Implementation of ESCO

approach
Scenario before Implementation
Figure-12 waveform before filtration
Figure-10 Harmonics of consumer Figure-13 Waveform after Filtration
Ithd are above 8%.After doing the analysis

TPDDL designed respective filter for the
consumer and validate through a MATLAB
E 372
Waveform Post implementation of Filter
Ithd Harmonics were reduced below 3%
Figure-15 CSI of TPDDL consumers

Through this initiative the Utility envisaged
following benefits such as
 Reduction in CAPEX cost
 Increase in Evacuation capacity
 Life extension of the asset by 15%
Figure-14 Harmonics Mitigated consumers
Conclusions
TPDDL achievements
As the consumers are not aware about the
TPDDL started this initiatives in FY 14-15 harmonics it is the duty of the respective
and till date they had mitigated harmonics utility to create awareness amongst the
for 34 no’s of key potential consumers consumers in terms of its ill-effects not only
envisaged an Energy savings to the tune of to Utility but also to the consumers itself.
3.4 crores and an earnings of around Consumers should also be given awareness
90lacs.This approach not only saved the about the ESCO models prevailing in India
Energy consumption of Consumers but also which wouldn’t burden the initial upfront on
it created a win-win situation for the Utility the consumer in dealing harmonics.
and Consumer. The consumer satisfaction This consumer centric approach has
level of the key consumer has also gone up enhanced the satisfaction level of consumers
through such initiatives (Figure-15) to the high level.
We have tried our best to present our focus
of harmonics Mitigation Initiative by a
Utility which helps them in meeting the
E 373
Power quality norms through an ESCO 5. J. Arillaga, et al, “Power System Harmonics”
ISBN 0-471-90640-9
based approach.
Power utility has not only implemented need 6. 4. P519A Task Force, Harmonics Working Group
based initiative program to develop its (IEEE PES T&D
caring image but also won the hearts of Committee) and SCC22 – Power Quality, “Guide for
Applying Harmonic Limits on Power Systems” (Un-
Consumers with developing a sense of
approved draft)
ownership and pride in contributing
something to the society. It is a proven study
that policy advocacy with regulators,
Educating key consumers regarding
harmonics Mitigation through various
initiatives would help utility in solving
problems jointly hand in hand with
consumer participation.
References
1. IEEE Recommended Practices and Requirements
for Harmonic Control in
Electrical Power Systems, ANSI/IEEE Std. 519-1992.
2. IEEE Guide for Applying Harmonic Limits on

Power Systems – Unpublished Draft, IEEE Std
P519.1™/D9a, January, 2004
3. Electrical Power System Harmonics Design Guide,

R.C. Dugan, M.F. McGranaghan, E.W. Gunther,
Electrotek Concepts, Inc., Knoxville, TN, 1992.
4. R.C. Dugan, D.T. Rizy, “Harmonic Considerations

for Electrical Distribution Feeders”, National
Technical Information Service, Report
No.ORNL/Sub/81-95011/4 (Cooper Power Systems
as Bulletin 87011,
“Electrical Power System Harmonics, Design
Guide”)
E 374
Household energy consumption pattern in various districts of rural

uttarakhand
Anukriti Sharma*, Prasoom Dwivedi**
*Doctoral Research Fellow, Department of Economics & International Business, UPES, Dehradun
**Senior Associate Professor & Head, Department of Economics & International Business, UPES, Dehradun
Abstract
Energy is an important ingredient of all less in comparison to non-commercial
human life required to fulfil all basic needs energy sources. The reason for high
and for overall development. According to dependence on non-commercial energy
Census 2011, in India around 70% of the sources is not lack of affordability but
population lives in rural areas and this accessibility. It is difficult to provide
statistic is almost same for the state of services consistently and sustainably.
Uttarakhand. The heart of Uttarakhand beats Therefore, it was concluded that due to
in its rural areas and therefore the study of adverse topography of Uttarakhand, the
energy consumption pattern of rural villages needs to made self-contained and
households become important. An extensive self-sustained and hence, this paper proposes
survey was carried out on household energy to develop 2-3 Model Energy Efficient
consumption in 12 districts of rural Villages with the help of suggested Holistic
Uttarakhand using schedule questionnaire. Livelihood Improvement Partnership
This paper focuses on household energy Program (HLIPP) and Local People
consumption, their expenditure on various Participation Model by developing policies
energy sources, expenditure on various for local people involvement in the
energy sources in relation to income in the development of villages and leveraging
study area. Electricity, LPG, Kerosene and central and state government policies for this
fuel wood were considered as the main purpose.
energy sources. The study shows that fuel
wood consumption is more than 75% among Keywords
all economic groups in comparison with Energy consumption pattern, rural
consumption of other energy sources. The Uttarakhand
use of commercial energy sources is very
E 375
Introduction Non-commercial sources of energy consist

Energy is required for every aspect of our of firewood, vegetable wastes and dried
daily life. At present, commercial energy dung. These are non-commercial sources of
consumption makes up about 65% of the energy in the sense that they are supposed to
total energy consumed in India. This be free and command no price. Actually, the
includes coal with the largest share of 55%, non-commercial sources such as firewood,
followed by oil at 31%, natural gas at 11% dried dung have started commanding a price
and hydro energy at 3%. Non-commercial in urban areas. Energy is also classified as
energy sources consisting of firewood, cow renewable and non-renewable energy
dung and agriculture wastes account for over sources.
30% of the total energy consumption (Singh,
S., & Bajpai, U., 2010). According to NCAER data, only 72% of the
households in the state have electricity
Energy generally, has been simply defined connections and the transmission and
as “the ability or capacity to do work”. distribution losses amounting to 39% are
Planned industrialization, economic well above the national average. The goal of
development, modernization of agriculture, Vision 2022 for Uttarakhand is to ensure
population growth, and the rise in the human 100 % electricity connection to all
standard of living has created a burgeoning households by: i) reducing transmission &
demand for energy in India. But there is a distribution loss ii) harnessing potential of
great mismatch between demand and supply hydro power generation, iii) focusing on
of energy in India and therefore what smaller power plants for ensuring power to
matters more is the adequate supply of remote villages and iv) feasibility of revival
energy and is a matter of great concern. of gharats. (Uttarakhand Vision 2022, CII)
These sources of energy are classified into It is obvious that the heart of Uttarakhand
commercial and non-commercial. beats in rural areas. For the sustained and
Commercial sources of energy are one, impressive growth, it is necessary to make
which commands a price for its utilization. Uttarakhand’s rural areas self-sustained. As
Coal, petroleum, electric power etc., are the we know that energy can play an important
chief commercial sources of energy in India. role in the sustainable development of any
E 376
economy. Therefore, this paper aims to Jones 2006). However, the concern is
study energy consumption pattern of whether the provision of energy services
people/households in rural Uttarakhand. leads to economic development or whether
economic development leads to expanding
Literature Review demand for energy. The conventional
A large number of studies on energy use in wisdom is that energy is a necessary but not
rural communities of India have appeared in a sufficient condition for development. But
literature. About 76% of the Indian this supports the policy question as to
population lives in rural areas and 51% of whether the lack of energy, especially
these lives below the poverty level. It was modern energy, is a cause of poverty,
reported earlier that in rural areas a large (Bravo et al. 1979). The Bravo measure
portion of the energy consumed comes from quantifies a household’s direct energy needs
fuel collection rather than being purchased. in considerable detail including those for
To examine the extent of collection, patterns cooking and lighting. It has been observed
are reported for the three fuels (agriculture with respect to per capita consumption, there
residues, animals waste and fuel wood) for is predominance of firewood usage in rural
the three seasons. During March, April and areas. Energy is essential to attain the
May, it has been observed that the fuel quality of life and economic prosperity in a
collection levels are very high because of society. In the rural areas of India, cooking
clear weather in summer season and purpose dominates the aggregate
therefore biomass, fuel wood are also consumption of energy (Fernandez, Saini,
collected for storage purposes for use in and Devadas, 2005). Energy planning
coming months. The relationship between exercise for rural areas involves use of mix
energy and poverty has preoccupied of locally available renewable resource with
development specialists for decades some commercial resource to cater to the
(Bowonder et. al. 1985). Running modern energy needs of the population. Such
economies without energy is impossible; exercises are economically attractive in
thus, it has been argued that energy use, developing countries. Developing countries
particularly modern energy such as such as India are largely rural in
electricity, is related in some way to composition. It is therefore, evident that in
economic development (John E. Besant- order to improve the economic development
E 377
of the country it is necessary to stimulate lighting, recreation, private vehicle use, and
growth and productivity in the rural sector. livestock breeding which satisfy farmers’
Energy planning exercise for rural areas of basic living requirements and improve their
locally available renewable resource with quality of life. It is found that the most
some commercial resource to cater to the important types of energy end-use purposes
energy needs of the population. Such in rural areas of northern china includes
exercises are economically attractive in cooking, lighting, home heating, recreation,
developing countries. According to the 61st and livestock breeding. The structure of
round of the National Sample survey energy consumption for different end-use
conducted in 2004-2005, 84% of rural purposes also changed greatly in the past 16
households rely on biomass as their primary years. Energy consumption for cooking
cooking fuel. These fuels are used even in purposes, dominated in 1989, but currently
areas with access to modern fuels. Indian cooking and home heating are of equal
household energy consumption from a broad importance. Till 2005, there was a rapid
perspective means going from the general to increase in recreational activities, stable
the specific and then back to aggregate growth in lighting, and disappearance of
energy requirement. A survey of livestock breeding. There are also equity
households’ energy consumption pattern has issues associated with urban energy
been carried out in 638 villages in India. transitions. Lower income residents rely to a
The households’ survey covered large extent on traditional fuels in
heterogeneous population belonging to comparison to higher-income consumers,
different income groups, education groups and are disproportionately burdened by the
and social groups. The structure of rural costs, both pecuniary and nonmonetary, of
households’ energy consumption varies in residential energy utilization (Massimo
different stages and in different regions and Filippinia, & Pachauria Shonali, 2004). This
can be affected by many factors, including segment of the population is most vulnerable
local energy resources, economy, social to policy changes instituted in energy
structure, and location (NSSO, 2007). The markets. For these reasons, it is important to
energy end-uses of rural households refers to assess the distributional burdens associated
energy consumption for activities such as with urban energy transitions, and to
cooking, home heating, refrigeration, consider the intended effects and possible
E 378
unintended side effects of policies small coverage of forest (about 15% of the
implemented in residential energy markets, total area of the country) and actual tree
(Batliwala and Reddy, 2003). Rural and coverage may not however, be more than 7-
urban residents may have different 8%. Of the total fuel wood supply, more
demographic characteristics related to than 90% come from homestead forest and
electricity usage. With certain assumptions, the rest from conventional forest and other
there may have been variations in the areas. Total biomass consumed per year in
intensity of use of electricity-consuming Bangladesh is about 39 million tonnes of
devices. The conventional approach to the which about 50% come from agricultural
energy-population nexus is that population residues, (Eusuf, Atikullah et al., 2005). The
levels determines energy demand - the larger majority of the population in the country
population, the more total energy required lives in rural areas. In 2003, the per capita
and the magnitude of this total energy energy consumption was only 220 KGOE
required depends on the per capita energy (kilogram oil equivalent). In Bangladesh
consumption. In other words, population about 32% households have access to
exogenously determines energy electricity in rural areas, where 75% of the
consumption. population resides, and the availability of
electricity is only 22%. The household
Energy is considered as one of the basic sector is one of the major consumers of
elements that are essential for the progress energy in India. In the overall national
of human civilization and all development energy budget it accounts for about 50% of
activities. Generally, energy sources are the total energy consumption, though its
broadly classified into two categories, share in the commercial is only 12%.
conventional such as fossil fuel and (Sheikh Mohammed Rafiul Huque et.al.
renewable energy. It is recognized that the 2003)
conventional sources of energy such as oil,
coal and natural gas would be available to The Energy demand of the different sectors
mankind only for a limited time. Biomass of Indian economy is met by different
fuels comprise trees, tree residues and sources of energy. These sources of energy
agricultural residues, animal excreta, kitchen are classified into commercial and non-
by-products, etc. Bangladesh has rather commercial. Commercial sources of energy
E 379
are one, which commands a price for its residues and firewood were found to be the
utilization. Coal, petroleum, electric power, three main fuels used for cooking, through
etc. are the commercial sources of energy in LPG was also used along with biomass fuels
India. Non-commercial sources of energy (Miah & Kabir, 2009). Rural household
consist of firewood, vegetable wastes and energy consumption pattern in the
dried. These are non-commercial sources of millennium villages in Sub-Saharan Africa
energy in the sense that they are supposed to shows households' reliance on biomass and
be free and command no price. The non- other traditional fuels across all project sites.
commercial sources such as firewood, dried There is heavy dependence on fuelwood
dung have stared commanding prices in (74%) as cooking fuel which is mainly
urban areas. Energy is one of the acquired through collection by women on
fundamental requirements for the foot. Kerosene is mainly used for household
functioning of any civilized society and also lighting. Also, it was reported that very low
needed for better lifestyle and socio- rate of households has (only 1%)
economic development of the country. More connections to the electricity grid. Averaged
than half of the world’s population lives in across all households surveyed, households
rural areas which depend mostly on biomass spent USD 58 per year on fuels and USD 19
for their energy consumption and have no per year on batteries. Of these expenses,
access to modern forms of energy USD 21 went to cooking-related purchases
(Asaduzzaman et al., 2010). The rural and USD 48 went to purchases related to
households mainly depend on biomass fuels, lighting and electricity, (Adkins et al.,
kerosene, electricity, candle and LPG 2012). The fuel consumption pattern in mid
(Liquefied Petroleum Gas) for their primary Himalayan region of Himachal Pradesh
sources of energy supply (Joon and indicated that the major fuels used were
Chandra, 2009). The households surveyed electricity (100%), wood (93.3%), crop
covered heterogeneous population belonging residues (46%), kerosene (22.7%) and LPG
to different income, education and social (93.3%) whereas biogas and, coal were used
groups. There was more availability and in negligible quantities (0.67%), that too, in
utilization of solid biomass fuels as energy specific areas. The study also revealed that
resources in domestic sector as compared to 93.3% of households used fuel wood for
the commercial fuels, Dung cakes, crop cooking and heating and 22.7% of
E 380
households used kerosene for cooking pronounced due to the lack of effective
despite the bulk use of LPG 93.3% and penetration of the alternative energy sources
electricity 100%. The CO2 emission from in the region. Data was collected at three
burning of conventional energy was 396.56 altitudinal range during three seasons by
tonnes per year. It has been observed that randomly selecting 120 households of
people were not aware of the use of different villages. Data was analyzed by
Renewable Energy Technologies (RETs) Friedman Test. It is observed that variation
which could reduce the burden on in fuelwood consumption exist at different
conventional fuels as well as reduces the altitudes in the hilly watershed. The major
GHG emissions (Sood et al., 2014). Biomass use of fuel wood in the entire watershed is
is one of the prominent energy sources in domestic cooking. The total annual
rural India and constitutes 75% of the total consumption of fodder was highest (7946.05
energy consumption. In the tough mountain kg) in high altitude and lowest (6077.25 kg)
terrain, the consumption pattern depends on in the lower altitude villages. A study has
the availability of the resources as well as been carried out to identify the fuel
socio-economic conditions of the people. consumption pattern in rural areas of the
The study was conducted at Fakot micro- watershed on pilot basis. The study reveals
watershed in Garhwal district of that the present level of use of fuelwood by
Uttarakhand, India. The paper explored the households (95.2%) is continuing despite the
variations in fuelwood consumption pattern fact that other fuels like kerosene, LPG are
in the watershed level at different altitudes also being used. (Dhanai et al., 2014)
with respect to family size. The fuelwood
consumption in the watershed is in the range This literature survey presents the studies
of 455–2388 gm/person/day. Absence of which have been done in the area of energy
serial autocorrelation in the seasonal fuel demand rural and urban areas in India and
consumption data is observed. Season different countries. The studies have covered
specific models for fuel consumption are energy consumption (in physical units and
proposed. (Khuman, Pandey, and Rao, monetary units). Consumption of different
2011). In Takoligad watershed, Tehri energy sources, effect of income on the
Garhwal, Uttarakhand, the issue of seasonal energy consumption, energy ladder
fuel and fodder consumption are more hypothesis, energy accessibility and
E 381
dependence on biomass and other traditional Singh Nagar, and Bageshwar fall in the
energy sources such as dung cake, kerosene Kumaon region.
etc. Various studies have discussed about
scope of renewable energy technology The Rural area selected for the survey was
intervention for improving energy access. 12 Districts in Uttarakhand.
But the questions have not been answered
about Uttarakhand‘s scenario about energy Tehri District: 17 Villages were
consumption in urban and rural areas. visited in Tehri district. These were
Therefore, this paper has made an attempt to Mulyagaoun, Kurn, Sour,
develop understanding on energy Bhallegaon, Singhtaali, Khemara,
consumption pattern in rural households in Pali, Shekalpur, Jakhanyali, Arakot,
Uttarakhand and has developed a research Udharh, Padagali, Savli , Todi,
design to achieve the objectives. Chapriyal, Khadi , Gaajna,
Bhauniyaar .
Data sources and methods Chamoli District: 15 Villages were
Description of the data source visited in Chamoli district. These
Uttarakhand has two Divisions, Garhwal and were Mana, Marwari, Bhariwari,
Kumaon, with 13 Districts, which can be Gawad, Deval Dhar, Khalla,
grouped into three distinct geographical Nindesand, Nauti, Mandal, Virahi ,
regions – the High mountain region, the Batola , Kathoor, Shiroli,
Mid-mountain region and the Terai region. Dongrikandri , Bhimtaal ,
The 13 districts are Almora, Bageshwar, Rudraprayag District:. 5 Villages
Chamoli, Champawat, Dehradun, Haridwar, were visited in Rudraprayag district.
Nainital, Pauri, Pithoragarh, Rudraprayag, These were Nagrasu, Mawana, Guar,
Tehri Garhwal, Udham Singh Nagar and Bauntha , Buda.
Uttarkashi. Among the 13 districts, Almora District:. 10 Villages were
Dehradun, Uttarkashi, Pauri, Tehri, visited in Almora district. These
Chamoli, Rudraprayag and Haridwar fall in were Chauna, Bhagtola, Matela,
the Garhwal region, while Nainital, Syalidhar, Dadin khola, Quareli,
Pithoragarh, Champawat, Almora, Udham Kathpohiya, Railakot Padula,
Gulakot, Papoli.
E 382
Nainital District: 11 Villages were Haridwar District: 7 Villages were

visited in Nainital district. These visited in Haridwar district. These
were Talla Ramgarh, Alchana, were Dogiwala, Jagjeetpur,
Chanfi, Panday Gaoun, Chopra , Dob Ibrahimpur, Ganeshpur, Manakhari,
luasal , Nagari, Vinayak, Bohrakot , Rohtakgarh, Amanatgarh.
Nathuwakhan. Pauri Garhwal District: 14 Village
Bageshwar District: 9 Villages were were visited in Pauri Garhwal
visited in Bageshwar districts. These districts. These were Phullersen,
were Soupi, Kalhara, Pagna, Kwerali Lingwana, Donakhal, Seela malla,
, Syuni , Kathpuriya, Bilona , Sisaldi, Lokmanipur, Ramdaylpur,
Kathpudiachina , Nadigoaun . Raisera, Dhontiyal, Sakunda,
Udham Singh Nagar District: 10 Simalchod , Sanjsona, Sendhikhol ,
Villages were visited in Udham Surmadi malli,
Singh Nagar district. Alak Devi, Uttarkashi District: 19 Villages were
Bakhpur, Ganhat, Bhatbhaj Heera, visited in Uttarkashi districts. These
Jhankot, Narayanpur, Prem Nagar, were Pijoli Kumola, Puani, Kuan,
Rani Nagar, Barkheri , Haripura. Damta, Sakhri, Sirga, Phitachi,
Dehradun District: 14 Villages were Dargal Gaoun, Lewari, Dhara,
visited in Dehradun district. These Pagtlani, Matyali Gaoun, Doni,
were Pondha, Amawala, Badripur, Osala, Kotha, Tunalka, Sour, Jakhol,
Adhoiwala, Navada, Dunga, Surkudi, Chwri.
Kholupani, Bidholi, Fajabaad,
Malhan, Kotha Korra, Sayya. Table 1: Population, total area & Density of
Pithoragarh District: 14 Villages various districts of Rural Uttarakhand for
were visited in Pithoragarh districts. Sample survey
These were Balla, Bardhola, Code Districts Population Area Densi
Mayarbola, Kanthi, Dhari, Dhamoda, (As of (Km2) ty/K

2011) m2
Jainti, Munakkot, Dor, Guyaradevi,
AL Almora 621972 3083 202
Fulidore, Darti, Dorkot, Suring,
BA Bageshwar 259840 2302 113
Birthi, Sirmoli. CL Chamoli 391114 8032 51
CP Champawat 259315 1781 146
E 383
DD Dehradun 1695860 3088 550 Sampling Procedure: The key

HA Haridwar 1927029 2360 817 features of the sampling procedure are
NA Naintal 955128 3860 247
stated below
PG Pauri 686572 5399 127
Sampling Area: The villages of
Garhwal
PI Pithoragarh 485993 7100 68 Uttarakhand are sample
RP Rudrapraya 236857 1890 125 villages.
g Sampling Size: The total
TG Tehri 616409 4080 151
sampling size 145 Village.
US Udham 1648367 2908 567
Tehri (17), Chamoli (15),
singh Nagar
Rudraprayag (5), Almora (10),
UT Uttarkashi 329686 8016 41
Nainital (11), Bageshwar (9),
Sampling methodology and data collection Udham Singh Nagar (10),
The household study was conducted during Pithorgarh (14), Dehardun (14),
March 2012 to December 2013. A total of Haridwar (7), Uttarkashi (19),
145 Villages were visited, about 2800 Pauri Garhwal (14).
households and about 12668 people were Data Processing and Analysis:
surveyed in Uttarakhand. A detailed SPSS® statistical package (Window
questionnaire was prepared to collect basic Version 16.0) MS-Excel was used for
data about the number of members in each data analysis. The study uses
household, total income of the household, descriptive statistics like bar diagrams
monthly expenditure on energy sources, etc. wherever a simple descriptive data are
Source: The primary sources of data being sought.
for the study of energy consumption Statistical Tools Techniques: Bar
pattern in rural Uttarakhand. diagrams, Column diagrams,
Date Collection Instrument: Schedule Correlation & Regression analysis,
Questionnaire. energy ladder have been used. Also
Data Collection Method: Direct for the analysis purpose in order to
interview Method: Questionnaires bring all energy sources in same units
were handed over to the respondents the following Conversion factors have
and they were asked to fill the been used.
questionnaire.
E 384
Table 2: Conversion Factors Table 3: Total hours spent in a month for

Specific Equivalent collection of biomass by rural households
Energy Units value in kcal
Hours spent
1 kWh 860 kcal
in Collection
1 Kg Kerosene 11,110 kcal
District of biomass
1 Kg LPG 12,500 kcal
Rudraprayag 44
1 Kg Wood 3500 kcal (dry
Chamoli 66
state)
Bageshwar 496
1 Kg Cow 3700 kcal (dry
Dung state) Udham Singh
(Source: Rajasthan Renewable Energy Nagar 482
Corporation Limited) Almora 358
Nainital 307
Results and discussion Pithoragarh 682
The main sources of energy in Uttarakhand Pauri Garhwal 447
are fuel wood, kerosene, electricity, LPG Dehradun 253
and non- conventional energy system like, Tehri 611
solar and wind energy devices, bio-gas etc. Haridwar 287
In this paper we have mainly considered the Uttarkashi 385
consumption of four energy sources by
households belonging to rural Uttarakhand
Monthly Hours spent in Collection of biomass
namely fuel wood, kerosene, LPG and 800
700
electricity.
600
500
400
Sources of Energy 300
200 Monthly Hours spent
In our paper biomass implies fuelwood only. 100 in Collection of
0 biomass
Dung is not included as part of biomass.
Dehradun
Haridwar
Bageshwar
Pithoragarh
Tehri
Rudraprayag
Udham Singh Nagar
Puri Garhwal
Almora
Chamoli
Uttarkashi
Nainital
Figure 1: Total hours spent in a month for

collection of biomass by rural households
E 385
Table 3 and Figure 1 depict total hours spent Household Energy Consumption Pattern
in a month for collection of biomass by rural The study found that in a month 265.52
households. kWh electricity, 1.39 liters kerosene, 316.50
kg Wood, 0.55 LPG cylinders, and 1.13 kg
Mostly biomass is not purchased by the dung were used per household across 12
household for daily consumption. Men and districts in rural Uttarakhand.
women both collect fuel wood and crop
residues. The villagers have to travel for an Table 4: Monthly consumption of energy
average 3 km and spend around 4-5 hours to sources per sample household (Units)
collect fuel wood. Cow
Electricity Kerosene Wood LPG dung
District (kWh) (Litres) (Kg) (Cy) (Kg)
Kerosene and LPG were directly bought
Rudraprayag 241.48 3.16 48.60 0.81 1.89
from the markets by the households. The
Chamoli 206.22 2.46 57.27 0.85 3.14
households in rural Uttarakhand mainly Bageshwar 61.64 1.47 315.13 0.46 1.30
have grid connected electricity connections. Udham
Around 96 per cent of the rural villages in Singh Nagar 145.36 0.76 153.09 0.29 2.04
Almora 206.59 0.91 371.19 0.53 2.24
Uttarakhand are provided with electricity by
Nainital 292.49 0.98 312.28 0.64 0.52
Uttarakhand Power Corporation Ltd.
Pithoragarh 174.12 1.75 277.95 0.62 0.96
UREDA, Micro-Hydel and Kuteer Jyoti Pauri
connections are also prevalent but in less so Garhwal 217.61 1.80 232.85 0.60 0.38
in villages. ( Dehradun 659.82 0.92 468.46 0.59 0.08
https://energypedia.info/wiki/Energy_Situati Tehri 284.05 1.13 408.40 0.67 1.05

Haridwar 403.33 0.97 543.48 0.37 0.43
on_Uttarakhand,_India#Rural_Electrificatio
Uttarkashi 86.04 1.37 475.59 0.10 0.05
n)
Total 265.52 1.39 316.50 0.55 1.13
Also, it was found out during the survey that
most of the energy sources (Kerosene, LPG
In order to know the consumption of energy
and Fuel wood) are used for the purpose of
sources both commercial and non-
cooking by most of the households.
commercial energy sources by households
belonging to different income groups, the
households across various districts in this
study have been divided into three income
E 386
groups 0-2000, 2000-200000 and 200001 Therefore, further analysis has been done by
and above. These income groups are termed considering the conversion factor of each
as Lower Income Group (LIG), Middle energy sources and hence measuring energy
Income Group (MIG) and Higher Income consumption in Kilo Calories (Kcal). Tables
Group (HIG) in our study respectively. 5, 6, 7 & figures 2, 3, 4 respectively are
Since, comparing energy consumption with depicting district wise energy consumption
their specific measurement units was not per households per month in LIG, MIG and
sufficient to reach to the conclusion. HIG economic groups respectively.
Table 5: District wise energy consumption per household per month in LIG
Category In Kcal per household per month
Electricity Kerosene Wood LPG Dung
Rudraprayag 1510.9 1296.2 4491.7 4083.3 394.7
Chamoli 383.6 224 1606 1129 107.4
Bageshwar 467.2 152 13064.2 368.4 338.8
USN 416.4 61.3 7103.8 362.1 97
Almora 795.1 61.3 7103.8 673.1 284.6
Nainital 494.6 170.9 19797.4 423.4 194
Pithoragarh 299.9 71.7 8769.8 473 15
Pauri
Garhwal 708.6 127.6 7957.8 795.5 0
Dehradun 1518.6 214.6 11359.1 546.9 0
Tehri 463 277.8 56787.5 568.2 1
Haridwar 1254.8 86.6 7545.5 239.7 0.5
Uttarkashi 139.2 160.4 18773.7 180.4 0
E 387
100% 2 4 1 3 1
3 5 5 8
8
90%
80% 35 33
70%
60%
83 83 Category
50% 91 88 80 94 91 83 98 98 Dung
38 Category
40% 47 LPG
30% Category
Wood
20% 11 Category
6
2
1 Kerosene
10% 1 1 Category
13 11 1
9 11 14
3
1
5 21 31 7 Electricity
0% 10 11
Figure 2: District wise percentage share of energy consumption per household per month in LIG
Table 6: District wise energy consumption per household per month in MIG
Category Energy Consumption per household per month by MIG (in Kcal)
Rudraprayag 2167.1 975.5 4865.9 2987.8 117.3
Chamoli 551.1 205.7 1420.7 1037 74
Bageshwar 1407.9 614 22096.1 3223.7 2453.7
Udham Singh 990.8 144.3 8900.1 1136.4 9.6
Nagar
Almora 735.4 61.2 11119.7 963.3 0
Nainital 938.2 74.7 7364.7 1029.4 68.4
Pithoragarh 770.5 196.7 7900.5 1276 0
Pauri Garhwal 679.9 116.4 799 1000 0
Dehradun 7147.8 199.4 96869.2 2243.6 0
Tehri 1171.7 87.7 17008.8 1074.6 84.4
Haridwar 1219.9 713.6 15279.9 510.9 0
Uttarkashi 535.6 137.4 18012.4 0 0
E 388
100%
90%
80%
70%
60%
91 86 96
50% 44 80 86 78 78 88 Middle kcal per hh Dung
43 74 31
40% Middle kcal per hh LPG
30% Middle kcal per hh Wood
20% Middle kcal per hh Ker
10%
Middle kcal per hh Elec
0%
Figure 3: District wise percentage share of energy consumption per household per month in MIG
Table 7: District wise energy consumption per household per month in HIG
Category Energy Consumption per household per month by HIG (in Kcal)
Rudraprayag 4071.2 783.9 8380.6 9722.2 125.4

Chamoli 1859.4 555.5 7000 3602.9 331.9
Bageshwar 5251.3 426.9 49368.4 6447.4 0
Udham Singh Nagar 5046 985.1 31336.7 9333.3 0
Almora 299.8 525.6 35417.3 5384.6 0
Nainital 3336 206.3 16191.7 3333.3 0
Pithoragarh 2032.6 459 18826.3 4144.7 457.6
Pauri Garhwal 3627 1168.1 12620 4000 0
Dehradun 19858 0 101150 17500 0
Tehri 3047.9 173.8 25164.1 3589.7 0
Haridwar 12777.1 11.1 12250 8312.5 0
Uttarkashi 11216 1222.1 87500 8750 0
E 389
100%
90%
80%
Higher kcal per hh Dung
70%
60% Higher kcal per hh LPG
37
50% 80 70 59 73 79 81 81
52 67 85 73 Higher kcal per hh Wood
40% 36
30% Higher kcal per hh
20% Kerosene
10% Higher kcal per hh
Electricity
0%
Figure 4: District wise percentage share of energy consumption per household per month in HIG
When we compare the consumption pattern the cost of commercial sources (see Table
of different energy sources in the given 8). Therefore, Uttarakhand is not the case of
economic groups, the consumption of fuel energy poverty rather it is a case of poor
wood is quite dominant irrespective of any energy access. It means that such
economic group, location or geographical dependence on fuel wood of rural people in
area. When we consider the monthly income Uttarakhand in not because of lack of paying
of the sampled households, it is evident that capacity but it is more because of poor
on an average every rural people can bear accessibility.
Table 8 : District wise monthly income per household (in Rs.)

District No. of Monthly income Monthly Income per Annual income Annual
households household Income per
household
Rudraprayag 88 1010500 11482.95 12126000 137795.45
Chamoli 294 2203200 7493.88 26438400 89926.53
Bageshwar 152 998750 6570.72 11985000 78848.68
Udham Singh 236 1519570 6438.85 18234840
Nagar 77266.27
E 390
Almora 214 2272800 10620.56 27273600 127446.73

Nainital 289 2883048 9975.94 34596576 119711.34
Pithoragarh 282 2210380 7838.22 26524560 94058.72
Pauri Garhwal 240 2304983 9604.09 27659796 115249.15
Dehradun 305 3846800 12612.46 46161600 151349.51
Tehri 305 2517000 8252.45 30204000 99029.51
Haridwar 230 1825800 7938.26 21909600 95259.13
Uttarkashi 204 1193400 5850 14320800 70200.00
the cost of gas cylinder to them is between
Although, agriculture is the major 800-850 per cylinder. The schools of
profession/livelihood of the people in rural Uttarakhand are also facing the same
areas, but still they do not use agricultural problem for their Mid-Day Meal scheme.
residue for the domestic purposes. They
burn the residue in the field itself which acts As far as a price of electricity is concerned,
as fertilizer and pesticides for the field. By people do not use electricity also due to
interview with village leaders, it is observed unreliable electricity bills. In most of the
that most of the villages have got van cases they use electricity for lighting
panchayat or the forest area for their own purposes. Similarly, few villagers also
consumption. They go for wood collection purchase wood on commercial basis.
to the forests in the nearby areas. On an Interestingly, as we move up the hills, the
average every household spent 4-5 hours for dependence on fuel wood intensifies more.
wood collection. This is because of the fact that in spite of
abundance of chir pine in the hilly villages
During the interaction, people shared that they don’t use chir pine for their domestic
they are dependent on fuel wood due to purposes, they collect both chir pine and
unavailability of commercial sources on wood. They use chir pine for their cattle and
time and also there is a lack of continuity in wood separately for their domestic purposes.
the energy supplies. They also shared that After enquiring with the scientists it is found
due to distance involved between the gas out that use of chir pine in the household for
agency and households, they have to spend cooking purposes etc. is not safe as it
almost the same amount for the contains Sulphur in a very small proportions
transportation of gas cylinder. Due to which which is harmful for human being.
E 391
with respect to different economic groups.

Defining energy consumption pattern in The consumption of electricity and LPG
terms of energy ladder hypothesis (sophisticated energy sources) of HIG
Energy ladder hypothesis describes the economic group is the highest (40 and 46
movement of energy consumption from per cent) among all the other economic
conservative sources to more refined sources groups and the consumption of wood and
along an imaginative ladder with the kerosene (traditional energy sources) of HIG
progress in the economic (income) status of is minimum while for MIG and LIG is
households (Rajmohan and Weerahewa, maximum. It means that share of HIG in
2007). Also, Pachauri (2004) states that total consumption of electricity by
households with higher income level households is maximum in the sampled
consume more commercial energy than households.
households with lower income level.
Though the dependence on wood has been
Electricity
50
recorded across all economic groups and as 40 38
40
mentioned above there are particular reasons 30 22
for such dependence but when we study the 20 Electricity
10
energy consumption from energy ladder
0
perspective, the results clearly depict the HIG MIG LIG
hypothesis once again in the case of rural Figures 5: Share of electricity source among
Uttarakhand. In this report, consumption of Economic Groups (based on energy
four energy sources electricity, LPG, Wood consumption in Kcal per household)
and Kerosene in terms of Kcal per
households have been plotted to understand
the indicative energy ladder in the state. LPG
50 46
According to energy ladder theory as the
40 33
individual moves up in the economic status,
30
21
he/she also moves from the consumption of 20 Percent
traditional energy sources to modern use of 10
energy sources. Similarly, we can see the 0
HIG MIG LIG
indicative energy ladder of rural household
E 392
Figures 6: Share of LPG source among reduce dependence on traditional energy

Economic Groups (based on energy sources even in HIG along with MIG and
consumption in Kcal per household) LIG economic groups. Reasons for
dependence on wood consumption
irrespective of income of economic groups
Kerosene have been discussed in detail in the previous
50
44 section.
45
40
35 31
30 25 Table 9: Energy Consumption of Economic
25
20
Percent groups (in Kcal per household per month)
15 Economic Energy Consumption
10
group (In Kcal per household
5
0 Category per month)
HIG MIG LIG
Lower Income
Figures 7: Share of Kerosene source among Group 31030.3

Middle Income
Economic Groups (based on energy
Group 29799
consumption in Kcal per household)
Higher Income
Group 131771.4
Wood
If we compare the energy consumption of
50 42
40 economic groups, the consumption of HIG
40
30 is four times more than the consumption of
19
20 Percent
LIG and MIG. Out of which, the HIG and
10
MIG groups are dependent on inefficient
0
HIG MIG LIG energy sources because of the lack of
accessibility of commercial energy sources
Figures 8: Share of Wood source among
and LIG lacks the paying capacity but that's
Economic Groups (based on energy
not absolutely.
consumption in Kcal per household)
The survey also presents that in spite of
Energy Expenditure
dominance of sophisticated energy sources
The average household expenditure for total
in the consumption by HIG there is still a
energy was Rs. 608.7 per month while the
large scope of technology intervention to
E 393
total monthly income of the household was The ratio of the expenditure of Electricity to
Rs. 8731. The households using Electricity total monthly energy expenditure and to the
have to pay Rs. 265.7 per month, followed total money income was 44% and 3%,
by LPG Rs. 257; Wood Rs. 62.7; Kerosene respectively, followed by LPG 42% and 3%,
Rs. 22.9 and Dung Cake Rs. 0.4. respectively, wood 10% and 1%,
respectively, and kerosene 4% and nil,
Table 10: Expenditure for different energies respectively (Table 10). The ratio of the total
in the households and their ratio to the total monthly energy expenditure to the total
expenditure for energy and total monthly monthly income was 6.97%.
income of the households in various districts
of rural Uttarakhand Figures 9-11 depicts the monthly
Energy Expenditure Ratio of Ratio of expenditure on energy consumption by
Type per month expenditure expenditure respective economic groups of rural
(in Rs.) of energy of energy
Uttarakhand. As can be seen from the
type to the type to
households, household
figures, there is not much difference in the
total total money expenditure of HIG and MIG in the
expenditure income (%) state which in turn indicates the dependence
of energy of households on non-commercial energy
(%)
sources in spite of paying capacity,
Electricity 265.7 44 3
willingness and readiness to spend on
Kerosene 22.9 4 0
Wood 62.7 10 1 commercial or modern energy sources.
LPG 257 42 3
Dung Cake 0.4 0 0
E 394
600 547
458 564
400 365412366
293 333341 382
200 185
147
0
Udham singh…
Rudraprayag
Chamoli
Bageshwar
Almora
Nainital
Pithoragarh
Puri Garhwal
Dehradun
Tehri
Haridwar
Uttarkashi
Figures 9: Expenditure on energy sources by LIG economic groups of rural Uttarakhand (in Rs.)
2500
2099
2000
1500
1000 600603
494517510727624 839
500 495 646
0 239
Rudraprayag
Chamoli
Bageshwar
Udham Singh magar
Almora
Nainital
Pithoragarh
Puri Garhwal
Dehradun
Tehri
Haridwar
Uttarkashi
Figures 10: Expenditure on energy sources by MIG economic groups of rural Uttarakhand (in
Rs.)
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900 851 856

800 769 766
687 740
700 640 644
633
600 542 562
500
400
300
200
220
100
0
Figures 11: Expenditure on energy sources by MIG economic groups of rural Uttarakhand (in
Rs.)
spends about 60 percent and 70 percent of
Table 11: Coefficient of correlation of their income on energy consumption. This is
Income and expenditure on Energy due to lack of fair pricing policies for
LIG MIG HIG commercial energy sources in the hills of
0.706839 0.606516 0.220237 rural Uttarakhand.
The matrix given above shows the In spite of poor paying capacities, the results
coefficient of income and expenditure on indicate that there is a sufficient awareness
energy which means the paper has made an for Renewable Energy Technology (RET)
attempt to measure the relationship between among the sampled households and in
income and expenditure by different addition to this rural people have willingness
economic groups. It also explains the and readiness for the usage of RET for their
percentage dependence of energy household purposes. It is interesting to note
expenditure by different economic groups that most of the respondents are aware and
on their income. It means that HIG as an are willing to use renewable energy but most
economic group spends about 22 percent of of them are not aware about their energy
their income on energy while MIG and LIG applications.
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Table 12: Interest in participating in Pithoragarh 235 47

producing energy by using Renewable Pauri Garhwal 163 77
Energy Technology: Dehradun 170 135
No or Tehri 204 101
Don’t
Haridwar 156 74
District Yes know
Uttarkashi 58 146
Rudraprayag 73 15
Chamoli 244 50 Total 1990 849
Bageshwar 122 30
Udham Singh The results from this paper can be used in
Nagar 120 116
many ways depending upon the policy
Almora 158 56
objective in mind. For a state like
Nainital 214 75
Pithoragarh 250 32
Uttarakhand having government
Pauri Garhwal 158 82 interventions that effect the price of
Dehradun 203 102 domestic fuels, the impact of such
Tehri 198 107 interventions on demand can be analyzed
Haridwar 159 71
based on own and cross price elasticity of
Uttarkashi 90 114
demand. In case the desired policy objective
Total 1989 850
is towards creating market for sophisticated
energy fuels due to health and
Table 13: Willingness to use Renewable
environmental concerns, this elasticity can
Energy Technology
be used to identify the paying capacity of the
Willingness to
rural people as per their income group,
District use RET
willingness to pay and readiness to pay for
Yes No
such energy sources. In the specific case
Rudraprayag 82 6
where wood remains the main cooking fuel
Chamoli 246 48
for rural population of the state, there are
Bageshwar 123 29
two environmental arguments in favor of
Udham Singh
reducing the fuel wood usage by improving
Nagar 148 88
the accessibility of close substitutes to it so
Almora 176 38
that the rural people can enjoy the benefit of
Nainital 229 60
subsidies. First is that the collection of fuel
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wood leads to deforestation and second is Therefore this paper has proposed a model
that the use of low grade fuel leads to indoor known as Holistic Livelihood Improvement
air pollution. Partnership Program (HLIPP)
Another area of application is the simulation Description of Holistic Livelihood

of energy planning. For policy conception Improvement Partnership Program
and implementation, there is a need for (HLIPP)
policy practices. The results of this paper Based on extensive interviews with village
can help in accurate decision making. It was leaders such as Gram Pradhan, teachers or
also found out that people do not see energy other representatives and the observations
availability as source of income generation made, this paper proposes to implement a
and livelihood opportunity. Most of the model with multifaceted approach. During
respondents have not identified energy the interactions the following observations
availability as source of livelihood. were made:
Therefore, as discussed above, there are few 1. Lack of livelihood opportunities in
key points which need to be highlighted: the rural areas other than agriculture.
1. Heavy dependence on fuel wood. 2. People are heavily dependent on
2. Need to improve the accessibility so biomass for their domestic purposes.
that rural people can enjoy the The people feel the need for such
benefits of subsidies. efforts which can help them to use
3. This will reduce the burden on fuel wood more rationally and
forests and reduce deforestation. efficiently. Also, they don’t have
4. Policy interventions for improving access to improved technologies and
the usage/availability of clean energy their usage.
sources. 3. People also hesitate in using such
5. Connecting the energy availability technologies because of lack of
with livelihood opportunities. proper technical expertise required
6. Involving local people for improving for the operation and maintenance of
energy availability. the technology.
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Figure 9: Holistic Livelihood Improvement Partnership Program (HLIPP)

(Source: designed as part of study based on interview and interactions with village leaders)
Based on these observations this paper for promoters

suggests HLIPP model with four verticals: /entrepreneurs.
A. Identification of energy services c. Support in identifying the
B. Linking various livelihood potential customers in the
opportunities with energy services identified region.
C. Facilitating the financing for such d. Technical assistance
projects during fabrication,
D. Developing skills for removing the commissioning, operation
market barriers and maintenance of the
Identification of Energy Services: identified energy system
a. Analyzing energy needs through Technical and
for domestic as well as managerial training of
for commercial purposes. local people.
b. Identification,
Organization and
sensitization workshops
E 399
Identification of Livelihood opportunities Developing network with the government

a. Identifying various agencies to meet the financing needs for
potential Farming the purpose:
activities and Non- a. Mapping the potential
Farming Activities in the government policies,
rural areas. subsidies, programs,
b. Identification of potential financial institutions.
self-help groups, b. Bridging financial gap for
government agencies to improving livelihood
provide livelihood opportunity initiatives.
opportunities through
farm and non-farm Capacity Building and Extension Services:
activities. a. Initial capacity building
c. Bringing together all the and orientation for project
stakeholders involved for development.
the holistic development b. Technical assistance on
of the population of the fabrication,
region. commissioning, operation
d. Under the proposed and maintenance of
HLIPP social framework proposed hybrid system
the village households through Technical and
will be facilitated to start managerial training of
farm and nonfarm local trainers, managers
activities with the help of and staff.
organizations such as
self-help groups, NGOs Thus, this model proposes the need for
and cooperative integrated efforts for the holistic
federations working in development of the state. It is proposed to
the field of farm and non- integrate the energy services, livelihood
farm activities will be opportunities and the activities which help in
identified. realizing and sustaining such efforts. For
E 400
this purpose, local people has to be taken sources. Largely, it is observed that it is the
into consideration and there is a need to access barriers which are hampering the
develop a framework for implementation. energy demand in the rural Uttarakhand.
During interaction with people at various This paper has suggested HLIPP framework
places in the state, it became evident that to remove the market barriers and has also
local people can be a key resource for the identified biomass or fuel wood as the major
development of the state as they can be part non-market energy sources which has got
of the projects which are based on locally intense penetration in all groups of the
available resources such as hydro power market, irrespective of economic groups,
generation etc. Though, state government region wise energy consumption etc.
policy on hydro power generation in the
state has mentioned about the local people Fuel wood has been a major energy source
participation but doesn’t provide any among the rural people of Uttarakhand.
framework for the involvement of the local Majority of the population is spending 4-5
people. Therefore, the project developed by hours a day for fuel wood collection. It is
Uttarakhand Renewable Energy also important to notice that people are
Development Agency (UREDA) was heavily dependent of forest wood. Because
handed over to local people for operation. they don’t use agriculture residue for
According to the local people, the plant domestic purposes rather it is used in the
worked only for first six months and since field itself as source of manure for
then, the plant is not working and the facility agriculture.
developed is used by the influenced people
of that area as their personal property. The cost of commercial sources is excessive
at the user end because of inefficient
Conclusion: logistics, distance involved and
A shift to sophisticated fuels over the next geographical reasons and therefore people
few decades is apparent and needed. As far are not able to enjoy the benefits of subsidy.
as the understanding of energy demand of As a result, the end user has to pay price
rural Uttarakhand is concerned there is equal to the market price of the energy
sufficient demand in the market, people are product or sometimes even more than the
ready/willing to acquire efficient energy market price. Awareness, willingness and
E 401
readiness to use the Renewable Energy people/ community which will give them
Technology (RET) among rural people of opportunity to have better energy access and
Uttarakhand is quite satisfactory. In addition resultantly better livelihood opportunity.
to this, they are also ready to share their The natural resources such solar and water
resources for RET applications. can become source of income for the
individuals as well as for communities.
After such extensive survey, interaction with There are schemes for promoting power
the stakeholders, visiting energy generation generation in the state such as scheme on
sites at the local level, it can be summarized Grid Interacted Rooftop and Small SPV
that the state government should implement Power Plants in Uttarakhand which enables
the concept of Public community the local people and communities to be part
participation model (Dwivedi & Dwivedi, of nation building activities .Still, there is a
2012) more extensively and in more logical need to develop models for implementation
manner to resolve issue of energy access, and interaction between people/community,
livelihood opportunity and issue of government agencies and other stakeholders
migration up to some extent. to provide self-sustainability to the project
as well as to the livelihood activities.
Acknowledgement
I would like to acknowledge Uttarakhand

Council of Science & Technology for
support to carry out this study of energy
consumption pattern in rural Uttarakhand
Figure 10: Public Community Participation
and this paper is derived from the report
Model
submitted to Uttarakhand Council of
(Source: Dwivedi & Dwivedi, 2012)
Science & Technology.
Finally, it is recommended that studies

should be conducted to leverage the existing
policies and abundant natural resources for
promoting power generation through local
E 402
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Identifying Barriers to Energy Conservation in Indian Telecom

Sector
C S Azad*, Dr. Prasoon Dwivedi**, Dr. Ankur Mittal***
*General Manager of BSNL, Noida

**Prof and Head, Economics Deptt. UPES
***Assistant Prof (SG), CoMES UPES
Abstract demands new strategies, solutions and policy

Energy consumption is a significant making approaches.
ingredient in the telecom networks
Keywords
operation. As increasing number of people
Indian telecom sector, Energy Conservation,
are becoming connected by fixed and mobile
Factor Analysis, Principal Component
telecommunications networks in India, the
Analysis
challenges related to providing electricity to
these expanding networks have become
Introduction
greater. With increasing energy consumption
India is today facing an extremely serious
and rising cost of fossil fuels, the adoption of
and worrisome multi dimensional energy
energy efficient technologies and energy
challenge, of which perhaps there is not
conservation measures is inevitable for
enough realization. One aspect of it is raising
Indian telecom operators. An empirical
import dependence on oil products, which
study covering the stake holders i.e. policy
may rise to over 90 per cent in the near
makers, management of telecom operators
future, threatening to increasingly
and energy managers of telecom companies
compromise our energy security. There is
were undertaken to understand the different
also a great likelihood that this would be
variables which hinder efficient utilization
accompanied with continuously increasing
and conservation of energy in telecom
prices of crude and oil products, which in
sector. Principal Component Analysis (PCA)
turn, would lead to rising burdens of
method of extraction of factors for the
subsidies creating problems of fiscal and
combined data resulted in emergence of 8
budget deficit, with its very serious
factors working as barriers to energy
consequences. It is obvious; therefore, that
conservation in Indian telecom sector.
everything possible must be done to reduce
The outcome of the study has greater policy
demand for electricity and oil products.
implications as sustainable development
Telecom networks in a country need round
the clock power for operation. Growth of
E 405
telecommunication infrastructure requires well beyond the world average of 8 Kg per

more amount of energy to power different subscriber.(TRAI 2011).
telecom equipments. This electricity is Power and fuel costs account for 30-40% of
provided from grid and burning of fossil fuel the operator network cost. The energy
like diesel. . As on 31st July 2015, India has requirement of the telecom industry is
more than 1 billion telephone subscribers out growing at a rapid pace as operators
of which 98.3 crores are mobile subscribers implement newer technologies like 3G and
(TRAI 2015). The demand for telephones 4G, and expand their network coverage in
keeps growing, and it is coming from the rural areas. The area of concern for the
rural and remote areas of the country. telecom operators is to control the energy
As telecom operators focus on sustaining expenditure in spite of frequent rise in power
growth and expansion into these new tariff and diesel price.
markets and areas, they are increasingly In 2011, TRAI released its recommendations
troubled by the inadequacies of the power titled ‘Approach towards Green
grids and risks of unexpected outages, Telecommunications’ to follow an approach
Studies have shown that Indian telecom whereby the telecom industry would adopt
industry consuming substantial amount of the environmentally friendly practices that
diesel and power can save energy by learning would result in sustainable benefits to the
the energy efficient ways. industry, the consumer as well as to the total
Energy conservation is vital for Indian ecosystem. Further, Department of
telecom sector consuming several billion Telecommunications in India issued a
liters of diesel at great cost to the country, to directive on Green Telecommunications
the telecom players themselves and to the with the objective of mitigating carbon
environment. emissions from the telecommunications
Sector. Though there are a number of energy
Indian Telecom Sector Current Energy saving measures like installation of free
Scenario cooling systems, energy efficient telecom
As per various estimates, the telecom sector network equipments ,modifications in DG
use 2 billion liter or more diesel annually in set for operating on bio-diesel , and utilizing
India which results in about 5 million tones renewable energy for telecom towers, the
of CO2 emission.(TRAI 2011)(Greenpeace process of adoption of energy efficient
2011) (Vasudevan et al 2013). As per working in Indian telecom sector has not
telecom regulator, TRAI, the per subscriber gained the desired momentum . The target
carbon emission in India is 21 Kg which is for emission reduction by elimination of
E 406
diesel with hybrid energy (Renewable 1995) (Weber 1997)(Brown, 1990) also
Energy and grid energy) could not be met, analysed this ‘energy-efficiency gap’. They
with less than one percent telecom towers discussed the impact of barriers to energy
working on renewable energy sources. efficiency responsible for ‘energy-efficiency
gap’. Reddy BS (2011) in his work for the
Literature Review United Nations Environmental Programme
In the recent years, many a researchers (UNEP), has categorized the barriers into (i)
around the world are undertaking study to financial-economic, (ii) technical, (iii)
determine ways and means to reduce the awareness and information, (iv)
consumption of conventional energy and institutional-organizational, (v) regulatory,
thereby mitigate its consequential and (vi) personnel and behavioral barriers
environmental impact. The studies are
These barriers depend on sector and regional
undertaken in all sectors of economy like
specific conditions .Ramirez et al., (2005)
Residential sector, Commercial sector,
note that regional and sector specific studies
Industrial sector, Transportation, and
are required to spot these barriers and adopt
Agricultural sector.
effective energy policies
Even though organizations benefits greatly
by conserving energy, various studies Reddy BS (2012) further categorized the
indicate that the recommended conservation various barriers to energy efficiency in to
procedures are often not implemented due to three categories (i) Micro ii) Meso and iii )
certain practical drawbacks, such as: Macro Barriers
Micro barriers are those that occur at the

- Cash flow problems.
lowest level, for example at the design stage
- Pay-back period longer than about two
of a programme or a project. By changing the
years.
features of a project – for example, by
- Resistance to change on the part of
modifying incentives for energy savings,
management and labour.
replacing the technology, increasing the
- Lack of commitment in the top
project size, or creating legitimacy through
management.
consultation – the financial viability and
- Energy cost being a small fraction of
feasibility could be improved.
total cost. ( Cook ,1976)
Meso barriers occur at the intermediate level,
Researchers ( SPRU 2000)(Hirst and
i.e., in the implementation stage. These relate
Andersson 1993)(Jaffe & Stavins 1994)(
to the organizations affiliated with the
Sanstad and Howarth, 1994) ( Velthuijsen,
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project. These barriers can be common to a conservation. In this backdrop, the current
wide variety of projects and can be tackled study primarily aims to probe the various
with efficient organizational design, human technical and nontechnical factors which are
resource, as well as time management. likely to influence the adoption of EC
measures and energy efficient technologies
The macro barriers occur at the highest level:
in telecom sector.
state, market, and civil society. Since these
barriers are not project or organization-
specific, they cannot be altered by changing
To understand the barriers to energy
project or organizational design.
conservation, first variables were identified
Further, Reddy also proposed actors on the basis of literature and further
approach in energy efficiency. In the EE exploratory interviews were carried out with
system, there are many actors and if the EE major stake holders to determine their
programmes are to be widely accepted, all applicability in the context of Indian telecom
these parties should work together. Each sector. The stake holders include officers of
actor has relations to other actors. The actor regulating agency TRAI, administering
experiences constraints and stimuli; has department DoT, NGOs, managers of
abilities and weaknesses; and holds rights, telecom service providers tower companies
responsibilities and obligations. All these and academicians.
lead to series of decisions. Technical The thirty one barrier variables were
solutions are not likely to succeed unless identified through exploratory interviews,
there is an interface between various actors group discussions are given as below:-
in the field of EE.
1. Lack of regulations for energy efficiency
The EE process can be completed only by in telecom sector
cooperation, by a common achievement. If 2. Non enforcement of hybrid energy and
the government wants to promote EE, it carbon disclosure directive by
needs to see how the whole system can be Government and regulator
modified which can lead to more EE- 3. Lack of customer awareness
directed decisions. 4. Lack of pressure from NGOs and public
Thus, it may be observed that many 5. Wrong examples set by public sector
researchers around the world agree that non- telecom service providers
technology factors are as important as
technological factors in improving energy
efficiency and enhancing energy
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6. Government does not support with 19. Lack of information and reporting about
financial incentives for energy energy use by telecom operators
conservation 20. Hiding of information by operators
7. Organization is lacking in policies regarding use of diesel due to risk of
procedures and systems for energy Exposing the use of subsidized diesel
management 21. Lack of customer preference for
8. Lack of information about energy sustainability
conservation and energy efficiency 22. Confusion that telecommunications
opportunities being a service industry do not need
9. Energy efficiency benefits cannot be energy conservation
quantified 23. Lack of energy audit methodology of
10. Priorities of service providers on telecom installations
expansion of telecom services in new 24. Lack of benchmarks for energy
areas consumption in telecom sector
11. Non availability of energy conservation 25. Inadequate financial and technical
targets information about fuel switching options
12. No incentive /penalty for 26. High CAPEX of energy efficient and
meeting/skipping the targets fuel switching technologies
13. Non importance/less priority of energy 27. Lax attitude of regulator and
management in the organization Government towards energy
14. Non importance of energy as a function consumption of telecom sector.
of service /production 28. Lack of skilled manpower and training
15. Management perception that in telecom 29. Poor quality and lack of standards of
services ,energy efficiency is less energy efficient products
important 30. Problems in maintenance and
16. Less awareness in the organization about availability of spares of energy efficient
importance of energy conservation equipments
17. Less awareness about linkage between 31. The workers in the organization are not
energy consumption and carbon accountable for energy cost
emission in the organization A structured questionnaire was designed
18. Lack of awareness about telecom sector based on identification of above thirty one
specific technical measures for energy barrier variables. This Questionnaire was
conservation designed on 5 point likert scale.
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The reliability of questionnaire was verified few manageable factors. These factors
(Chronbach Alpha) on the responds that was explain most part of the variations of the
received from a pilot study. Method of original set of data. FA helps in identifying
stratified proportional sampling has been the underlying structure of the data. As the
used for collecting the primary data. The variables in this study are standardized and
sample size of 205 has been taken highly correlated, FA was justifiably applied
proportionately distributed across different to extract the major factors. Significance of
players in the ratio of the total number of correlation matrix is established using
stakeholders approx. 800. The received Bartlett’s test of sphericity. As there are 31
responses have been analyzed by factor variables and sample size 205 is more than
analysis through SPSS 16 software. five times, the statistical requirement is
satisfied. Kaiser Meyer Olkin (KMO)
Factor Analysis
statistic compares the magnitude of observed
This is one of the popular multivariate correlation coefficients with the magnitude
technique widely used by the researchers. It of partial correlation coefficient. A small
is a statistical technique to determine the value of KMO shows that correlation
underlying factors or forces among large between variables cannot be explained by
number of independent variables or other variables. The Bartlett’s test of
measures. It is a method to extract the sphericity takes the determinant of the
common factor variance from a set of correlation matrix into consideration. The
observations. A variable is anything that test converts it into a Chi-Square statistic
changes its value and a factor is a linear with degrees of freedom = (k (k-1))/2, where
combination of variables. Factor is a k is the number of variables on which FA is
construct that is not directly observable but applied. The Kaiser-Meyer-Olkin (KMO)
that needs to be inferred from the input statistic was used to evaluate whether the
variables. Factors are statistically sample size used for study was adequate so
independent. as to ensure the precision of factor analysis.
The value of KMO statistic greater than 0.6
FA is a useful tool to reduce large number of (should be > 0.50), is considered to be
variables resulting in data complexity to a adequate.
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Table 1 KMO and Bartlett’s Test result

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.603
Bartlett's Test of Sphericity Approx. Chi-Square 7.050E3
Df 465
Sig. .000
The Bartlett’s Test of Sphericity relates to Extraction of Factor

First step undertaken was to decide how
the significance of the study and thereby
many factors are to be extracted from the
shows the validity and suitability of the
given set of data. According to The Kaiser
responses collected to the problem being
criterion, first, we can retain only factors
addressed through the study. For Factor
with Eigen values greater than 1. In essence
Analysis to be recommended suitable, the
this is like saying that, unless a factor
Bartlett’s Test of Sphericity must be less
extracts at least as much as the equivalent of
than 0.05.
one original variable, we drop it. This
For our questionnaire we got KMO value for criterion was proposed by Kaiser (1960), and
combined response at 0.603 and Bartlett’s is probably the one most widely used.
test significance at 0.00 level, the factor
Result & Discussions
analysis was successfully applied.
The Principle Component Analysis method
was used to analyze these 31 parameters. In
this Principle Component Analysis, Eigen
Value Method and Scree Plot Method were
used to determine and justify the factor
E 411
By the application of factor analysis, components explain the 78.505% variance

31identified variables were reduced to 8 loading.
major factors which act as the barriers Table 3 below gives the values of factor
affecting the energy conservation measures loading, mean variable score, average factor
in Indian telecom sector. Figure 1 shows the score (which is the average score of all the
scree chart for Eigen value for all 31 variables included in the factor) and lastly
variables. Table 2 shows the total variance the factor names.
for all 205 respondents. The eight identified
Table 2 Total Variance explained for all 205 respondents

Comp Initial Eigen Value Extracted Sum of Loadings Rotation Sums of Squared
onent Loadings
Total % Cumulati Total % Cumula Total % Cumulati

Variance ve Variance tive Variance ve
% % %
1. 7.324 23.625 23.625 7.324 23.625 23.625 5.334 17.205 17.205
2. 3.554 11.466 35.091 3.554 11.466 35.091 3.317 10.700 27.905
3. 3.446 11.115 46.206 3.446 11.115 46.206 3.315 10.693 38.599
4. 2.922 9.425 55.631 2.922 9.425 55.631 3.261 10.518 49.117
5. 2.461 7.940 63.571 2.461 7.940 63.571 3.252 10.490 59.607
6. 2.161 6.971 70.542 2.161 6.971 70.542 2.657 8.569 68.176
7. 1.361 4.391 74.933 1.361 4.391 74.933 1.732 5.588 73.764
8. 1.108 3.753 78.505 1.108 3.753 78.505 1.470 4.742 78.505
E 412
Table 3 Barriers to energy conservation in Indian telecom sector and variables loaded into those
Barriers
E 413
E 414
Table 4: Rank wise Factors (Barriers) to energy conservation in Indian telecom sector
Factor Ranking Mean Factor Score Factor name
1. Lack of Benchmarks / Targets and Reporting

Barriers
4.20
2. Bounded Rationality Barriers
4.1875
3. Regulatory and Organisational Policy Barriers
4.16
4. 4.1575 Precedence and Lack of financial incentives

Barriers
5. Technical Barriers
4.11
6. Customer Awareness Barriers
4.08
7. Availability of subsidized diesel Barriers
3.348
8. Lack of Standards of Energy Efficient Products

Barriers
2.80
Recommendation conservation in Indian telecom sector have

The various actors in the field of energy been illustrated in figure
E 415
i) Department of
Telecommuntications(DoT)
ii) Telecom Regulatory
Authority of India (TRAI)
iii) Ministry of New &
Renewable Energy (MNRE)
Macro Level
i) Telecom Operations
Asscociations (COAI etc.)
ii) Renewable Energy Service
Actors in the field of Energy Companies(RESCOs)
Meso Level
Conservation in Telecom Sector in India iii) Financing Insistitutions and
Banks
iv) Energy efficiet telecom
Equipments Manufacurers
Micro Level
i) Telecom companies
ii) Telecom infransturcture
Providers
iii) Non Governmental
Organisations (NGOs)
.
Figure 2: Actors in Energy Conservation in Indian Telecom Sector
Table 5: Recommendations to address barriers to energy conservation in Indian telecom sector
S. No. Barriers Solutions

1. Policy
 Regulatory and  Inclusion of telecommunication industry
Organizational Policy under the purview of Energy Conservation
Barriers Act
 Lack of Benchmarks /  Transparent and effective implementation
Targets and Reporting of “Green Telecom” directive of DoT
Barriers  Setting of benchmarks for energy
 Lack of Standards of consumption and targets for reduction
Energy Efficient Products  Reporting framework for energy
Barriers consumption and carbon emission of the
 Availability of subsidized industry
diesel  Setting of standards for energy efficient
telecom network components on the line of
star rating of Bureau of Energy Efficiency.
 To formulate policies to motivate the
industry to switch over to cleaner fuel
from subsidized diesel.
2. Knowledge information  Establishment of exclusive knowledge
 Bounded Rationality Barriers management centre
 Customer Awareness Barriers  Documentation and sharing of
experiences
 Training and information sharing
 Comparative studies
 Sponsoring research and development
activities
 Inter and intra regional research
E 416
 Mapping of gaps and strengths

 Involvement of NGOs and media for in
awareness to customers
 Highlighting the companies for
reduction in diesel consumption
3. Management and financing barriers  Development of energy audit
 Precedence and Lack of methodology for telecom installations
financial incentives Barriers especially the telecom towers
 Technical Barriers  Ensuring finance for energy efficiency
from financial institutions
 Subsidy and technical assistance from
ministry of non conventional and
renewable energy sources (MNRE) for
fuel switching
 Inclusion of telecommunication
industry as a separate category for
National Energy Conservation Award
The measures to address the identified Recycling ,267-281

4. Howarth, R. & Anderson , B. (1993),
barriers have been summarized in Table 5.
Market barriers to energy efficiency .
Energy Economics, 262-267
Conclusion
The Indian telecom service industry is 5. Jaffe, A.B.& Stavins, R . N. (1994). The
energy efficiency gap : What does it mean .
working on an unsustainable business
Energy Policy ,804
model; the industry is dependent on fossil
6. Mane D Suresh & Najesha N (2014)
fuel for the operation of telecom network. In .Analysis of factors for enhancing energy
a country where 70% of oil requirement is conservation in Indian railway worksops –
met by the import, the annual diesel a case study .International Journal of
Research in Engineering and Technology.
consumption of telecom industry is a cause
eISSN: 2319-1163
of concern. It is high time for all the actors
7. Ramirez, C.A., Patel, M., Blok, K., 2005.
of the energy conservation in Indian telecom The non-energy intensive manufacturing
sector to work in tandem to adapt a road sector. An energy analysis relating to the
map to a low carbon growth. Netherlands. Energy 30 (5), 749-767.
8. Reddy, B. Sudhakara , Gaudenz B Assenza ,
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(2009).Energy Efficiency and Climate
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Sustainable Future.Sage Publications Delhi
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W.H. Freeman and Co., USA.
Barriers to and Driving Forces for Energy
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, 1836-1844. 23.aspx
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Mumbai 15. Velthuijsen, J. (1995).Determinants of
12. SPRU(2000). Reducing barriers to energy investments in energy conservation .
efficiency in public and private Doctoral thesis. Grningen, Rijksuniversity.
organization. Brighton , UK : SPRU 16. VenuGopal & Chattaraj M (2012).Enabling
13. Telecom Regulatory Authority of India. clean talking .Greenpeace India
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towards Green Telecommunications. barriers to the efficient use of energy.
Retrieved from Energy Policy, 833-83
E 418
Improving Power Transmission Capability for better Energy Security
Gaurav Singh Chauhan* Dr. V.P. Singh**

*Senior Research Associate, Great Lakes Institute of Management
**Program Director- PGPM (Energy), Great Lakes Institute of Management
Abstract demand in India grew at a CAGR of 6.3% during

The purpose of this paper is to set the tone for the period 2010-2015 and stood at 1048.7 TWh in
contemplating & reviewing possible solutions for 2015 with 8.4% growth rate w.r.t. the previous
ailing electricity sector, especially when it comes fiscal year. If we look at the split of sources of
to energy security & role of transmission in the power generation it was 69.5% from Thermal
same. Given the complexity & dynamics of power, 15.3 % from Hydro, 13.1% from
electricity sector, the subject of transmission Renewable Energy sources & 2.1 % from Nuclear
cannot be studied in isolation; So to address the Energy. Total installed capacity is 272 GW
subject matter this paper seeks to build a holistic whereas the peak demand is 148 GW. Why do we
perspective of electricity sector in context of the need to have 272 GW capacity to deliver peak
Indian economy going forward to the year 2022, demand of 148 GW? One of the reasons for this
an important benchmark in current times, given much of excess power generating capacity over
the recent policy directives set forward by the peak load demand is the inadequacy of power
current regime & the Industry dynamics. There transmission infrastructure. Prior to 1998,
are three impending issues raised in this report, transmission network was being planned &
however the area of focus is Congestion & Open developed by respective SEBs of the states,
Access. Other challenges and their mitigation- whereas introduction of Electricity Act 2003
measures would be a part of further studies. brought with itself the Tariff Based Competitive
Bidding (TBCB) that opened further development
Keywords of the sector. So the transmission planning on
Energy Security in India, Power Transmission, central level started much later and still needs a
Transmission Capacity, Transfer Capability comprehensive approach at both state & Central
(TTC/ATC) and Transmission Constraints level. Electricity flow is a complex phenomenon
due to which assessing right kind of Transmission
Introduction Capacity requires quite a thorough analysis. The
India has surpassed China as the fastest growing concepts like Total Transmission Capacity and
economy. The country wishes to grow even faster, Total Transfer Capability (TTC), Available
recording 8 to 9% GDP growth. Given such Transfer Capability (ATC) and Transmission
ambitions, the country needs to utilize all possible Reliability Margin (TRM) need to be understood
sources of energy in efficient manner. Electricity better so that adequate transmission capacity can
E 419
be created for achieving better energy security. ATC/TTC can be calculated more
accurately
Figure 1: Demand growth of Electricity &
Present Energy Mix in year 2015 Research Methodology
This paper is largely exploratory & descriptive in
Elecricity produced in TWh
nature & has been developed using secondary
1200
1000 research that includes using information available
1048.7
800 967.2 on Government websites like CEA, CERC,
876.9 912.1
771.6 811.1
600 POSOCO etc. & other texts available in news
400 articles and industry-journals. The paper begins
200
with assessing realistic power demand for
0
FY10 FY11 FY12 FY13 FY14 FY15 electricity in the year 2015 & going forward till
Elecricity produced in TWh
2022, assessing the probable demand-supply gap
Source : BP Statistial Review, Tech sci Researh
& how the gap can be plugged. The study hence
MW graduated to the need of addressing the enhanced
200 Transmission capacity/transfer capacity to
189.3
150 provide energy security till year 2022. This
implicated the necessity to understand the
100
complex issue of Open Access & Congestion in
50 detail & how Available Transfer capability can be
41.6 35.8 5.8 increased.
0
Thermal Hydro Renewables Nuclear
MW
Source : Ministry of Coal, NHPC, CEA Literature Review
As per Makwana, Joshi &Solanki (2014), Open
Access on one hand opens up avenues for
Objective of the study
competitive markets whereas on the other hand it
1. To re-assess power demand in wake of
increases the uncertainties in the grid over which
higher Renewable Energy targets & lower
the electricity is transferred. Congestion is one of
GDP growth rates realized.
the main problems as an outcome of Non-
2. To understand the process of creating
discriminatory Open Access, which if dealt with
requisite transmission infrastructure.
can make way for efficient use of energy
3. To understand the complexity brought
resources. Various approaches are available for
into power transmission due to “Open
Congestion Management like Price Area
Access”
Congestion Management, Optimal Power flow
4. To highlight the necessity of accurately
(OPF) based Congestion Management &
estimating ATC/TTC/TRM
Available Transfer Capacity (ATC) based
5. To suggest measures through which
E 420
Congestion Management. ATC based approach to bring out the concerns related to ATC
with Jacobean iterations taking Real Power & calculation in Indian context.
Reactive Power line flow sensitivity indices helps
identifying the most sensitive zone in a network. Analysis
Thus ATC based approach is one of the best to According to electricity model of IEEFA,
validate bid results in a deregulated Open Access electricity demand would grow at a rate 1.15
Electricity Market. Further as per Bhesdadiya & times the GDP growth rate which is expected to
Patel (2014) ATC can be calculated using either grow at 6-8% annually through 2022. Accounting
the Deterministic methods or the Intelligent for energy efficiency measures planned by GoI,
methods (like that of neural networks). 1% can be deducted summing up to an electricity
Deterministic method is further divided into growth rate of 7%1 through the year 2022.
approaches such as Continuous Power Flow While peak demand in India was 148 GW in
method (CPF), Repeated Power flow methods 2014-15 2 , the demand that was met came to
(RPF), Optimum Power Flow (OPF) method, DC around 141 GW. Even at 7% growth rate, this
load flow method & Power Transfer Distribution peak demand will rise to 237.66 GW by the year
Factor (PTDF) method. Sensitivity based power 2022. Current gap between installed capacity 272
flow method uses PTDF or Line Outage GW & Peak demand 148 GW shows inefficiencies
Distribution Factors (LODF) or a combination of like: lower PLF, T&D losses& huge transmission
both using DC load flow approach, which is a constraints, as we still have a peak deficit of ~5%.
faster approach for reporting ATC. However DC Accounting for peak deficit 0%, 237.66 GW will
flow methods are less accurate when compared to be supplied while 297 GW of production capacity
AC load flow method using sensitivity factors that would be needed after accounting for
take care of Voltage limits, Voltage collapse, transmission loss of 5% & distribution loss of
Thermal limits & reactive power flows etc. As per 15%. As per CEA about 470 GW of total capacity
Pradhan (2015), RPF method is used in India, will come till 2022, with huge proportion of RE
which may not be one of the best approaches (nearly 175 GW 3 ) in the Energy Mix that has
available. Also POSOCO has highlighted the lower average-PLF.
lacunaein existing approach and how these can be Considering total installed capacity in the year
plugged. Except for Pradhan (2015), other studies 2022 to be 470 GW, out of which 175 GW would
have been done in foreign context. India has its be from Renewable Energy sources and that
own unique characteristics e.g. Day Ahead energy is delivered at 80% PLF from
Market, customer segments like household, conventional sources & 20% PLF from RE
Commercial & Industrial etc. This paper attempts sources, a total of 271 GW would be supplied.
1IEEFA report on Indian Electricity-sector transformation, august 2Load Generation Balance Report, CEA, 2015-1016,
2015 3Ministry of New & Renewable Energy
E 421
Considering the T&D losses at 20%, ~217 GW Available Transfer capability (ATC) in the
would only be met, leaving a gap of (237.66-217) national grid. This would reduce the need of huge
20.66 GW peak power supply. augmentation of generation capacities and help to
Now how do we plug this gap? meet the power demand more consistently up to a
Our ability to meet the demand in year 2022 good extent.
would depend on following factors: If we take a look at the Inter-regional transmission
capacity, it is about 55,350 MW6 by November
2015 (55.35 GW against an installed capacity of
272 GW), whereas it has been planned to reach up
to 72,250 MW by the end of 12th Plan (2017). This
capacity increase of 1.55 times sounds good on
paper but if it is enough and achievable, is a
question that needs to be answered. Another
important piece of information is that associated
intra-state transmission system has not come up in
Figure 2: Factors affecting demand in 2022 a lot of strategic regions that has led to
A number of combination of following factors unavailability of power in certain regions despite
may help us in meeting the future peak & average the availability of inter-state infrastructure.
power demand. Plausible ways; One is to increase Hence the subject of study for better transmission
the commensurate generation capacity, second we would be ATC (Available Transfer Capability),
increase the average PLF or/and third we reduce which is the actual capacity available for
the power lost in T&D side. First way is a very transmitting power reliably under various
capital & resource intensive activity; second way operating conditions in the grid. This is further
i.e. increasing PLF itself is a major challenge due discussed in this paper.
to problems/volatility in fuel supply-side as well Given free-flow of power within a power
as power demand side. Third way is reducing transmission network, varying congestion in the
Transmission & Distribution losses, which can network will lead to changes in the price on the
contribute majorly in energy security. However exchange in such a manner that the difference
there is a stark difference in T&D losses in India between cost of sourcing power from different
(~25%-30%) 4 to other more developed parts of generators will tend to be zero. However in
the world with average T&D losses around 6- practicality there are constraints to the free flow
10%5. While we have a long way to achieve such of power, one of those is Congestion (The
figures, what also needs focus is improving the definition of Congestion is the situation wherein
4Ministry of Power 6http://powermin.nic.in/Inter-Regional-Transmission-Capacity

5http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS
E 422
the demand for transmission capacity exceeds the network (each line) within two control areas
Available Transfer Capability) responds in proportion to any power flow in the
network. This response is found out by network
topology, spatial distribution of generation,
customer demand & any other transaction over
the network. Each transmission path in a network
acts dynamically in real time and collective
response of all such elements in a network
determine the permissible flow across various
Figure 3: Example of Congestion
sections in the network. This permissible flow is
Consider a simple hypothetical situation (Figure
the Available Transfer Capability (ATC), which
2) that there are 3 nodes in a network A, B, D with
may change over different time ranges depending
C as a Generation Centre supplying 50 MW of
on factors like thermal limits, voltage limits &
Power to B. Line A-B and B-D have a
stability limits of the network elements.
transmitting capacity of 500 MW. Now suppose
that the generating station near node C fails to
Open Access & Congestion
deliver power to B. In this case Load Center at B
Open Access concept was brought in to increase
will start drawing power from either A or D,
the inter-regional free-flow of electricity in
which was unplanned. Suppose B starts drawing
between various regions in the country &
power from A; in this case as the line A-B will
optimize the use of resources efficiently.
have to bear a load of 550 MW through it whereas
However as some Large-Scale consumers & even
the capacity it has is only 500 MW after margins,
DISCOMs started finding it cheaper to source
it will get overloaded or it will face congestion as
electricity outside their own states it led to
overloading would be unsafe. This is because
uncertain change in procurement plans of power.
there is restriction to free-flow of electricity if
Leading to problems like congestion & plants
direction of procurement is varied. So if
running at lower PLF.
transmission network & inter-regional links are
Congestion & Open Access challenges, unfair
augmented or the transfer capability was
pricing:"Congestion in transmission caused loss
increased to an extent that the flow electricity is
of 3.1 billion units of electricity on Indian Energy
unrestricted there would be no problem.
Exchange (IEX) in 2014-15 which otherwise
Power system or network is divided into different
could have been used to cater to Delhi for over a
control areas for commercial & management ease;
month or the entire state of Maharashtra for over
also it decides the jurisdictions. However
a week, signifying need for strengthening
electricity by its nature, flows seamlessly in the
transmission network in the country. ” –
interconnected network irrespective of asset
Economic Times.
ownership or jurisdiction. The entire transmission
E 423
 Generators declare their point of injection considerably safe under operation at a

& accordingly transmission lines are built reasonable range of uncertainties in system.
 When states/customers change power-
Available Transfer capability: It means the
procurement plans, generators have to sell
transfer capacity available in the inter-
power on non-planned network
controllable region for scheduling
 This leads to surplus of power on one side
commercial transactions through short term
& deficit on the other
access, medium term access & Long term
 Power plants in certain mineral rich
access (STA, MTA, LTA) in a specific
eastern-states do not have enough
direction taking into account the network
evacuation support (Power gets wasted)
security.
 Southern states import electricity at almost
double the price to that in North
To avoid violation of security limits,
 This is because of congestion problem
Transmission System Operators (TSO) need
caused by lack of transmission
to define limits on ATC, so to avoid
infrastructure
congestion and support Open Access,
Technicality of Congestion-Problem: Total
accurate assessment of ATC & TRM is very
transmission capacity of the National Grid is
crucial. Too conservative an approach will
different from the Total Transfer Capability.
lead to under-utilization of transmission
It is not simply the sum total of the entire
system, whereas too confident an approach
network infrastructure. Total Transfer
will jeopardize the Grid-safety. Numerous
Capability is the capacity available in the grid
incidences have been documented on the
given all the voltage, Thermal & Frequency
CERC-website that led to Grid inefficiencies
Conditions.
leading to less availability of Power
• TTC: Total Transfer Capability
transmission capability:
• ATC: Available Transfer capability
cercind.gov.in/Advisory Committee/Sub-
• TRM: Transmission Reliability Margin
Committee on Congestion/Annexure/XXXII
• ATC= TTC-TRM
Total Transfer Capability: It is the amount
Reviewing problems in details
of electricity that can be transferred reliably
over the transmission system under a given
Transfer capability of the national grid ranges
set of operating conditions considering the
from 20 to 30 % of the transmission capacity
worst possible contingency.
(So the term transmission capacity is
Transmission Reliability Margin: It is the deceptive) whereas the Transfer capability
amount of margin that is kept in spare out of depends on a host of factors such as system
the TTC for making sure that grid is voltage, loading, physical properties, system
E 424
reactive capability & stability; the capability 1. Fatehpur-Agra with a line of 3400 MW
of a system is definitely not just the sum total has only 34 MW (just 10%) flowing
of it’s physical components. through it.
2. TTC declared in NER is 1500 MW,
whereas total demand is that of 2500 MW.
Now NER lies in the chicken neck region
(with ROW limitations), while it can meet
its demand in peak-hydro season, it faces
crisis during lean-hydro season as it faces
ATC constraints to import power from
other regions.
Figure 4: Total Transfer Capability

AEGCL is of the view that ISTS should be
Transmission capacity versus transfer capability for inter-

planned to meet 50% of peak demand of the
7000
regional links during September 2009
region.
6000 Transmission capacity
MW capacity/capability
5000 Forward Transfer Capability Important insights from the “report of the CAC-
4000 Reverse transfer
51 % 93 %
sub-committee on congestion in transmission”:
3000
2000 53 %  The national grid is capable to do away

36 % 32 % 58 %
1000
16 % 20 % with constraints if matching systems at
6% 16 %
0
Inter-regional link
ER-NR ER-WR WR-NR ER-SR WR-SR ER-NER state level are in place to meet the
7 requirements. This also applies to the
provisions for System Protection Schemes
Figure 5: Total transmission capacity vs Total
(SPS) and dynamic control mechanism
Transfer Capability
like SVCs, STATCOMs etc.
 Gestation period of Coal-Power plant &
Total transfer capability being taken as minimum
Hydro Power plants is relatively much
of Thermal limit, Voltage Limit & stability limit
longer than the transmission project.
Recent meeting (CERC-Task Force) on Whereas the Renewable Energy plants are
transmission planning that happened this October set up in much shorter period. So there’s a
2015 also sighted some regional constraints such need of a dynamic mechanism to capture
as: the upcoming generation capacities &
demand forecasts in different parts of the
country to plan the transmission projects
7Transfer Capacity & Congestion Concepts, Mr. AbhimanyuGartia,

WRLDC
E 425
Reasons for Congestion in specific zones: the load flow in 2014, the situation
 Congestion in Raipur-Wardha region due reversed as the power was being imported
to forest clearance issue by southern region rather than the other
 NR-WR: Gwalior-Jaipur due to delay in way round planning. Hence the existing
constitution of National Wildlife Board line was no more sufficient to meet the
 SR & NEW Grid: Gooty-Madhugiri- demand. More outlets have been planned
Salem Line has been held up due to ROW from Chhattisgarh to Southern Region,
problem in Karnataka which is a time-taking exercise.
The above mentioned lines are supposed to come  Another case that can be referred to is the
up soon but the related infrastructure at 220 kV Vemagiri, Vijaywada, Nellore, Nunna
level in states has not come up. region in Southern Grid, where there has
Observation: Delay in commissioning is leading been delay of commissioning of
to congestion Termination of 2 circuits of Vemagiri
 Delay in commissioning of Intra-state & Vijaywada 400 kV at Narasaraopet. In
Inter-state generating stations leads to this region ER-SR import is restricted due
various unplanned, uncertain situation in to generation in Vemagiri complex. As of
the Grid like shortfall of supply in actual now the gas-based-generation is low and
demand scenario as seen in NER region hence no constraint however when the
and numerous cases that have been listed position changes it would lead to
in the annexure-I in this report. For overloading of 400kV Vijaywada-
example the in the case of Tiroda, Nellore D/C
Wardha, Aurangabad region, associated  Delay in commissioning of parallel
intrastate lines (2nd circuit of 765 kV transmission network that inhibits power
Tiroda-Koradi-Akola, Akola- transfer; due to ROW problems in
Aurangabad at 765 kV& Bableshwar- Karnataka, Kerala, Maharashtra & UP
Kudus D/C) hasn’t come which is leading  Commissioning of State generation
to overloading of existing lines (Wardha- without commissioning of planned
Parli D/C & 400 kV Warsha-Akola transmission system in case of Tiroda
Aurangabad D/C) hence restricting (3300 MW), Ideal Energy (270) MW
power transfer to southern Region (refer  Skewed power flow due to market forces
Annexure-I)  Under-utilized projects due to price
 Reversal of load & generation scenario in reasons, like CLP Jhajjar (1320 MW) &
SR Grid w.r.t. NEW Grid. In case of APCLP’s Jhajjar(1500 MW) in Haryana,
Solapur-Raichur line, the planning done Kayamkulam in Kerala, Gas Projects etc.
for 2007 happened to be different from that were planned as Load-center based
E 426
generation from stability point of view; (2015), is the construct of our economy. As said
burdening the Transmission facility. earlier Indian consumers have become used to
 As it can be seen there are large variations having subsidies and most often either these
in assumptions for power procurement, subsidies are not rightly placed/designed or are
hence better planning of transmission misused. State DISCOMs in India are under the
network development is necessary. pressure of subsidies consistently. Open-access is
a commendable concept adopted from western
Reasons for congestion problem as highlighted countries but we differ in a way that our
by POSOCO: DISCOMs do not operate on commercial platform
 Non-availability of intra-state network like that in west. Our DISCOMs have different
(Refer Annexure-I) segments of consumers viz. Domestic,
 Delay in commissioning of generating Agricultural, Commercial & Industrial. The
units Industrial & Commercial consumers cross-
Practices prevalent in India subsidize for the cheaper electricity being given
Open Access & Challenges to the other two segments. As per Mokashi
In a recent article Agarwala (2015) said that as (2015), What happens due to Open-access facility
of now the national Grid has a big divide between is that commercial & Industrial consumers above
north & south due to lack of commensurate 1 MW of requirements opt for cheaper electricity
transmission infrastructure. outside the state. Now as these consumers
contribute roughly the 44 % of the revenue of
Figure 6: Raichur-Solapur case
This shows up in the high-priced electricity
bought by Southern states & consumers. The
electricity imported by North comes at almost half
the price to that imported by southern states.
Recent commissioning of Raichur-Sholapur &
Aurangabad-Sholapur lines has augmented the
utilities, DISCOMs are apprehensive to loose on
evacuation capacity by about 2000 MW reducing
such customers & states try to stop consumers
congestion problem. Also Kolhapur Narendra
reaching out for electricity access from other
Transmission line, which is soon to be
states.
commissioned, will add further 1000 MW of
As per Bhandari (2015), More and more Industrial
capacity. This should help in easing out the prices.
consumers are setting up their captive power
Open access is very often victim to the abuse of
plants & are opting Open-access, leaving
section-11 of Electricity Act, imposed by states;
DISCOMs with mostly the subsidized customers.
this is something that we often come to hear
With high-end consumers fleeing to the other
about. But the underlying reason, as per Bhandari
E 427
states for power, DISCOMs cannot recover the Open-access surcharges.

costs incurred in setting up huge infrastructure.
Method adopted by POSOCO to calculate
For this reason states have tried persuading
TTC/ATC & improvements needed:
regulatory commissions to increase wheeling
charges, cross-subsidy charges to reduce the gap In recent report of the sub-committee on
between retail tariffs & Open Access purchases, Congestion in Transmission (Pradhan, 2015) it
so that Open –access doesn’t remain an attractive has been established that, presently POSOCO
option. If we take example of Gujarat which made uses Repeated Power Flow method (RPF) in
many long-term PPAs to meet its demand of which power flow equations are repeatedly solved
electricity from industrial growth, if these for various points under various Load Generation
industrial consumers go elsewhere, the state will Balance scenarios. This technique is suitable if
be left paying fixed charges without even drawing ATC need not be updated immediately after each
power. transaction. The improvements suggested by
Recommended solutions by industry experts POSOCO are:
(referred to above, in the literature-Review):
1. Rationalizing the tariff, reducing cross 1. Network Topology: For more frequent
subsidies so that Industrial & Commercial calculation of ATC, snapshot model
consumers get cheaper and more justified inputs need be taken from SCADA/State
prices. Estimator as input for PSS/E (Power
2. Augmenting of Transmission Capacity at System Simulator for Engineering –
national & state level to reduce congestion Software). This would need interpreter to
& hence cost of electricity. This will help convert bus-oriented model to node-
in enabling Open-access. oriented model to run AC power flow.
3. Addressing issue like Right of Way 2. Input data: for Load & Generation as of
approval & Forest clearances for now is mostly being developed using
transmission projects will encourage predictive model based on historical
private investments participation. record and some data available with
4. Post Grid-strengthening & price easing, RLDC for a particular time-window for
strict provisions need to be brought in so last few years. However states should
that the license of DISCOM not adhering come with their own Load generation
to the Open-access provisions gets balance figures for day-ahead, month
cancelled. ahead & three-months-ahead data for
As per the amendments to sections 38, 39 & 40 of more realistic TTC calculations
the Electricity act, an appropriate commission 3. Revision of TTC/ATC: Due to absence of
shall determine the open-access-surcharge. This interface for SCADA & PSS/E the
will discourage states from levying unduly high revision of TTC in real time is not possible
E 428
and hence an interpreter is needed for the solar, 65GW through wind energy and rest
same for more frequent TTC calculations. through mini hydro, run of river &
4. Loop flows & Transit flows: All -India biogas/Biomass.
base case with full network is considered Scaling up of generation capacity with
for checking loop flows and transit flows huge renewable portfolio will pose
while calculating TTC. Short-term problems to the grid in terms of Grid
transaction approvals or re-routing should frequency & behavior of conventional
be phased out gradually in the existing generators will be crucial to make it a
complex Grid. success. As per Bhatnagar (2015), the
5. Counter Flow; Counter flow transactions usual norm in Indian electricity grid has
& their History in MTOA/STOA been that of CERC relying on the UI
transactions should be factored in charges & deviation settlement
TTC/ATC calculations, which are not mechanism to enforce grid discipline.
considered in contracts in a dominant flow However this way of tightening the
direction. frequency-band & imposing UI charges
6. TRM (Transmission Reliability margin): has been able to discipline only the
The usual way adopted is quite vague in DISCOMs not the generators. The better
nature, one method that could be adopted way would be operationalizing the
would be taking a no. of Load-Generation- spinning reserves on an efficient manner.
Balance scenarios & Network Topology. The present definition of spinning reserve
Providing sensible weightages to different includes only the Primary reserves defined
scenarios to calculate TTC/ATC would be as part-loaded generating units with some
a good method. reserve margin that is synchronized & can
respond to any frequency drop in the Grid.
Other major problems & some mitigations
However for a Grid like that of India with
measures:
145 GW of peak load to handle it is highly
1. Scaling up of generation capacity & recommendable to use both Primary &
consequent requirement of Grid support: Secondary reserves. In India, Secondary
With plans of adding 175 GW of RE- control is nearly absent and DISCOMs
based generation by the year 2022, T&D resort to load shedding in situations where
network should be able to support such the generation is lagging. Creation of
huge augmentation in generation capacity. adequate system reserve margins and
High injection of RE into the grid, spinning reserves has been mandated in
compromising grid-safety & quality- the National Electricity Policy but not yet
power supply. 100 GW shall be coming been operationalized. Primary control is
through solar, which has 40 GW of utility control over frequency through turbine-
E 429
speed-governor by the conventional

generator for a short span of 30 second to 2. AT&C losses leading to power deficit:
15 minutes, whereas secondary control is As per Power Ministry Ujwal Bharat
control through Automatic generation Report (2015), AT&C losses
control. (inclusive of mostly T&D losses) in
Recent recommendations by CERC: India are pathetically high at 32% with
a. Suggested to maintain a requisite spinning some states going up to 68%. This has
reserve in a distributed manner which led to higher merchant power rates,
shall be coordinated by RLDC & NLDC Power stations backing down, low
depending on the grid conditions at PLFs of power plants. As per FICCI,
regional levels GOI needs to augment transmission by
b. Each region to maintain secondary 90000 C-Km of 765-200 kV lines &
reserves corresponding to the largest unit 154000 MVA of substation capacity
size in that region and overall capacity of 27350 MW
c. Decentralized-Tertiary reserves to be across the country to make-happen its
maintained by each state control area for power to all program.
atleast 50% of the largest generating unit
therein. Region Wise Performance
d. 4000 MW of additional primary reserve Billing Efficiency % Collection Efficiency %
has been proposed on all India basis for AT&C Losses %
contingency 99% 95% 98% 96% 97%

91%
82% 85% 77%
e. Reserve requirement to be estimated 73% 71%
64%
based on day-ahead basis, along with the 34% 38% 32%

19% 25%
18%
day ahead scheduling of all generating
units available; Load forecasting at state, West South North North East All India
East
regional & national level will have to be Source: Ministry of Power, Ujwal
robust considering the increasing share of

Figure 7: AT&C losses
Renewable Energy in the grid. Reserves
will have to be allocated to each region
based on commercial & technical aspects This topic is not under the scope of this study and
& Energy charges would be taken up in further studies.
f. A framework for Ancillary Services
Conclusions & Recommendations
Operations as specified in CERC
In Short-Term:
regulations also can be followed for
1. Calculation of ATC & TTC is quite
Spinning reserves with a proper study
fuzzier right now, first solution would be
done by NLDC
E 430
NLDC addressing the need of for CTU to track crucial details regarding
sophisticated computation of TTC (Total the generation capacities coming up in
Transfer Capability), ATC (Available each state and the corresponding need of
Transfer Capability), TRM (Transmission Transmission network. (refer Annexure-I)
Reliability Margin) of inter-regional links/ 2. In long term, Transfer capability can be
corridors scaled up at Central & State level
2. Current computation of TTC is mainly Transmission system & sub-Transmission
done in short term. Frequent congestion in system by upgrading single-circuit lines to
short term implies that the same should be double circuit lines, Reconductoring &
looked at in Long-term & mid term. strengthening of towers, upgrading 220
Further there is a need of Day ahead, Intra- kV lines to 400 kV lines.
day & Intra-hourly TTC calculations. 3. Bottleneck regions/infrastructure both at
Presently only Day-Ahead market exist in State Level & Central level constraints
Power exchanges. have been identified (refer Annexure-I)
3. SLDCs do not post TTC/ATC figures and associated lines should be built soon.
hence intrastate congestion is not brought Also there is a need of a mechanism to
to the attention, this gives an impression make sure that associated infrastructure at
that constraints exist only at Interstate state-level comes up subsequently with
level. This may pose serious threats to Central level lines. Standing committee
network security. SLDCs should meetings should take the state level
participate actively in this in their developments as a major agenda & state
respective control areas. utilities should coordinate this with CTU
4. In short term, Use of FACTS controllers & CEA.
& Damping controllers by STU/CTUs to 4. Strict monitoring & control over timely
increase stability of power transfer & commissioning & utilization of
hence the transfer capability. transmission & generation systems being
5. Lack of stability-devices as compared to implemented
the existing infrastructure. So fast track 5. General Network Access (GNA) is a new
installation of devices like SVCs & idea being conceptualized & drafted to
STATCOMs for Voltage Stabilization & address Network access issues. Earlier the
Power factor correction is needed. transmission planning was carried out on
the basis of signed PPAs (beneficiary was
In Long Term:
known), but under the GNA concept the
1. Transmission projects have shorter
transmission planning would be done on
gestation period as compared to the
the basis of the quantum of
generation projects, hence there is a need
demand/generation & their location
E 431
without knowing their contracted source planning by various stakeholders. GNA

of Purchase/Sale. The generators & would bring better operability in the
consumers would be given access to the market due to flexibility in economic
ISTS network for the agreed quantum of procurement of power.
Power (MW). This concept would need 6. Regular inspection of protection systems
high level of coordination, forecasting & with stringent norms for compliance to
7. the standards is needed. Note:-Historic Data on the difference between
8. Regular monitoring of lines critical to do total transmission capacity & Total Transmission
away with short & mid term constraints is Capability doesn’t seem to be available anywhere
needed. on the public domain, whereas most of the
9. As established in Sub-committee report, researchers in the industry are trying to
Forest clearance process has to be understand this subject in detail. This is a subject
simplified, planned & expedited. of further study.
Acronyms standard.com/article/economy-
CEA: Central Electricity Authority policy/govt-to-build-general-network-
CERC: Central Energy Regulatory Commission access-for-hassle-free-power-
GoI: Government of India 115081700034_1.html, [cited
IEEFA: Institute for Energy Economics & 2016December2].
Financial Analysis 2. R.C. Agarwala, P.N. Bhandari, Rajesh
NLDC: National Load Dispatch Centre Mokashi, M.G. Raoot,“Open Access
RLDC: Regional Load Dispatch Centre challenges”, PowerLine, 20(2) (2015) 44-
NER: North East Region 45.
AEGCL: Assam Electricity Grid Corporation 3. NehaBhatnagar, “Grid Discipline
Limited Measures”, PowerLine, 20(2) (2015) 39.
DISCOM: Distribution Company 4. GirishPradhan, “Report of the CAC Sub-
ISTS: Inter-State Transmission System committee on Congestion in
UI: Unscheduled Interchange Transmission”,
ROW: Right of Way http://cercind.gov.in/2015/Reports/conge
SEB: State Electricity Board stion.pdf, [cited 2016 December 2].
5. Report by Ministry of Power ,“Towards
References Ujwal Bharat UDAY: The Story of
Reforms”,
1. Shreya Jai, “Government to build general http://powermin.nic.in/upload/pdf/Power
network access for hassle-free-power”, _Sector_Reforms.pdf, [cited 2016
http://www.business- December 2].
E 432
6. HDFC Bank Investment Advisory Group http://slideplayer.com/slide/7390608/,

, “HDFC Bank Investment Advisory [cited 2016 December 2].
Group Power sector 8. ShilpaAgarwal, “Minutes of 3rdmeeting of
report”,http://www.hdfcbank.com/assets/ the Task force on Transmission Planning
pdf/privatebanking/PowerSectorUpdate- held on 10.10.2015, New Delhi”,
June2015.pdf, [cited 2016 December 2]. http://www.cercind.gov.in/2015/Minutes/
7. AbhimanyuGartia, “Transfer Capacity & VM19.pdf, [cited 2016 December 2].
Congestion Concepts”,
ANNEXURE-I
Generating Stations already commissioned and constraints in Interstate transmission system (ISTS)
due to delay in commissioning of associated intra state transmission system
Capacity Associated
Final Associated
Sl. Statio Commissione Control transmission system
Capacity transmission Remarks
No. n d area yet to be
(MW) system
(MW) commissioned
A. Western Region
LILO of 400 kV LILO of 400 kV

Maharas Over loading of
1 IEPL 2x270 2x270 Koradi‐II‐ Wardha Koradi‐II‐ Wardha at
htra 400 kV Wardha‐
at IEPL IEPL
Parli D/Cand 400
765 kV Tiroda‐ 1) 2nd circuit of 765 kV Wardha‐
Koradi kVTiroda‐Koradi‐ Akola‐
‐Akola‐Aurangabad Akola AurangabadD/C
3x660 (ph‐
Tiroda Maharas ckt.1 2)Commissioning of leading to
2 1) 3x660
APL htra &2 Akola‐ Aurangabad restrictions in
2x660 (ph‐2)
400 kV Tiroda‐ at 765 kV power transfer to
WaroraS/C 3) 400 kV Southern Region.
400 kV Tiroda‐ Aurangabad‐
List of substations with inadequate outlets adversely affecting transfer capability
E 433
Warora Bableshwar‐Kudus
D/C D/C
The Mundra‐
Mohindergarh
HVDC bipole is
operating with
SPS, as the lines
to Gujarat from
400 kV
APL Mundra are
APL‐Sami‐
4x330 (St‐ inadequate. Even
Dehgam D/C
1), LTA of 1495 MW
400 kV APL‐
APL, 2x660 4x330 (St‐1), from APL
Hadala S/C400 kV 400 kV APL‐Zerda
3 Mundr (St‐ 2x660 (St‐2), Gujarat Mundra to
APL‐Versana 2xD/C
a 2), 3x660 (St‐3) Haryana has been
D/C400 kV APL‐
3x660 (St‐ granted with SPS.
Zerda 2xD/C220
3) Failure of SPS
kV lines to
can lead to
Gujarat system
complete outage
of APL Mundra
complex and loss
of 4500 MW
generation and
cascading.
B. Southern Region
Vemag 400 kV Vemagiri‐ Restriction in
4 iri(GM 370 370 Vijaywada D/C import of ER‐SR
R) (PG) corridor due to
Jeguru 400 kV Vemagira‐ Generation in
5 u220 220
pad Vijaywada D/C Vemagiri
1. Termination of 2
Konase (AP) complex. As on
6 445 445 ckts of Vemagiri‐
ema AP 400 kV Vijaywada‐ date gas
Vijaywada400 kV at
Gautha Nellore generation is low
7 464 464 Narasaraopet
mi 400 kV SS at and therefore
Narasaraopet, constraint is not
GMR termination of 2 experienced;

8 237 237
(BRG) ckts of Vemagiri‐ however position
Nunna would change.
E 434
400 kV at Causing
Narasaraopet overloading of
400 kV
Vijayawada‐
Nellore D/C
400 kV NCTPS‐SV
North Vallur/North
Chatram and400 400 kV Almathy‐
9 Chenn 2x600 2x600 TN Chennai complex
kVAlmathy‐ Thiruvalem D/C
ai Exp. insecure
Thiruvelam
Overloading of
400kV Mettur‐ 400 kV Hosur‐
Mettur
Arasur DCline & 400kV Mettur‐ Salem D/Cline
10 Stage‐ 1x600 1x600 TN
400 kV Mettur‐ Thiruvalem D/C line and Creating
III
Thiruvalem D/C congestion on S1‐
S2Corridor
C. Northern Region
System is n‐1
insecure,
400 kV Kawai‐Anta
oscillations
D/C
Anta and Phagi sub‐ observed
Rajastha 765 kV Anta‐Phagi
11 Kawai 2x660 2x600 stations are yet to be frequently. Loss
n 2xS/Clines
ready of entire
400 kV Kawai‐
Chabra/Kawai/Ka
Chabra
lisindh complex
possible.
S.No. 400/220kV State Transformation Outlet
Substation name capacity
Northern Region
1 Sohawal UP 2*315 No outlet
2 Shahjahanpur UP 2*315 No outlet
3 Jaipur South Rajasthan 2*500 220kV Jaipur South-Chaksu D/C
4 Jind Haryana 2*500 No outlet
5 Kotputli Rajasthan 2*315 No outlet
6 Lucknow-PG UP 1*315+1*500 220kV Lucknow-Chinhat & 220kV Lucknow-
Sitapur
7 Manesar Haryana 2*500 No outlet
8 New Wanpoh J&K 2*315 No outlet
9 Samba J&K 2*315 No outlet
10 Mundka Delhi 2*315 220/66 kV ICTs (No 220kV Ckts)
E 435
11 Deepalpur Haryana 2*315 220kVDeepalpur-Barhi D/C

12 Nawada Haryana 2*315 220kV Nawada-A5 Faridabad D/C
13 Sonepat Haryana 2*315 220kV Sonepat-Mohana D/C
14 Loni Road Delhi 2*315 220/66 kV ICTs (No 220kV Ckts)
15 Deedwana Rajasthan 1*315 As reported 220kV Deedwana-Sujangarh D/C
commissioned (Loading is not available)
16 Nakodar Punjab 2*315 220kV Nakodr-Noormehal D/C
17 Panchkula Haryana 2*315 220kV Panchkula-Rewali D/C
18 Bhiwani (PG) Punjab 1*500 No outlets
Western Region
1 Pune Maharashtra 3X315 Inadequate 220KV outlets
2 Sholapur (Pg) Maharashtra 2X 315 Outlets not planned/commissioned
3 Taptithanda Maharashtra - Outlets not planned/commissioned
4 Aurangabad(Pg) Maharashtra 2X 315 Outlets not planned/commissioned
5 Warora Maharashtra 2X 315 Outlets not planned/commissioned
6 Kala DNH 2X 315 Inadequate 220KV outlets
Southern Region
1 Munirabad Karnataka 2*315 1. 230kV Munirabad - Lingapur DC
2. 230kV Munirabad - Kalyani SC
2 Cochin Kerala 2*315 1. 230kV Cochin - Kalamaserry DC
2. 230kV Cochin - Brahmapuram DC
3 Trivandrum Kerala 3*315 1. 230kV Trivandrum - Pothencode 1,2,3,4
4 Tiruvalam Tamil Nadu 2*315 1. 230kV Tiruvalam - SPKoil SC
2. 230kV Thiruvalam - Thiruvalam
5 Mettur Stage -3 Tamil Nadu 2*315 1. 230kV Mettur ST3 - Gobi SC
2. 230kV Mettur ST3 - Mettur ST2 SC
3. 230kV Mettur ST3 - Mettur Auto SC
6 Khammam Telangana 2*315 1. 230kV Warangal - Durshed DC
2. 230kV Waranagal - Nagaram DC
Eastern Region
1 Bolangir Odisha 2X315 Nil
2 Keonjhar Odisha 2X 315 Nil
North Eastern Region
Nil
E 436
Impact of Fuel Linkage Policy Reversal on IPPs in India

Utpal Bhattacharyya*, Dr. Tarun Dhingra**, Dr. Anirban Sengupta***
*Executive Director, The Calcutta Electric Supply Corporation, Kolkata

**Professor & Assistant Dean (Research), CoMES, UPES
*** Professor & Dean, CoMES, UPES
Abstract Keywords
Electricity is a 115 year old commodity in Stranded, uncertainty, fuel linkage, real
India. While Electricity Act 2003, recently option theory, IPP
enacted, lays down important provisions
like thrust on generation capacity addition Introduction
and private investment, the Government In India, commercial supply commenced in
fuel policy does not seem to work in 1899 (Calcutta), closely following USA
tandem with such objectives. Large and Europe (1880s). Since then, India has
generation capacity was created by private come a long way. The current installed
investors on the basis of Government capacity is around 280 GW. The country’s
assurance of coal supply. However, new economic growth critically hinges on its
restrictive conditions were suddenly ability to deliver electricity. Laws were
imposed by Government for these new enacted from time to time to facilitate and
plants rendering them unviable. govern electricity business in India. Until
Investment decision for these plants had 1998, two statutes, primarily, governed
been based on traditional methods of risk electricity industry in India, viz. Indian
assessment. This paper studies electricity Electricity Act, 1910 and the Electricity
and coal sector in India, and seeks to (Supply) Act, 1948.
assess the impact of such policy reversal
on financials of a firm whose high value Over the period, these two Acts were
investment has become stranded and also amended several times, but the basic
examines whether Real Option Theory, if cornerstones and structure changed very
considered in investment decision, would little. Subsequently, Electricity Regulatory
have been helpful under current Commissions Act 1998 brought in the
uncertainty. concept of independent regulation through
establishment of Regulatory Commissions.
It was followed by Electricity Act, 2003
which consolidated all laws, repealed
E 437
earlier Acts and made sweeping structural

Thermal Nuclear Hydro RES
changes mandating very important
provisions like thrust on generation
13%
capacity addition, promotion of
competition and market development. 15%
2% 70%
Since Independence, Indian power sector
had an impressive growth. Starting with a
meagre 1362 MW installed capacity in
Figure 1: Installed Capacity – Type-wise
1947, it has since developed into a 280
(As on October 2015)2
GW system. Concurrently, there has been
a matching development in Transmission
and Distribution lines. Energy generation State Sector Central Sector Private Sector
was 4073 GWh in 1947, the same now

stands at around 1048,403 GWh 1 . The
26%
growth of installed generating capacity has 35%
been largely coal based. Government

sector still dominates in the generation
segment. Installed capacity-wise 39%
Government Sector (State & Central)

contributes over 70%. The thermal
Figure 2: Installed Capacity – Sector-wise
generation capacity is about 70% with
(As on October 2015)
Hydro at 15%, 13% Renewable and 2%
Nuclear.
Historically, Government Sector (State and
Central) had a far higher contribution
towards capacity addition. However, with
change in policy/ mindset, Private Sector
investment is expected to propel capacity
addition 12th Five Year Plan onwards3.
2
CEA, Executive Summary, Power Sector, October
2015
3
Discussion Document – Model Power Purchase
1
CEA – Executive Summary Power Sector, March Agreement, Public Private Partnership in
2015 Generation of Electricity, Govt. of India, 2013
E 438
Since the 1990’s Indian Government assurance on coal supply for all new power
policies had a change from their earlier units and imposed severe restrictions. In a
thrust on capacity addition by primarily significant move 6 , the Government of
State sector projects. A number of India has suddenly imposed prohibition for
initiatives were taken to invite private coal supply to generators who do not have
sector to build up power capacity. long term bilateral contracts (PPA) on
Developers responded favourably to new power sale with power distributing
framework and invested heavily in licensees. This prohibition in effect has
building up power plants in India – mostly shaken the industry because a number of
in coal based plants. Coal is the principal developers have already put in large scale
fuel in India for thermal power generation investments for building up market based
and is largely Government controlled. merchant power plants (plants which will
have large proportion of power untied in
Power generating stations who had long long term bilateral contract) following
term agreements on power sale with Government of India’s earlier policy of
distribution companies and power stations developing power market. India is a
who did not have such long term country where Government controlled
agreements were treated by GOI policy monopoly Coal India Ltd. and its
alike. Both were entitled to assured coal Subsidiaries control the domestic coal
supply as per the terms of Letters of market. This shift in policy, as per
Assurance (LOA) issued by coal developers, is grossly inconsistent with the
authorities. Fuel being a very critical express assurance of developing power
input, developers finalized investment market in India. Restrictions continue till
decisions based on such assurances from date, meanwhile plants are at various
GOI.4 Quite a number of new investment stages of development – a good number
decisions were taken for commissioning of has already been commissioned and the
their plants beyond March 20095. rest are close to their commissioning
schedule but are without fuel supply.
However, around 2011, coal shortage hit Obviously, such high value investments
the country and GOI as a knee jerk are now under a major state of uncertainty
reaction, chose to go back on its earlier with a likelihood of being stranded.
Stranded Assets are those assets of a firm
4
Letter of Assurances issued by CIL subsidiaries.
5 6
Minutes of Meeting of Standing Linkage Model Fuel Supply Agreement, Ministry of Coal,
Committee Government of India, 2013
E 439
which have experienced premature and un- Distribution and Supply were not
anticipated write-down, devaluation or segregated.
conversion to liabilities.7
Coal Sector in India
Review of Business Framework –
Electricity and Coal Background
Earlier Coal Sector had seen large private
Electricity investment across India .The Coking Coal
Industry structure has undergone a major Mines· (Emergency Provisions) Ordinance
change following enactment of 2003 Act. (later the Coking Mines (Emergency
Earlier, the industry was dominated by Provisions) Act 1971) was promulgated
large monoliths like State Electricity by the Government of India in October
Boards whose responsibility was to 1971 under which the management of all
generate, transmit, distribute and supply coking coal mines was taken- over by the
electricity to end consumers (Retail Government to the exception of TISCO
market). and IISCO captive mines. A new
company called the Bharat Coking Coal
The new Act encouraged segregation of Limited was formed as a subsidiary
functions viz. Generation, Transmission company of the Steel Authority of India
and Distribution. Transfer Schemes were Limited to manage· the taken over mines
accordingly drawn by many States for (226 mines)9.
achieving unbundling and corporatization
intro separate functional bodies. Such Subsequently, the management of 711
schemes envisaged transfer of assets and non-coking coal mines was also taken over
staff into successor companies. However, by the Government with effect from early
8
unlike UK model and the likes , 1973 (Coal Mines (Taking over of
Management), Act 1973). The
7
Stranded generation assets: Implications for nationalisation of all these mines was
European capacity mechanisms, energy markets
and climate policy – Ben Caldecott & Jeremy
McDaniels
i) 8 Experience of Privatisation Regulation and iii) Ownership Unbundling in Electricity
Competition: Lesson for Governments - Distribution: Empirical Evidence from New
Davies, Wright and Price [CCP Working Zealand – Paul H.L. Nillesen and Michael
Paper 05-5], 2005 G. Pollitt, [Springer Science+Business Media,
ii) Liberalisation, privatization and regulation in LLC.2010], 27.11.10
the UK electricity sector – Richard Pond
9
Working Lives Research Institute, London A brief history of coal mining and coal deposits in
Metropolitan University, November 2006 India, Ch.3, G.C. Chattopadhyay
E 440
brought about w.e.f. 1.5.1973 vide Coal CIL and its subsidiaries are incorporated
Mines (Nationalisation) Act, 1973 and a under the Companies Act, 1956 and are
new Government Company namely, the wholly owned by the Central Government.
Coal Mines Authority Limited In addition to CIL and its subsidiaries,
(“CMAL”) was set up by the Government there is one more coal company in Public
in May, 1973 to manage the non-coking Sector, namely, the Singareni Collieries
coal mines. CMAL was organised as a Company Limited (“SCCL”), which is a
unitary structure on divisional pattern joint venture between the Government of
with four Divisions, the Central Andhra Pradesh and Government of India,
Division, the Eastern Division, the with equity capital shared in the ratio of
Western Division and the Central Mine 51:49 respectively.
Planning and Design Institute
("CMPDIL"). The mines of the erstwhile Policies & Procedures – coal linkage for
National Coal Development Corporation thermal power plant
were brought under the Central Division
of CMAL. Standing Linkage Committee
The developers seek "fuel linkage"
In September, 1975, Coal India Limited (assurance) for their projects from inter-
(“CIL”) was formed as a Holding ministerial Standing Linkage Committee.
Company with five subsidiaries, namely, The Committee considers the cases of
Bharat Coking Coal Limited (“BCCL”), these sectors keeping in view the
Central Coalfields Limited (“CCL”), availability of coal from the desired
Eastern Coalfields Limited (“ECL”), source(s) indicated by coal companies,
Western Coalfields Limited (“WCL”) and movement logistics and other relevant
CMPDIL. Two more coal companies, considerations including recommendation
namely, Northern Coalfields Limited of the nodal Ministries. These committees
(“NCL”) and South Eastern Coalfields are headed by Additional Secretary,
Limited (“SECL”) were formed in Ministry of Coal, who is the ex-officio
November 1986. Further, a new chairman.
company, the Mahanadi Coalfields
Limited (“MCL”) was incorporated in The objective behind the setting up of this
1992 as a fully owned subsidiary of Coal committee was to make the most efficient
India Limited by bifurcating SECL. economic use of available capacity for
production and transportation of coal. The
E 441
committee is concerned with, inter-alia, New Coal Distribution Policy, 2007

establishing rational fuel linkage and is (NCDP)
mandated to advise, inter-alia, on planning This concept of Letter of Assurance (LOA)
and development of additional capacity for which confirms supply of coal to
coal production and efficient consumption developers was introduced through New
of coal. Coal Distribution Policy to bring in clarity
and certainty to investors. Once the
On being satisfied, the Committee grants milestones stipulated in the LOA are met
coal linkage for upcoming end-use plants by the developers, LOA holders would be
(EUP), primarily power plants. This entitled to enter into fuel supply agreement
assurance is vital for finalization of for long term supply of coal.
investment decisions for developers of
EUPs. Important Events – Indian Electricity
and Coal Sector
Some of the important events that has
taken place in the Indian electricity and
coal sector is shown in the below table 1:
Table 1: List of Critical Dates

1910 Indian Electricity Act
1948 Electricity (Supply) Act

1971 - 1973 Nationalisation of Coal Mines
1975 Formation of Coal India Ltd. with 5 Subsidiaries
1986 – 1992 Formation of 3 more Subsidiaries NCL, SECL & MCL
1998 Electricity Regulatory Commissions Act
2003 Electricity Act
2005 National Electricity Policy
2006 Tariff Policy
2007 New Coal Distribution Policy, Ministry of Coal, GOI
2008 1st Power Exchange becomes operational - platform for short term power trading
2008 - 2009 Letters of Assurance issued to large number of developers on fuel (coal) supply
2012 Government Fuel Policy shift – not to supply coal to power projects selling on
the Short Term Market
2014 Huge private investment in power generation capacity becomes stranded
E 442
Investment under Uncertainty simplistic form, risk is defined as

Most of the large investment decisions randomness with knowledgeable
have three important characteristics – probabilities and uncertainty is defined as
irreversibility with initial investment as randomness with unknowable probabilities
sunk cost, uncertainty over the future (Meijer, 2008) and consequently, risk is
returns, and timing of investments with inherent part of uncertainty. Moreover, the
postponement in expectation of more way risk and uncertainty are
information; and interaction of these conceptualized does not affect the models
characteristics determine the optimal and methods adopted by the decision
investment for the future (Dixit and makers to handle the same (Lipshitz and
Pindyck 1994). These characteristics Strauss, 1997).
introduce an asymmetry in the distribution
of value of any investment which results in Uncertainty is defined as any departure
expansion of investment opportunity’s from the unachievable ideal of complete
value with respect to standard NPV determinism (Walker et. al., 2003) or a
analysis by an option premium (Trigeorgis system of inadequate information due to
and Mason, 1987). The extent and nature inexactness, unreliability and border with
of the analysis of this interaction to arrive ignorance (Funtowicz and Ravetz 1990).
at a real value in the form an extended However, uncertainty prevails even with
NPV can influence the decision making for lot of information (Van Asselt 2000) and it
optimal investment. The option based can increase or decrease with new
framework provides an expanded and information. The uncertainty also needs to
unifying approach for real investment be distinguished based on perspective of a
decisions by integrating capital budgeting modeller or a decision maker where the
and strategic planning under the single latter’s focus is to value the outcomes
roof of value maximization (Trigeorgis, based on goals and objectives (Walker et.
1988) al. 2003). Literature categories uncertainty
under two major headings - Knowledge
Defining Uncertainty Uncertainty (weak, internal, secondary,
The conceptual definitions around risk and substantive or epistemic) due to lack of
uncertainty in investment decisions information about future (Van Asselt
literature are varied although they are 2000), complexity (Boyd and Fulk 1996)
considered inherent in capital investment and Variability Uncertainty (stochastic,
decisions (Lipshitz and Strauss, 1997). In random, primary, external or procedural)
E 443
due to inherent variability in the system Sutherland,

1998; Farzin,
which cannot be reduced (Walker et.al Huisman et.
Al, 1998
2003) leading to decreasing confidence in
the predictions (Boyd and Fulk 1996). It is Perceived
St. John,
Pouder et. al,
important for decision makers to know the uncertainty
2003,
about the
Jennings and
nature of variability uncertainty to decide actions of
Jones, 1999;
competitors
their course of action, while knowledge Farzin,
either innocent
Competitive Huisman
or strategic.
uncertainty can be reduced with more Uncertainty et.al, 1998;
Major factors
Mullins and
are ‘first mover
information. advantage’,
Sutherland,
1998;
Economies of
Miller, 1993;
scale, number of
Milliken,
Policy related literature categorises competitors
1987
different uncertainties based on their Uncertainties
about the action Buyukozkan
sources that are domains of an organization of supplies i.e. and
timing, quality Feyzioglu,
environment which the decision maker is and price of 2004; St.
delivery, John, Pouder
uncertain about (Milliken 1987) and are Supplier
uncertainties et. al, 2003,
Uncertainty
about partners in Jennings and
categorised as in the following Table: a JV. With more Jones, 1999,
dependence, Miller, 1993;
uncertainty Milliken,
Table 2: Different uncertainties based on becomes 1987
important
their sources Regulatory or
policy Foxon, Gross
Sources of uncertainty et.al, 2005,
Description Sources
Uncertainty about current Chesbrough,
Meijer, 2008; policy, unclear 2004;
Uncertainty Political
Foxon, Gross or inconsistent Carlsson and
about Uncertainty
et. Al, 2005, regulation, lack Jacobsson,
technology of regulation, Miller, 1993;
Cheshrough,
itself, future changes, Milliken,
2004;
Uncertainties government 1987
Carolsson
about the behaviour
and
relation between Foxon, Gross
Jacobsson,
Technological technology and et.al, 2005,
2004;
Uncertainty the Chesbrough,
Buyukozkan
technological 2004;
and
infrastructure. Carlsson and
Feyzioglu, Uncertainty
The possibility Jacobsson,
2004; St. about consumer
of choosing Consumer or 2004;
John, Pouder preferences,
alternative market Buyukozkan
et. Al, 2003, characteristics,
technological uncertainty and
Jennings and development of
option Feyzioglu,
Jones, 1999) demand
St. John, 2004; St.
Availability of John, Pouder
Pouder et. Al,
raw materials, et. al, 2003,
Resource 2003,
human and Jennings and
Uncertainty Jennings and
financial Jones, 1999
Jones, 1999;
resources
Mullins and
E 444
The sources of uncertainties depend upon the opportunity to respond to future

the context (Meijer, 2008) and each of the contingent events.
uncertainty can further be given a 3) Real options theory concerns
levelranging from complete deterministic classes of investments in real assets that
level to total ignorance (Van Asselt, 2000; are similar to financial options in structure.
Walker et. al, 2003) based on which
decision maker can opt for appropriate Uncertainty in the context of fuel supply
strategies. to new plants
The policy U-turn by the Government of
Real Options theory10 India introduced a major uncertainty
Real options theory is a way of analysing regarding fuel supply to new power plants
decision making problems that involve recently developed in India. Currently,
uncertainty, irreversibility and future large number of plants are facing a major
discretionary action. Even though no challenge because of uncertainty in fuel
uniform definition of real options has supply. The following table illustrates11
emerged (as demonstrated by the debate in
the Academy of Management Review in Table 3: Commissioned plants with coal
2004), all variations in the literature assurance
contain three essential elements: Commissioned plants with coal assurance
(LOA) but without Long Term PPA (MW)
uncertainty, irreversibility and future
Commissioned
discretionary action. Example of capacity with
1. fuel linkage and 6310.5
definitions of real options: without Long
1) Real options investments are Term PPA
characterised by sequential, irreversible Commissioned

capacity with
investments made under conditions of tapering fuel
2. 1492.5
linkage and
uncertainty. without Long
Term PPA
2) A real option is the investment in
Projects with
physical and human assets that provides 3.
coal mine and
4047
without Long
Term PPA
Commissioned plants with coal assurance
(LOA) but without Long Term PPA
10
Flexibility in Investment Decisions under
Uncertainty: Do Managers Behave According to
Real Options Theory? – Michael Alan Collins, 11
Association of Power Producers communication
Australian Graduate School of Management,
to GOI
March 2009
E 445
With fuel linkage  In possession of Letter of Assurance

4. and without 4220
issued by Coal India but unable to have
Long Term PPA
With tapering coal due to Government restriction
fuel linkage and
5. 930  Location in a State where competition
without Long
Term PPA in power market exists
Projects without coal assurance (without
LOA)
This IPP has recently been developed by a
Commissioned large Indian power company. Depth
capacity without
fuel linkage or Interviews were carried out with Senior
block (consists of
6. 4700 officials of the firm who are conversant
3,165 MW with
Long Term PPA
and 1,535 MW with investment decisions, technological
without PPA)
and business issues. On query, views were
expressed on how investment decisions
Projects that lost were made in the project – whether such
their mines but
could not win uncertainty was envisaged at the time of
mines in auction
7.
(consists of 2060
2490
decision making. The detailed Reports in
MW without
PPA. Does not this context were shared by the officials.
include projects
with tapering Relevant Information was also obtained
linkage) covering:
 Capacity
Assessment of Impact of such Policy  Location
Change on a firm (IPP)  Distance from domestic coal source and
port
Methodology  Latest project cost
In order to study in detail the impact of  Unit size
such change in fuel policy, an IPP was  Likely thermal efficiency
selected based on the following criteria:  Likely secondary oil consumption rate
 Private ownership  Source of coal, pre and post policy
 Broadly equidistant from pithead and changes
port  Auxiliary consumption
 Either unit commissioned or targeted for  Expected return
commissioning shortly  Likely Operation & Maintenance
expenditure
E 446
Based on inputs received from these

officials, Financial models were prepared
at various Capacity Utilisation Factors
(Plant Load Factor - PLF) to arrive at cost
of generation under various scenarios.
Likely price in the wholesale market
(Power Exchanges) were also assessed 12 .
Sensitivity/ Scenario Analyses were
carried out with options as under:
 Mothballing the project

 Full scale generation
 Generate under lower PLF(s)
Other options like possibility of

conversion, relocation and divestment
were also examined. Other Values as
agreed for the exercise are as under:
12
Central Electricity Regulatory Commission.
(January 2013). Report on Short Term Transaction
in Electricity in India. CERC
E 447
Table 4: Assumptions and the sources of data

Item Figure of assumption Source of data
Coal usage  At the time of project Assumption made as per ground
conception: entirely domestic linkage situation and basis of Project Report
coal used for generation.
 Present: 50% E-auction coal
and 50% imported coal used for
generation.
(in the absence of Linkage coal)
Coal price  At the time of project
conception: Domestic linkage coal
price has been assumed same as
envisaged during project conception
stage.
 Present: Coal price for e-
auction and imported (Indonesian)
coal price trend has been considered.
Norms for fixed  O&M cost assumed as per CERC Tariff Regulations
costs CERC Tariff Regulations.
 Norms for working capital and
interest on working capital is
considered as per CERC Tariff
Regulations.
 Depreciation of fixed assets has
been considered as per CERC Tariff
Regulations.
Rate of interest  Rate of interest on long term
loan capital has been considered @
12.50%.
 Rate of interest on working
capital loan has been assumed same as
that of long term loan.
Scenario build up Four different scenarios of capacity
utilisation have been assumed:
 30% PLF;
 60% PLF;
 80% PLF; and
 Project mothballed.
Other Under the scenario of project
assumptions mothballed condition, following
assumptions are made:
 O&M cost is 50% of normal.
 Spares requirement has been
assumed to be one-fourth of normal
operating conditions.
E 448
Outcome of the study various scenarios Scenario 2: 60% Capacity Utilisation

[Plant Load Factor (PLF)]
Scenario 1: 30% Capacity Utilisation
[Plant Load Factor (PLF)] Table 6: outcome at 60% Capacity
Utilisation
Table 5: outcome at 30% Capacity
At the time of
Utilisation project
Current
scenario
conceptualisation
At the
time of
Current
project
scenario Capacity
conceptu % 60% 60%
alisation Utilisation
Total Ex-
Bus MU 2869.78 2869.78
Generation
Capacity
% 30% 30%
Utilisation
Total Ex-Bus Total Fixed Rs.
MU 1434.89 1434.89 674.66 680.9
Generation Cost Crore
Total
Rs.
Variable 283.27 478.6
Crore
Rs. Cost
Total Fixed Cost 670.14 673.26
Crore Rs.
Total Cost 957.93 1159.5
Total Variable Rs. Crore
141.63 239.3
Cost Crore
Rs.
Total Cost 811.78 912.56 Fixed Cost Rs./
Crore 2.35 2.37
per unit kWh
Variable
Rs./
Fixed Cost per Rs./ Cost per 0.99 1.67
4.67 4.69 kWh
unit kWh unit
Variable Cost per Rs./ Total Cost Rs./
0.99 1.67 3.34 4.04
unit kWh per unit kWh
Total Cost per Rs./ Market
5.66 6.36 Rs./
unit kWh determined 7.49 2.6
kWh
Market Rs./ price
7.49 2.6
determined price kWh Profit/
Rs./
Profit/ (Loss) per Rs./ (Loss) per 4.15 -1.44
1.83 -3.76 kWh
unit kWh unit
Total Profit/ Rs. Total
262.58 -539.52 Rs.
(Loss) Crore Profit/ 1190.96 -413.25
Crore
(Loss)
 Deterioration in efficiency/ heat rate due

 Deterioration in efficiency/ heat rate due
to low load operation has not been factored
to low load operation has not been factored
in.
in.
E 449
Scenario 3: 80% Capacity Utilisation Scenario 4: Mothballing of Plant (No

[Plant Load Factor (PLF)] Generation)
Table 7: outcome at 80% Capacity Table 8: outcome at 0% Capacity

Utilisation Utilisation
At the time of
At the time of Current
Current project
project scenari
scenario conceptualisatio
conceptualisation o
n
Capacity Capacity
% 80% 80% % 0% 0%
Utilisation Utilisation
Total Ex- Total Ex-
Bus MU 3826.37 3826.37 Bus MU 0 0
Generation Generation
Total Fixed Rs. Total Fixed Rs.

677.68 685.99 584.68 584.68
Cost Crore Cost Crore
Total Total
Rs. Rs.
Variable 377.69 638.14 Variable 0 0
Crore Crore
Cost Cost
Rs. Rs.
Total Cost 1055.37 1324.13 Total Cost 584.68 584.68
Crore Crore
Fixed Cost Rs./ Fixed Cost Rs./

1.77 1.79
per unit kWh per unit kWh
Variable Variable
Rs./ Rs./
Cost per 0.99 1.67 Cost per
kWh kWh
unit unit
Total Cost Rs./ Total Cost Rs./
2.76 3.46
per unit kWh per unit kWh
Market Market
Rs./ Rs./
determined 7.49 2.6 determine 7.49 2.6
kWh kWh
price d price
Profit/ Profit/
Rs./ Rs./
(Loss) per 4.73 -0.86 (Loss) per
kWh kWh
unit unit
Total Total
Rs. Rs.
Profit/ 1809.87 -329.07 Profit/ -584.68 -584.68
Crore Crore
(Loss) (Loss)
E 450
 Fixed cost is significantly lower as Railway Rs. 52

siding Crore
O&M cost is significantly lower in this Transmissi Rs. 94
on line Crore
scenario. Also, requirement of working
Reservoir Rs. 35
capital is also significantly lower in this Crore
Taxes and Rs. 380
scenario, requiring less outgo towards duties Crore
interest on working capital. Sundry Rs. 116.5
infrastructu Crore
re works &
overheads
Illustrative Model - Tariff at 60% CUF
(Plant Load Factor) Consultanc Rs. 104.75
y charges Crore
&
overheads
Input
Finance Rs. 433.69
costs Crore
Table 9: Illustrative model of input sheet Margin Rs. 91.6
Input sheet for Original Current Money for Crore
Cost Computation Scenario Scenario Working
Capital
(At the (Based on
time of current Contingenc Rs. 12
Project market ies Crore
Conceptu conditions Total Rs. 3479
alisation) ) capital Crore
cost (for 2
X 300
Installed capacity input MW)
Capacity of MW 600 600 Pro-rated Rs. 3479

plant capital Crore
cost for
offered
Capital cost related inputs installed
capacity
Original
Asset
Land and Rs. 65 Additional Rs. 0 0
Site Crore Ccapitalisa Crore
developme tion
nt during the
BTG Rs. 1157.86 year
supply Crore
Balance of Rs. 936.6 Debt and
Plant Crore Equity
including
civil work Debt 75% 75%
and Equity 25% 25%
erection
Debt Rs. 2609.25 0
(including
Crore
BTG
Equity Rs. 869.75 0
erection)
Crore
E 451
Rate of 12.50% 12.50%

interest on Normative ml/ 0.5 0.5
loan capital secondary kWh
specific oil
consumptio
n
Availability related inputs
Expected ml/ 1 1
Planned days 20 20
actual kWh
outage in a
secondary
year
specific
Unplanned days 5 5 fuel oil
outage in a consumptio
year n
GCV of kCal/ 9500 9500

Capacity utilisation secondary litre
Capacity % 60.00% 60.00% fuel oil
utilisation
factor for
the plant GCV of kCal/ 4050 4050
linkage kg
coal
GCV of E- kCal/ 3300 3300
Performance parameters related inputs auction kg
coal
Are the Yes
GCV of kCal/ 4800 4917
boiler feed
imported kg
pumps
coal
electrically
driven
Blending ratio 100% 0%
proportion by
of linkage weigh
coal t
Design unit kCal/ 2220
heat rate of kWh Blending ratio 0% 50%
the units proportion by
of E- weigh
auction t
coal
Maximum kCal/ 2300 Blending ratio 0% 50%

design heat kWh proportion by
rate of imported weigh
permissible coal t
as per
Regulation
Applicable kCal/ 2300 2300
heat rate kWh Heat % 100.00% 0.00%
for contributio
computatio n of linkage
n of tariff coal in
Expected kCal/ 2360 2360 combustion
actual heat kWh
rate
E 452
Heat % 0.00% 40.16% Receivable Mont 2 2

contributio s hs
n of E-
auction
coal in Asset stacking for computation of
combustion depreciation
Opening
GFA
Heat % 0.00% 60.70%
contributio Leasehold Rs. 65 65
n of land Crore
imported Plant and Rs. 3414 3414
coal in machinery Crore
combustion
Total Rs. 3479 3479

Crore
Fuel price input Additional
capitalisati
Price of Rs./ 62500 55000 on during
secondary kl the year
fuel oil
Leasehold Rs. 0 0
land Crore
Price of Rs./ 1440 2267 Plant and Rs. 0 0
linkage Tonn machinery Crore
coal e
Price of E- Rs./ 3465 3485
auction Tonn
Total Rs. 0 0
coal e
Crore
Retirement
Price of Rs./ 1160 1605 of asset
imported Tonn Leasehold Rs. 0 0
coal e land Crore
Plant and Rs. 0 0
Norm for O&M cost machinery Crore
As per Rs. 21.21 21.21

CERC Lakh/ Total Rs. 0 0
Regulation MW Crore
Closing
GFA
Leasehold Rs. 65 65
Norm for working capital computation
land Crore
Plant and Rs. 3414 3414
Fuel cost Mont 2 2 machinery Crore
(coal+sec hs
oil) Total Rs. 3479 3479
Crore
Rate of
Month Mont 1 1 depreciatio
O&M cost hs n
Leasehold 3.34% 3.34%
Maintenan % 20.00% 20.00% land
ce spares O&M
cost
E 453
Plant and 5.28% 5.28%

machinery
Computation of PLF and generation
Expected
actual
Rate for income tax computation auxiliary
% 9.00% 9.00%
MAT rate 20.01% 20.01% energy
consumptio
n
Rate of
interest for
working Gross
capital generation MU 3153.6 3153.6
in the year
Rate of 12.50% 12.50% Total

interest annual
MU 2869.78 2869.78
considered generation
same as in at bus-bar
long term
loan Computation of fuel consumption
Secondary
fuel oil
litres 3153600 3153600
consumptio
n
Computation
Total heat
input from Mn
29959 29959
secondary kCal
Table 10: Illustrativ model of computation oil
sheet Total heat
Original Current input Mn
7442496 7442496
Scenario Scenario required for kCal
generation
Total heat
Plant input Mn
MW 600 600 7412537 7412537
capacity required kCal
from coal
No. of days Heat input
days 365 365
in the year from Mn
7412537 0
linkage kCal
coal
Computation of plant availability
Heat input
No. of from E- Mn
available Hour 0 2976922
8760 8760 auction kCal
hours in the s coal
year
Heat input
Capacity from Mn
utilisation % 60% 60% 0 4499684
imported kCal
factor coal
Average Consumpti
hours for Hour on of
5256 5256 kg 1.8E+09 0
actual s linkage
generation coal
E 454
Consumpti
Addition of
on of E- Rs.
kg 0 9.02E+08 loan during 0 0
auction Crore
the year
coal
Consumpti Repayment Rs.
182.43 182.43
on of of loan Crore
kg 0 9.15E+08
imported
coal Reduction
in loan due
Rs.
to retired/ 0 0
Computation of fuel cost Crore
replaced
Total cost assets
of Rs.
19.71 17.345 Closing
secondary Crore Rs.
oil balance of 2791.68 2791.68
Crore
loan
Total cost
Rs.
of linkage 263.557 0 Average
Crore Rs.
coal loan during 2700.47 2700.47
Crore
Total cost the year
of E- Rs.
0 314.381 Rate of
auction Crore 12.50% 12.50%
coal interest
Interest for Rs.

Total cost 337.56 337.56
Rs. the year Crore
of imported 0 146.878
Crore
coal
Total fuel Rs. Computation of O&M cost

283.267 478.604
cost Crore
O&M cost Rs.
127.26 127.26
for the year Crore
Computation of Variable Cost
Total fuel Rs.
283.267 478.604
cost Crore Computation of working capital
Total ex- Rs.
Cost of fuel 23.61 39.88
bus MU 2869.78 2869.78 Crore
generation Rs.
O&M cost 10.61 10.61
Variable Crore
Rs./ Maintenanc Rs.
Cost per 0.987 1.668 25.45 25.45
kWh e spares Crore
unit
Receivable Rs.
Computation of depreciation 159.65 193.25
s Crore
Total
Leasehold Rs. Rs.
2.17 2.17 working 219.32 269.19
land Crore Crore
capital
Plant and Rs.
180.26 180.26
machinery Crore
Computation of interest on working capital
Total
depreciatio Rs.
182.43 182.43 Rate of
n for the Crore
interest
year
(SBARon 12.50% 12.50%
date of
Computation of interest on loan capital application)
Opening
Rs.
balance of 2609.25 2609.25
Crore
loan
E 455
Interest on
Rs. Capacity
working 27.41 33.65 % 60% 60%
Crore Utilisation
capital
Total Ex-
Computation of Fixed Cost Bus MU 2869.78 2869.78
Generation
Interest on Rs.
337.56 337.56
loan capital Crore
Rs.
Depreciatio Rs. Total Fixed
182.43 182.43 Cror 674.66 680.9
n Crore Cost
e
Operation Total Rs.
and Rs. Variable Cror 283.27 478.6
127.26 127.26 Cost e
Maintenanc Crore
e expenses Rs.
Total Cost Cror 957.93 1159.5
e
Interest on
Rs.
working 27.41 33.65
Crore
capital Fixed Cost Rs./
2.35 2.37
per unit kWh
Total Fixed Rs.
674.66 680.9 Variable
Cost Crore Rs./
Cost per 0.99 1.67
kWh
unit
Ex-bus Total Cost Rs./
MU 2869.78 2869.78 3.34 4.04
generation per unit kWh
Fixed Cost Rs./
2.351 2.373 Market
per unit kWh Rs./
determine 7.49 2.6
kWh
d price
Total Cost computation Profit/
Rs./
Total Fixed Rs. (Loss) per 4.15 -1.44
674.66 680.9 kWh
Cost Crore unit
Total Total Rs.
Rs.
Variable 283.27 478.6 Profit/ Cror 1190.96 -413.25
Crore
Cost (Loss) e
Total Cost
Rs.
computatio 957.93 1159.5
Crore
n Summary of Findings
Large investment / cost stand sunk today
Cost per Rs./
3.338 4.041
unit kWh with the entire construction work having
been completed. Units have been
Output commissioned, Plant is ready to supply but
fuel supply will not commence unless the
Table 11: Illustrative model of output sheet
project wins long term contracts on power
At the time of Curren sale to Power Distribution Companies.
project t
conceptualisatio scenari This can be achieved only by placing
n o lowest bids in the tenders to be invited by
E 456
Distribution Companies. Unfortunately, little that can be addressed through

adequate tenders are not being floated by investment in physical/ human assets now.
Discoms. Selling power in any other
forms of contract will not allow the plant On query, the IPP categorically informed
to get coal supply. As can be seen from also that even on hindsight, applicability of
the above computation, loss is minimum in real option theory at the time of taking
80% CUF and maximum under investment decision would not have served
Mothballing option (0% CUF). Huge loss any useful purpose to circumvent future
looks to be a fait accompli under all the problems of such supervening nature.
conditions. Further, any large capex based flexibility
introduced in design of the power plant
Table 12: Comparative sheet would have rendered the project even more
Annual Profit uncompetitive today. Therefore, the
Option
/(Loss)
possibility of any “conversion” 13 do not
30% Capacity
1. Rs.(539.52 Cr.) seem to exist today. Given this policy
Utilisation
60% Capacity
scenario, divestment is still a theoretical
2. Rs.(413.25 Cr.)
Utilisation possibility. The officials were not hopeful
3.
80% Capacity
Rs.(329.07 Cr.)
about their sunk costs being recovered
Utilisation
through divestment.
Mothballing
4. Rs.(584.68 Cr.)
the plant
Conclusion
In interviews with senior officials of the Investments in thermal power plants are
IPP, questions were raised as to the options highly capital intensive in nature and have
now at hand of the developer. Real option long gestation period. For example, a
theory was discussed to find out typical 600 MW coal based power plant,
applicability of such theory in decision requires investment close to a staggering
making at this stage, if any. However, it Rs.4000 Crore. Based on the prevailing
was a clear reply from the officials that Government fuel policy, several private
such uncertainty was not considered during investors committed themselves to such
taking the investment decision. Such high value investments recently, supported
policy reversal was unprecedented in
independent India. Any meaningful 13
Stranded generation assets: Implications for
application of Real Option theory at this European capacity mechanisms, energy markets
and climate policy – Ben Caldecott & Jeremy
stage is ruled out because there is very McDaniels
E 457
with loans from Public Financial 3. Anderson, J. A. (March 2006). End-Users Say
Today's Organized Electricity Markets Actually
Institutions in India. However, while
Decrease Competition. Natural Gas & Electricity,
irreversible construction work was on full
22(3).
swing, the policy took a sudden ‘U’ turn as 4. Antoshin, S. (Nov. 2006). Investment under
a knee jerk reaction to threat of domestic Uncertainty. International Monetary Fund.
coal shortage. This resulted in a large 5. Asian Development Bank. (May 2002).
Handbook for Integrating Risk Analysis in the
scale uncertainty for these projects. The
Economic Analysis of Projects.
position was further aggravated by drastic
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Information Technology Strategy Towards Operational Excellence in

Oil & Gas
Hicham Hebaichi*, Dr. Shailendra Pokhriyal**, Dr. Geo Jos Fernandez***
* Product Development Manager, DNVGL Phone: (+971) 50 6621336, E-Mail: hobaishy@adma.com

** Professor and HoD (Department of Oil Gas), College of Management & Economic Studies, UPES
***Asst. Professor (Sr. Sc.), Department of Oil Gas, CoMES, UPES
The demand for real time information resulted The demand for continuous asset monitoring and
with the big data phenomena. This paper analyses real time data had created the big data
the upstream Information Technology phenomena in IT. In an information growing
applications readiness for this increase and drafts environment, it is necessary to review
a way forward for enhancing IT role in the Information Technology position in upstream Oil
hydrocarbon industry. It evaluates the current and Gas and assess ways to move its current
position of services rendered by IT which in most position as a service provider to become a true
cases taking reactive role. Corporations demand value creator to support cost control and
more automation, integration and real time tools operational excellence with business insight.
to support the decision making process and Having matured in many business areas, IT
seeking swift response to market demand with strong focus in the core business and production
minimal loss to production opportunity and optimization should provide a full partnership
maximum recoveries. IT must have an with the business. This can only be realized if
information strategy to convert this information
into the tool of performance excellence. The data Objectives
shapes up decisions related to asset condition, oil The objective of this paper is analyze IT position
reserves, hidden risks, long term development in oil and gas & recommend way forward to be
plans and effective day to day planning. ready to support the companies objectives to
enhance oil recovery, optimize fields operations,
Keywords manage risks and enabling decision tools to
Information Technology Strategy, Upstream IT control and mitigate problems. IT must empower
Roadmap, Performance Excellence, the decision making process by being an active
player in the core automation following an
Enterprise Architecture that integrates processes,
E 463
technology and people. In the short term IT distributed simulators in one system
should develop a comprehensive strategy using asset dynamic model and key
decision variables analytics for
approach that is aligned with the business plans
production & ongoing activities.
with investments measured against a predefined
set of performance criteria. Additionally, the
Methodology
divisional business units should work with IT
The complexity of the support problem calls for
teams in close partnership to proactively connect
adopting the Enterprize Architecture with
the diverse applications utilizing the right tools
Business Process modeler framework
and standards. IT can add value if shift is
methodology to complement the current ITIL
achieved in:
Version Three Service Management. The choice
Table 1: IT Goals
of EA Framework is used because it provides
Decision Unified office based environment that
Tools provides visualization and monitoring mechanism for IT to be involved in the buisness
tools of the assets condition, with key process and inch its way further towards
plans, actions, dashboards, risks, becoming more engaged in the provision of
mitigations, changes to key variables
effective performance excellence tools. The
of interest through business intelligence
components of an architecture framework are:
management at all levels of
responsibilities.
Enterprise To develop a blue print of the BUSINESS: Process used to run

the business activities
Architecture business or the business model that
(EA) defines all the processes, the technology DATA: That must be collecetd,
organized, classified, mined for
enabling it and how it is used by the decsion tool.
people. APPLICATION: In-House or

acquired that connect the processes
to data
Data The roadmap to utilize EA to deliver an
Management end-to-end process for up-to-date TECHNOLOGY: Harware, servers,
network collaboration supported by
technical records and version control IT
in an environment based on diversified

best-of-breed applications as compared
to integrated applications and
Figure 1: Enterprize Architecture
repositories.
 How to document the enterprise as a
Operations The provision of holistic process for
Research optimization that can use simulation of
system for the interest to the stakeholders
all the models in one integrated system in the form of a table, a diagram of sub-
as alternative to individual default processes.
integer programming. It will put all
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 Methods for designing architecture and Some penetration into the

the processes that architects; business interfaces
o Usually, an overarching enterprise Managing service portfolio
architecture process, composed of Business through Service Catalogue

Insight Mobility and accessibility
phases,
from anywhere
o Breaks into lower-level processes Integrated and coordinated
composed of finer grained approach
activities. ITIL enabled service
o A process is defined by its management
objectives, inputs, phases (steps or Effective data management

Excellence and integration
activities) and outputs.
Instrument Intelligent Decision &
o It may be supported by Search Capabilities
approaches, techniques, tools, Value added of process
principles, rules, and practices. optimization solutions
 Organization capability of the support for Collaboration for enhancing

recovery and production
the governance with the required skills,
experience and training needed.
The Changing Role of IT Upstream Business in Brief
The analysis of IT role over time shows that it The core activities of the operating companies
has evolved through a number of stages that can are field development, drilling, production,
be summarized in the below table prior the storage and shipping of oil and gas. Transported
sought excellence tool: material must go through separation of crude
Table 2: Changing IT Role from associated gas and water; and getting it
ready for transport with special blending for
Data Center Focus on technology, not
business safety and environmental concerns. The
Provision of HW and SW hydrocarbon producers companies organizations,
administration although generally steady, are dynamic and
Supporting applications in
transformational due to the technological changes
silo with little business
and consequently to cope with new business
involvement
processes re-engineering and management trends.
Business units seen as
Service internal clients
Focus Focus on Infrastructure The overall process starts with the Fields
Project specific planning Development business units assessment of the
E 465
economical presence of oil that is feasible for and reservoir characteristics. Logistical support is
short and long term production. This is followed in charge of arranging lifting operations,
by petro-physical studies, reservoir models, oil in transporting personnel to site, moving rigs, hiring
place estimates, production targets, and well service vessels and managing the material.
planning. Development units provide Drilling Administration units handles recruitment,
units with long term detailed plans and short term commercial matters, finance, insurance,
guidelines (i.e. new wells locations, depth, environmental, employees’ welfare and social
trajectory, adjacent wells, stratigraphy models, responsibility by procuring of services and
formations, reservoir characteristics, rock typing, material from within the community.
seismic interpretations, 3D models and soil
properties, etc.). Engineering business unit Health, Safety and Environment units set the
receives the results of the feasibility studies for standards of safe operations. Support from
the projects to be planned, designed, procured General Services, Legal and Public relations are
and executed by Projects units following a all preserving the good images of the Companies.
structured approval with business justification.
Drilling unit is responsible for well development IT Spectrum in business and shortfalls
and well maintenance (work-over) based on the A high level business process is drafted here for
guidelines received from the Development units. the full field life cycle. Each process is
Once production facilities are in place, operations accompanied with a number of automated
and maintenance are managed by the Production business functions which are supported by IT
units supported by Technical and Integrity Division. It starts with seismic studies to obtain
Services that provide detailed outages plans, flow information about the presence of hydrocarbon.
assurance tasks, assets condition and fitness for Further well cores sampling provides real data to
service evaluations. calibrate the model. The, samples are extracted
through a development well that can give
Corporate Planning business unit analyze the characteristics and petro-physical information
demand and effective capacity to plan further (i.e. pressure, temperatures, geochemistry - ratios
development wells. This is achieved closely with of substances in the fluid, porosity, permeability
Petroleum Engineering after evaluating the well and rock typing, etc.). All information
tests, well models and inflow performance contributes to the feasibility study for front end
results. The operational targets guidelines design of the production facilities capacities and
(pressure, flow, production and injection) are designing an economical facility scaled to the
issued to Production unit based on well model first stage of oil recovery. This is followed by
E 466
long term planning and evaluating various Incident Management, Change Management and
technologies for enhanced recoveries. The Service Catalogue. The increase in real time data
process continues through commissioning the acquisition and big data phenomena will mandate
facilities, normal operations, up-keep by the use of the Enterprise Architecture, business
monitoring surface and sub-surface assets during modelling and effective IT involvement into the
operation until final abandoning. applications functionality.
The increase in automation volume, mandated

that IT to adopt an Infrastructure (ITIL) which
was the foundation for Service Management,
Oil In Place, Field Facilities,

Diversity of Data
ergonomics Network,
Oil In Place,
Network, Flow, Storage, Power,
Economics
Storage, Shipment, Utilities, Housing,
Strategic As Built ,
Seismic, Plans Transport,
Interpretation Critical records,
Exploratory Process specs,
Wells
Feasibility Design Detailed Commission
Study Engineering Portfolio, etc.
Calibration
Logging
Project
& Geo
Manage
Modeling
ERP, Surplus
Studies ERP, EAM, Planning, etc. material,
Potential Spares
Imaging Procure
for Manuals, etc.
Magnetic Exploration Construct
Gravity
seepages Visualization
Abandon Execute Well Plans
Regulations & Drill Logging LWD,ML
Seal and Administration, HSE, QA Coring, Hookups
Protect Completion
EOR & Operate
Formations Real Time.
Sustain &
Demobilize Test, Operate
Produce
Maintain
Revamp Assess &
Account Facilities Mgt,
Smart Well Reservoir Mgt,
Optimize, Assets, People ,
Artificial Lift Maintenance Monitor,
Downhole test Work-Over Flow
Plan, Produce Produce
Inj. Monitoring Modifications Assurance
Shut-Downs Integrity, Risks Oil Accounting
Work-Over DOF, ERP, DCS,
Figure 2: Bssiness Process Diagram IT planning works with the life cycle of the
existing technologies (4 to 6 ) years, it addresses
While each business unit role ends with the end of the process it is handling, the next process
is handed over to the next business unit, ITfuture requirements
role continues all thein way
periods
throughof the
5 whole
years.
production chain. However, business plans are based on 20 years
production plateau and long term development
beyond 40 and 50 years. Most fields in the Gulf
region have been producing for over 50 years and
E 467
the known estimates of the recovered oil does not to setup the operational parameters of the wells.
exceed 20 or 25% of the initial oil in place Special purpose software products to evaluate
estimates. Yet & in order to meet market risks and to simulate the operation are in place to
demand, major developments are taking place to ensure that the operation is not at risk and to
increase production in brown fields and introduce secure assets fitness for service.
new producing facilities in the additional new
fields. Today’s major systems information is based on
the following applications categories:
The shortfalls of the current support is that more
user engagement is required in-light with the IT a. Applications Based on Structured Data
manpower constraints. IT needs to cope with the The applications that are maintained in
fact that the same level of the traditional relational databases and can provide the users
manpower support disciplines can cover for the with trending and analytics of how the
increase in user demand. This is due to the new business is doing. Among those are:
technological offerings that made systems less Production and Well Monitoring:
manpower demanding technically. Minor Intelligent Oil Fields which encompass
adjustments in security and new IT skills are capturing data from well automation
required due to the shift towards more business systems, completions instruments, well
collaboration, IT driven optimization and real testing, modelling, real time data
time data driven decisions. acquisition during workovers, multiphase
flow measurement, continuous
monitoring of performance of the
Applications Description & IT role producing wells, choke valves condition,
IT supports “relational databases” for hundreds zonal diversion valves, inflow control
of applications to run all the business processes valves and down-hole flow gauges,
(among those are ERP, production system, asset temperature and pressure readings and
management, capacity planning, simulation and monitoring of subsurface as well as
modelling, etc.). A large number of desktop surface facilities. IT further involvement
applications are used for Structural evaluation, in the process flow and the knowledge of
Engineering, Subsurface modelling, Sampling, site distributed control systems and
Simulation, Piping evaluation and structural instrumentation becomes inevitable.
stress computations. Desktop simulation products Traditionally IT was supporting
as well as server based are used by all disciplines standalone systems that made IT more
E 468
active in the back-office tasks and less IT coordinators assigned to business units
involved in daily decisions. Therefore; was an approach that drifted away from
new disciplines of control and process its original purpose. Alternatively, IT
engineers will become necessary to boost staff will require business training by
the IT organization to cope with joining the users’ Divisional units for
supporting the new fields. long periods to be more exposed to the
Subsurface Applications and Enhanced way the process is flowing and
Oil Recovery: Wells history, geological conducted. IT business analysts will
logs, sub-surface logs and petro-physical require more involvement in the data
properties are maintained in core management, model updates, trending,
applications with data read from the data mining and statistical techniques.
production system and uploaded as Drilling and Work-Over Efficiency: and
summaries for evaluation purposes. introduction of geo-steering using 3D
Traditional data acquisition will be models, submersible pumps installation
changing with a shift towards continuous and maintenance, real time operations
modelling. Ocean Bed Cable sensors for centers for data transmission which
time based 3D interpretations (4D introduced new data standards
modelling) will be among the emerging (WITSML/PRODML) that requires
methods of continuous reservoir adequate management and swift
monitoring. Interpretation software will availability when needed. The drilling
be acquired for near real-time controls of optimization has been also a concern for
injections technologies for reservoir offshore and onshore operations. Both
management, history matching, require effective logistical support and
uncertainties analysis, fluid planned deployment of the rigs with
characterization, wells vertical seismic minimum loss of time. The drilling
profiling, geo-modelling, fracture program has a great impact on
modelling, carbonate build-up detection, production. Traditionally, drilling
artificial lift monitoring and water applications have been kept away from
unloading. Specialized software for all the the Enterprise Resource Planning (ERP)
subsurface technical applications will Systems due to the complexity of the
require staff who are multi-skilled and drilling costing and the estimation of the
capable of supporting multi-discipline authorization for expenditure (AFE)
tasks. Traditional support by permanent process. Similarly, the Production
E 469
systems are also handled separately from place but not connected. There are
ERP and drilling systems. This will incidents where the systems silo planning
change by introducing connectors to caused loss of expensive rigs productive
enable the planning capabilities towards time. Additionally, enablement of
optimized production. vessels, people and crews tracking to
Activities Planning Model: Integrate all secure on board safety, evacuation in case
sites (current and new digitally ready) and of emergency and protection from
minimize surface and subsurface hazards is a key drive for further
constraints to lower shut-downs, reduce automating including drilling route
well visits and obtain more real time data optimization, people tracking and other
for reservoir assessment. IT will require means of work scheduling. IT will need
to be involved in developing a master to utilize the integrated process model to
plan model that will review all technical handle work generated in ERP, by
and planning constrains to prioritize asset optimising the use of the resources
management. An activity planning model scheduling (vessels, rigs, people, material,
can be used to produce optimum test plan. accommodation) and people movement.
stimulation plan, pipelines pigging Automation use of GPS, RFID or radio
activities, shut-down plans, effective communication will add value when
modifications and routine maintenance critical path activities are communicated
seeking reduction of breakdown between the logistical support systems.
maintenance and optimize productive Budgeting and Costing: Swift reporting &
time. The master simulation model will accuracy of budget and expenditure is
be handled as an Operation Research becoming more transparently available
question targeting optimization in a for all responsible areas of authority
holistic manner that can allow a full field within the organization. The development
integrated approach. of financial systems to provide fast and
Logistics and People On Board: accurate expenditure for all cost elements,
Working in remote sites relies heavily on projects, cost centers and venture
logistical support that needs to be planned accounting is reasonably mature in
and at the same time securing safe upstream industry. However, cost
movement of people and vessels. A reporting is not very accurate when
logistical system along with vessel and information related to the asset value for
people tracking systems are normally in asset replacement as compared to upkeep
E 470
costs. This is a task that needs input from system audit function should be put in
the IT with drive by business analysts. place to secure that the process is being
Technical Records & As-Built Models: A followed and being completed. The whole
common problem upstream is the update concept can save lost production revenue
of the as-built drawings as a result of or environmental problems costs.
plant modifications or introducing new Projects Portfolio: A master plan that
technologies that may require minor puts all ongoing projects for all fields
changes to the facilities. This has been a covering all the phases of the schemes
cause of many operational problems and from initiation to execution. Financial
in some cases many accidents. reporting, critical path plans and technical
Complacency is the main cause for data are managed together in one
incomplete process of commissioning, application. The projects system works in
shortcuts in the work permit system, the silo and some documentation is not
nature of the business remoteness, handed over to Operations. Once a
absence of unified system for handling all project is completed it will interface with
activities, the lack in some cases of use of existing facilities; therefore the impact on
complete project risks or decision tree existing applications is to be realized to
analysis. Latest technology is providing reflect this interface. A business process
walk through 3D model that is integrated should be introduced with each
with the engineering process diagrams are commissioned project to allow for IT and
relatively fast to implement and already users to effectively manage the change
available for new fields. It encompass the and its interfaces.
physical scanning of the plant in 3D and Asset Integrity & Risk Assessment: This is
overlay it with the process diagrams. IT critical for old and new facilities. The
value is recognized in this area but much integrity assessment of the aging plants
more will be required to implement the (Separation plants, utilities, wells,
right technology and maintain the as-built pipeline network, platforms, electrical
up to date. A process flow should be systems, pressure systems, machinery,
introduced that connects management of storage, metering and loading facilities)
change to contracts closure and the update require an up-to-date quality data that is
of the engineering records. While available and maintained it in the right
delivering the best systematic approach way. However, the data needed for risk
will not guarantee compliance, an IT assessments is not always ready or
E 471
accessible by the consuming system. This etc. In this domain of applications, IT

issue also calls for the business and IT to business analysts play a key role in
introduce System Audit function to make securing future releases compatibility
recommendations and advice the business with the implemented systems tailoring
units on best use of the systems. over time. Some of the key
Additionally, it is required that the implementations are not integrated with
anomalies are passed to the maintenace the ERP. It is necessary to address these
system and closed under the ERP suite of systems due to their internal and external
applications. The functionalities of these impact on the way that the whole business
applications are developed in isolation communicates. The business units strive
from the production system. for ‘best-of-breed’ approach that made
Consequently their use is limited to a integrated ERP less popular in large
small number of users. To make these organizations. IT is not in a position to
systems useful company wise, they must enforce integration for all business units
have a value related to the production or to extend the connectivity to
integrated model and ERP maintenance production and drilling applications. Such
plans. decisions are normally made outside IT
ERP and Asset Management: ERP and driven by a business unit with limited
systems have been also remote from scopes. Business units have bigger say in
Production systems. ERP are being the process they manage and in some
implemented with little focus on the cases how it will be automated and with
Company production objectives. They are which solution. In order for IT to be more
either driven by commercial control, effective in this area; information should
maintenance planning or costs based not be duplicated in multiple systems
approach. Regular enhancements are in- through the use of data standards and data
progress to; introduce e-procurement, classification. Once in place, IT can
suppliers management, payment tracking, deploy web-services to bring information
work permit, safety regulations, from different applications and to avoid
Geographical Interface (GIS), inventory having multiple versions of information.
management, smart warehouse A more alignment will be required with
automation, technical records integration, the business units to secure that the
predictive maintenance, asset tracking, solutions are using a set of standards.
material tracking, shut down planning,
E 472
b. Applications based on Unstructured Data  E-mail, transmittals & Faxes,

These applications are handling and Circulars, Video collaboration
maintaining data in a mix of repositories meetings
(i.e. relational databases, shared folders,  Specifications & Maps
proprietary databases, vectorized or pre-  Insurance & Legal Records
processed data, media, images, PDF,  Bidding & Procurement documents
etc.). They can provide the users with  Personnel Records and Leases
valuable studies, engineering references,  Policies & Special Incidents Reports
operational manuals, business
transmittals, diagnostics information and The strategy for IT is to introduce a
history records required for business or search engine that can access all data
legal matters. repositories and run the native application
They are known today as Enterprise as required and based on license
Content Management Systems. In Oil agreements. This will pave the way for
and Gas they are associated with: future intelligent search that provide
 Critical Operational Records smart connection queries.
 Manuals, Standards, Drawings and
revisions c. Proprietary Data Applications
 Reservoir Studies Row data which is collected through
 Media Files, Submarine diving sensors, hydrophones, ultrasound, x-ray
footages radio signals are kept in its format and
 Non Destructive Testing (processed processed for interpretation by the
sound waves, ultrasound records, X- relevant systems . Once processed, it is
ray and magnetic tests for structural compared with the previous readings to
assessments) extrapolate changes over time. E&P
 Shared folders, Company Reports and geophysical applications, special
publications diagnostics systems, spatial
 Web contents services, interpretations, metallurgical applications,
 Projects documents corrosion readings applications, etc. all
 Contracts, Purchase Orders & use proprietary databases to interpret
Invoices changes and develop a trend for reservoirs
changes, well logs, assets condition
E 473
changes profile and oil volumes maintains technical records with no risk
displacement models. of change by occasional inappropriate use
overtime.
The oil and gas industry developed a
range of industry standard data formats Data Growth
through the Society of Exploration On the average, data is growing 10 times every 5
Geophysics (SEG) and other societies years. The 2010 Company with 2000 employees
which would make information in Oil & Gas had an average of 250 Terabytes
interchange between relevant applications total data. In 2015, the total storage reached 1.2
easier and also allow various software Petabytes not including backup. Corporations
products to be used to analyze and demand more automation, integration and real
interpret the models in a consistent time data acquisition tools to support the decision
manner. making process and seeking fast response to
market demand with minimal loss to production
In recognizing this, the data gets opportunity and maximum recoveries. This has
converted form pre-processed to post- considerable data growth rate and mandates data
processed and can be read in a binary storage and retrieval strategy. IT must have an
format by the Computer program in order information strategy to convert this data into the
to produce the required analytical models. tool of performance excellence. The data shapes
Various methods are used in the up decisions related to asset condition, oil
processing including stack the data, reserves, hidden risks, long term development
eliminate noises digitally and aligning plans and effective day to day planning.
various signals reflected in the collection Additionally a data mining technology will
process to the right interpreted point using require to be implemented to support delivering
special mathematical techniques. This trends and profiling of decision variable over the
data is the source of the wealth of the course of production periods.
companies and IT can play a role in
managing the historical records, The graph (figure 3) below highlights the volume
versioning them and use time based of data growth.
history models (e.g. reservoir properties,
fluid displacement overtime, corrosion
monitoring, etc.). Managing this data in
systematic manner for elapsed years
E 474
facility for a DRP. A business continuity

1600
1400 plan is of higher priority in the event that
1200
1000 Unstructu prohibits total entry to the company
800 red
600 Strutured headquarters. The strategy is to
400
200 continuously review the applied approach
0
2010 2011 2012 2013 2014 2015 and enhance it to ensure speed of
recovery and minimum loss of service
Figure 3: Data Growth Diagram
time by monitoring the service
Hardware Strategy
availability performance indicator. With
Ongoing infrastructure upgrades are common
virtual servers also being on the increase
practices. This is also subject to technological
and doubling almost every 3-4 years. A
advances via implementing a modern data center
strategy for consolidation of applications
that is resilient and expandable. Among those
for effective administration will become
technologies are virtualization, private cloud,
inevitable. It is to be noted that each
high availability service delivery, mobility and
service can have from 3 to 7 servers for
access from anywhere. The increase in servers
Development, Staging, Testing, Training,
does not impact IT support resources since
Pre-Production, Production and Backup
servers are becoming easier to configure and
for disaster recovery. Likewise, the
support. According to HP, one system engineer
database servers also follow the same
can support 200-300 servers as compared with
structure.
15-20 five years ago.
b. Telecom and Network
a. Servers and Storage
The hydrocarbon companies IT
Servers follow the upgrade path of four
infrastructure supports video, voice, data,
year life time for large units replacement
radio and mobile communication, paging
and three to five years for entry level
systems, cinema, CCTV, IPTV, rich
units. The companies IT must identify
Video Conferencing streaming, remote
the critical systems and implement switch
data acquisition systems and emergency
over plans for business continuity with a
centers connectivity for all sites. Remote
backup site. Implementing an effective
sites and barges are connected via
cloud will make DRP less required and
wireless communication which is
alternatively, outsourcing this function is
dependent on the service providers or
also a viable option which may relief the
wireless equipment (microwave, UHF,
organization from running a dedicated
E 475
VHF Dialup, RAS, DSL and GPRS 3G, based environment. Desktop applications
4G or satellite or service lines). Local are acquired based on one off purchase
Area Networks are normally composed of order with limited support related to clear
fibre connections in various locations and malfunction that is encountered during
a number of routers, network nodes, use of the application. Upgrade of user’s
network hubs, storage media, desktops, desktop hardware follows four years
and input/output devices. Wide Area usage strategy. Peripherals such as
Network is moving to fibre backbone scanners, plotters, Media equipment,
where conventional radio based external storage, etc. follow obsoleteness
communications are fading away. IT analysis as they are not critical to the
should build its infrastructure to respond business and commercial alternatives are
to the business needs and be aware that available. The strategy in this respect is to
the dynamic animation of the full upgrade to the latest reliable release based
production operations in real time may be on business justification. Virtual Desktop
less than 5 years away. New facilities is the way forward which will provide
already have this dynamic operation users the flexibility to remotely access the
simulation in place on the Plant level and full capabilities of the office desktop
progressing towards the full production given that licesncing provisions are in
chain. place.
c. Peripherals Strategy
d. Security
Cloud technology made the virtual
Implementing the digital oil field
desktop more valuable by providing
introduced direct communication between
flexibility of accessing services and office
the distributed control system and the
equipment remotely. However, the
business network. This mandates
traditional physical desktop continue to
enhanced security infrastructure to protect
be the most convenient to use specially
the plant control system from malicious
due to restrictions of Licensed software
software and intruders. The process
products. Desktop based systems’ life
network should be isolated from the
cycle depends on the divisional core
business network and secured over its
business changes or new automation
traditional levels of protection.
requirements. In most cases, in-house
Investment in physical security needs to
developments are associated with servers
ensure integrity, availability and
E 476
confidentiality of the digital systems and Production Accounting, Effective

that the process is flowing in isolation Capacity, Operation shift handover
from the company business network management, Well Value Assurance,
which is vulnerable to viruses being open Well Integrity systems etc.). These
to external Internet, Email and other open systems serve the core business and
systems. It is essential for IT to segregate specific to the production process
process and business networks (i.e. design or methodology that is an
process control network and process intellectual property of the company.
information network) and to implement To some extent IT organization
firewalls, anti-spyware, error log managed to implement some
managements, security operations center, connectivity and standards between
white listing and intrusion prevention. these applications and maintained the
level of authority and administration
e. Application Development Types as defined by the client divisional
In general there are two main types of users.
applications implementation. In-house ii. Ready Made Applications: Functions
developed and off-the-shelf ready-made that are general in nature and subject
systems. Some situations may involve a to external auditing as defined by the
mix of both when a licensed software shareholders guidelines will continue
provides internal tools for minor to be acquired off-the-shelf (e.g. ERP,
customizations. In such situation, the reservoir simulation, model
strategy follows the ready made interpretation, geological modelling,
applications given that the launch of new flow assurance simulation, flow
releases will always allow for migrating modelling, well data modelling, wells
in-house customizations. maintenance, well work-over, plant
i. In-house Applications: The measures integrity, corrosion monitoring, 3D
related to these systems are specific to visualization systems, Real Time data
special business needs and normally acquisition & distributed control
requested by the owner discipline systems, etc.). The measures related
division or business unit. IT will to these systems are assessed jointly
acquire readymade packages except with users’ departments. These
for major in-house developed systems systems own processes that cross the
with the plant configuration basis (e.g. divisional boundaries. In most cases,
E 477
IT will buy these systems and develop Integrating these solutions is not possible
high skills of configuration, tailoring, due to unavailability of the source code or
reporting and data support. The the data model. A web service can be used
configuration and automation of the to pass these variables between the choke
reports to support the business applications to deliver the right data
intelligence falls within IT and service at the right time between them.
designed by the users’ community. IT
is required to maintain the technical
documentation of these systems to
facilitate reports, support and
interfaces.
f. Strategic Business Initiative

Suppliers of hydrocarbon applications are Figure 4: Choke Model
excelling in their applications development
Maintenace, Shut-downs, Pigging Pipelines,
to provide end to end solution for projects, Modifications, Breakdown,
Workovers, Stimulation & Servicing are
production chain by bridging the gaps in
impacting each other while the operations are
the various solutions interfaces. Therefore, concerned about controling the choke model
they are adopting a strategy around their

g. A model for Excellence
own existing best of breed solutions.
Operational excellence is the process of
However, clients’ users find difficulties to
orchestrating field activities in a safe
adopt such solutions which will render
manner and with minimum loss to
some of their own existing solutions
production opportunities. There is a
obsolete. This has a drawback due to its
production opportunity that is lost as a
impact on cost, training and management
result of absence of optimization based on
of change. IT may step in here and develop
operations research and integrated model
a strategy through service oriented
that can assist in effective planning and
architecture to bridge the gaps between
minimizing constraints. Therefore, a
systems. The main processes were treated
portion of the profit is lost and
as choke points in some of the reviewed
consequently the production cost per
studies. Each point has a number of
barrel is effected. In order to understand
solutions that deals with a set of decision
the problem, a full review to all decision
variables needed by the next one.
E 478
variables need to be conducted to  Simulate the production history

understand their behaviour and based on profiles instead of the
constraints. Using data mining for constants
trending and analytics to understand the  Compare with existing records to
change of the decision variables will help validate lost production
in predicting future values by opportunity.
interpolations (by using a polynomial fit  Simulate forecast based on the
or Monte Carlo simulation). Once this is future extrapolated variables
achieved, A discrete dynamic general  Conduct what if scenarios based
purpose simulator can aid in solving this on facilities and network
Operations Research problem. The IT availability for flow assurances &
should take an active role in operations reset other variables, (e.g. back
research as a new skill to allow for allocation) re-run and obtain best
working with the users in a process to estimate
achieve the following:
 Understand and define all the The above methodology can only be
decision variables and constraints accomplished successfully by an Internal
 Data mine the decision variables IT organization. Service providers have
 Develop a mathematical or repeatedly attempted a process with
statistical model (e.g. via a limited success or no success’ as a result
probability distribution, Monte of the following:
Carlo prediction or a polynomial  Incompatibility of multidiscipline
fit) software products used by the
 Develop an overall simulation client company
process for the system based on  Absence of realistic business
the choke model process backed by operations
 Use well past estimated actual research
production to test validity of the  Absence of process orchestrator.
simulation model In most cases, the external vendor
 Continue calibrating the model will charge of such orchestration
until the results are valid (tally as major variation to the service.
with production)  Absence of the internal will to
support this process
E 479
 Overlap and lack of clarity of  Management vision: dashboard

RACI (Responsibility, with drilldown capabilities for
Accountability, Consult, Inform) decision process
charts  IT vision: achieve the above
 Long time needed for
development as a result of It is required that IT sets its goals and
proprietary applications used. introduce balanced scorecards for
 Adapt with new technologies as achieving them. Once the goals are
applications development cycle formulated the mechanism can be put in
very lengthy and can be place to monitor its progress. This will
introducing new problems. ensure that the business demand and
 Lack of collaboration and good supply are in place with the right
will by external service as governance tools. Among those tools are
compared to internal IT Enterprise Architecture (EA), data
warehousing, web services, portals built
h. IT Supporting Initiatives that are personalized to each functional
While upstream companies targeting units needs through a unified user
increasing production, based on market interface to the existing services as
demand, accompanied with the needed by the business.
implementation of the digital oil field; IT
is being introduced to new challenges in a. Applications Connections via EA:
reference to infrastructure, data services As was stated earlier, attempts for
and integrating production systems with applications integrations are not
data historian. There will be more shifts practical due to varying data
towards collaborative environment, models. Alternatively, web
process systems integration, visualization, services tools can be used to
data standards and graphical tools to connect the key applications.
facilitate data interpretation. However; a prerequisite to that
The Company vision is seen from 3 will be the presence of the services
perspective: and infrastructure blue prints in
 User vision: one easy interface to place. These are represented by the
access data and do business Enterprise Architecture which
covers business process models,
E 480
process owners, users roles, data optimization. Studies have placed

models, applications dictionary the lost production opportunity
description, data standards and the upstream is between 10 to 15% as
hardware infrastructure. EA a result of information delay due
capabilities have been used in to unconnected business processes.
many industries. The process of This is validated by main
putting applications, servers and consultants and major oil and gas
users for all services together in Companies (ref. Accenture, IHS,
one portfolio and in one model Chevron, Marathon, BP, etc.).
will provide the tool to align IT b. Data Management: The objective
with the business. Such portfolio of data management is to benefit
will move the IT function from fit from the data mining capabilities.
for service purpose category to a Data Management does not entail
business excellence instrument. backup, archiving and high
The value in upstream comes from availability. It does not also limit
identifying the processes of itself to industry standard (PPDM,
integrated planning activities and POSC adopted by major oil and
the data structure of the decision gas service providers). Data
variables. This can be used for management will have value if a
data mining and to provide process that secures up-to-date
connection between the business information is in place with
units applications to optimise tracking of changes. This involves
production and recoveries. EA operational parameters, latest
provides the foundation for data study results, as-built drawings,
management, data warehousing risk assessments, inspection
and big data technology. Without findings and assets parameters.
it, data management becomes data The reason for having problems
reporting tool that is missing key related to data management is the
elements related to how the data is incomplete business processes,
being used. EA provide the speed in projects development,
ground work for identifying business growth and stretching the
decision variables required by use of the aging facilities beyond
Operations research for the designed lifetime which
E 481
resulted with integrity issues and August 13, 2012). The massive
work activities by different areas amounts of data related to
of authorities. Incomplete data diversity of systems will need to
management can lead to out of be managed effectively through a
date engineering records and business process. This
consequently to accidents and management will help companies
main problems. During the achieve their goals in of organized
attempts to control the oil flow at centralized directory of updated
the Gulf of Mexico accident, the information repositories. IT will
remote operated vehicle ROV was require to explore solutions for the
unable to operate the Blow out emerging big data standards. The
Preventer (BOP) second shutdown current practices in backup and
mechanism as a result of outdated recoveries secures operational
drawings. Other examples (i.e. aspects but does not sustain the
2005 Texas refinery accident) are changes overtime. This renders
related to Inspection the historical technical records,
recommendations that didn’t reach models, procedures,
maintenance Team or DCS system interpretations, etc. as a user
that was not updated when responsibility. While users change
instruments changed or equipment overtime, some of the companies
modified. Data Management is a information may be subject to loss
critical activity considering the or negligence. Maintaining
future of information development historical instances will protect the
in Oil and gas (Data Scientist an information as one of the key
emerging new skill – ref. IBM assets. Additionally, the version
CNN Report “According to IBM, control, data classification, data
every day we create 2.5 quintillion retention policy, data quality
bytes of data — so much that 90% audit, data completeness audit and
of the data in the world today has system usability audit (is data
been created in the last two years being entered correctly?, is it
alone” Dying careers and thriving retrievable? Is it readable by web
careers: The jobs of tomorrow By service or query? Etc.). IT must
Alan Townsend, Special to CNN keep all applications data model
E 482
as a reference and for use in many will have layers for different
functions to support its role. features (i.e. maintenance
c. Dashboard & Visualization: activities, production, asset
Traditional systems, so far, have condition, well testing, well plans,
been using standard log-in screens subsurface, reservoir
with special user interface for characteristics, models, effective
each application and log-in capacities, major projects,
credentials. This is cumbersome to shutdowns, vessel/vehicle
the users and IT who have to tracking, people tracking, , etc.)
administer users’ access, with appropriate user access
privileges, application portals, rights. This interface is a
application servers and databases compliment to the technical
with many instances for testing, features of the native applications
training, development and that serve the a special
production systems. Web based functionality for the user. This is a
applications created opportunity to private portal designed based on
unify the single sign-on but didn’t user needs and relying on the
overcome the administration processes, EA, organised
problem and the support volume databases, organised servers and
required. The Intranet is emerging asset geographical model.
slowly but without a unified
service portal, it can be limited to
be a service catalogue only if not
Priority Roadmap for Alignment
thought of carefully. Asset Portal
The following diagram suggests the IT priorities
is the smart user interface that
quadrant for business alignment without timeline.
navigates users to a physical asset
It is related to where (“to seek leadership”, “more
model based on the GIS. Users
work needed”, “to seek betterment” & “benefits
should be able to search and get
realized”). This has alignment drives IT strategy
the physical asset interface to all
and defines priorities for more collaboration with
data and applications, with
the business units.
seamless navigation between
information without using
multiple systems. The operations
E 483
Table 3: IT Initiatives
Initiative Mitigation
Real Time Company vision in achieving optimum
Models oil recovery calls for real time
modelling for responsiveness to
changes and fast decision making. IT
will need to be proactive as an
excellence instruments in meeting the
subsurface requirements in near real
Figure 5: Business Focus time modelling and surface

requirements in optimization.
Infrastructure Network Operations Center,
Conclusions of strategic IT Tasks
modernizing emergency response
Centers, Cloud & and business
Oil and Gas business relies on Information Continuity infrastructure
Technology in all aspects of the business. The Service ITIL Change Management and all
Management processes in relevance to Incident,
spectrum of the science behind the business
Problem & Quality Control are to be
(thermodynamics, geology, Monte-Carlo
adhered to based on the Enterprise
simulation, production management, accounting, Architecture (EA) model
equations of state in multiphase simulation, Applications IT blue print of the automated business
engineering sciences and all other disciplines) are Connections using Enterprise Architecture as a tool
and to facilitate capturing the
not required to be mastered by IT. This is not
functional processes decision variables
achievable as each function has its subject matter
and apply connectivity.
experts. The concept of symphony orchestration, Operations IT supports the continuous process all
is instrumental in having good players without Research (OR) the way through the whole production
having the conductor playing any of the of holistic chain. This calls on IT to develop the
model systematic orchestration to all tasks
instruments. The set of strategic tasks can lead to
through a holistic model that relies on
the successful orchestration if the focus on this
OR decision variables. And defined
purpose was strong. The set of initiatives and resources and constraints.
mitigations below are the suggested Web Service Web Services can help business units
technological roadmap towards performance to streamline processes so that they
can do business more efficiently, and
excellence. It is essential that all business units
adapt to changes, using the software
have the buy-in and extend the required
scripts to deliver the required decision
collaboration that can lead to success of the variable from another application
objective; when needed. This also supports
E 484
interfaces of processes between Gas at the University Petroleum & Energy

various best of breed systems like
Studies, Dehradun, India. Special
Drilling, ERP and Production or
acknowledgement to the University Faculty and
closed loop process (e.g. linking
anomalies closure to work done, etc.) Staff, My Internal Guide, External Guide and the
Dashboard Asset condition Portal, 3D walk authors of the referenced material listed in in the
through, GIS Integration, and Search next paragraph. Other acknowledgement are
Engine that can bring results from all
attributed to:
related data utilizing smart fetching
 4th IT Strategy Forum 2009 - Dubai
capabilities.
Skills Upgrade Operations Research, Process &  Abu Dhabi Oil Companies IT
Instrumentation, Oil & Gas Business Strategies, 2010
Analysts and General Purpose  Gardner Strategy Structure,
Simulation Concepts
Accenture Strategy Model
Governance of To secure that data is trusted
Updates & information, usability needs to be
 Web Sites – (ITIL, CobIT, BP,
System Audit monitored to secure adequate use of Total, Shell, Schlumberger,
applications and overcome users Halliburton, Weatherford)
lagging behind in reporting it in timely
 Enterprise Architecture standard
manner. Continuous system audit tool
model Wikipedia
can be applied to audit trail
completeness of information across all
related processes when an object is
added. Additionally a dynamic
embedded process which calls for
completing all updates in a closed loop
References
can be applied
[1] Bob Cavnar, Chelsea Green Publishing, 2010
Data Collaboration with the business to
“Disaster in the Horizon” ,
Management, manage data to suite analytics by
[2] Saputelli, L.A., et al. paper SPE 83978 Offshore
Standards and exploiting data mining and versioning.
Europe 2003, Aberdeen, U. K., 2003 ;Promoting
classifications Use unified identifications, unit of
Real-Time Optimization of Hydrocarbon
measure, formats for key business
Producing Systems
decision variables and technical
[3] International Petroleum Technology Conference,
specifications.,
4-6 December, Dubai, U.A.E. Shell, 2007;
Production Surveillance and Optimization With
Acknowledgement Data Driven Models
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the thesis project Production Optimization Oil & Libya February 2008, 10th Mediterranean
Petroleum Conference; Operational Performance
E 485
excellence through production optimization in http://compnetworking.about.com/od/basicnetworkingconce

upstream industry pts/l/blglossary.htm
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[6] L D Arya* and Atul Koshti 2009; Capacity
planning using Monte Carlo simulation and
neural network
[7] S. Rahmawati, C. Whiston, B. Foss, A. KKuntadi,
SPE 130768, 2010 Europe EC/EAGE conference;
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[10] BP RAM, 2008-2014; Subsea Simulation Model –
Angola In-House project on the use of generic
simulator to study maintenance & reliability RAM
[11] Schlumberger 2008 Journal PEMEX onshore
Mexico; New life for old field with multiple
simulators from Schlumberger
[12] BP P-Choke, SPE 36848 – 1996, (Latest model in
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Glossary of Terms
For easy reference, the following sites contain all
terminology explanations.
http://www.sharpened.net/glossary/index.php
E 486
Natural Gas Pricing reforms and its impact on the Indian Energy
industry
Atul Rawat*, Sonal Gupta**
*Assistant Professor (Sr. Sc.), College of Management and Economic studies, UPES,
Email: a.rawat@ddn.upes.ac.in
**Assistant Professor, College of Management and Economic studies, UPES,
Email: sgupta@ddn.upes.ac.in
Abstract low price environment. This paper throws

India’s energy consumption has been light on the perils of new gas pricing
increasing on the back of sustained mechanism and key imperatives required to
economic growth. Subsequently, provide the necessary thrust to the upstream
consumption of natural gas has been industry.
increasing due to rising demand from CGD,
power and fertilizer industry. However, the Keywords
falling domestic production coupled with the Natural Gas pricing, pricing regimes, NELP,
infrastructure issues associated with LNG Upstream
terminals has failed to bridge the rising
supply deficit. Additionally, lack of clarity Introduction
for gas pricing was prohibiting companies to India’s energy needs has been growing on
make upstream investment. the back of high economic growth,
increasing industrialization and rising
In order to provide necessary thrust to boost population. The country holds 0.5% of
domestic production and attract investment global oil and gas resources but accounts for
in upstream sector, the Government of India around 5% of global primary energy
approved implemented a modified version consumption.
of Rangarajan Committee’s pricing formula (http://www.indianchamber.org/sectors/oil-
in November 2014. However, the new gas and-gas-sector/) With increasing focus on
pricing mechanism failed to make the emissions and the rising energy demand,
impact as the industry has not made any natural gas has been fast emerging as the
investment announcement in the prevailing preferred fuel for the industry. In November
E 487
2014, the Government of India implemented (accounting for 61% of total consumption).
pricing reforms to promote natural gas The other significant demand contributor is
exploration and attract the investment from city gas distribution, refining and
the industry. (Ministry of Petroleum & petrochemicals. Additionally, increasing
Natural Gas, 2014) However, the current focus on reducing carbon emissions has
pricing mechanism failed to boost the contributed to the rise in natural gas demand
upstream activities in the country amid the in the country. Subsequently, the country’s
low pricing environment. Therefore, India dependence on imported LNG has been
needs to introduce the market based gas increased significantly. Currently, the
pricing mechanism to boost the domestic country’s LNG imports have increased to
production and develop the natural gas 11.58 MMT in FY15 from 8.9 MMT in
market. FY10 at a CAGR of 5.4%. (PPAC)
According to BP Statistical Review of
India natural gas market overview World Energy 2015, India is the world’s
India’s natural gas market is supply deficit fourth largest LNG importer. (BP, 2015)
on account of low domestic gas production
and an inadequate transportation Further, Indian gas market is expected to
infrastructure. In 2009, India’s gas remain in deficit due to limited gas
production received a much needed impetus production and rising demand. The shortage
with commencement of production at RIL’s of gas is likely to reach its peak in 2016,
KG-D6 block. However, the field’s with around 39% of the demand being
production has been declining steadily after unmet. However, the deficit may increase
hitting 60 MMSCMD in 2010 due to primarily due to the volatility in energy
geological complexity and natural decline in prices which may make some fields and
the field. According to RIL, the field LNG terminals economically unviable for
production was 11.4 MMSCMD in development. Power and fertilizers are
2QFY16. (RIL, 2016) expected to drive demand for natural gas,
accounting for around 67% of the total
On the contrary, the demand for natural gas demand in FY17. With rising focus on
has surged on the back of rising demand addressing climate change issues coupled
from fertilizers and power sector with deregulation of petroleum products
E 488
pricing are expected to drive the demand for  Administered Pricing Mechanism
natural gas from industrial and residential (APM)
users. However, the demand is highly price  Non-APM
sensitive and will depend on the price
affordability of end users, especially in the APM: Natural gas produced from existing
power and fertilizers industries. fields of the nominated blocks of Indian
national oil companies (NOCs), cater to
According to MoPNG, natural gas supply is fertilizer and power industry, and court
expected to reach 325 MMSCMD by FY17 mandated customers and those requiring less
from 142.9 MMSCMD in FY15 at a CAGR than 50,000 standard cubic meters per day at
of 50.8%. (Planning Commission) Since, the APM rates. The price of APM gas has been
domestic supply will fail to meet the rising set by the Government on a cost-plus basis
demand; therefore most of this incremental and is US$4.2 per MMBtu in India
supply is expected to be met through (US$2.52 per MMBtu in the Northeast). The
imports. The domestic supply will likely to price in the Northeast is 60% of the APM
come from new discoveries, partial recovery price elsewhere in the country and the rest is
in KG-D6 block and increased production paid by the government to the NOCs as
from CBM blocks. However, upstream subsidies. (Ministry of Petroleum and
commitments to go ahead with the field Natural Gas)1
developments would depend on the gas
pricing. (Ministry of Petroleum and Natural Emphasis on moving towards market based
Gas) pricing
In November 2014, Indian government
implemented a modified version of
Gas pricing regime in India Rangarajan Committee’s pricing formula.
Gas pricing in India is heterogeneous and Under the modified formula, the government
complex. There are variety of different removed the Japan LNG and Indian import
wellhead prices applicable which are set netback pricing markers, and included the
according to the terms of fiscal regime the Alberta reference price and Russian
governs the producing field. The prices can
be broadly divided into the following: 1
“Report of the committee on gas pricing” Ministry
of Petroleum and Natural Gas
E 489
domestic gas prices. The new formula will NELP pricing: Replaced pre-NELP regime
be reviewed on a half-yearly basis. (Ministry in 1999. It applies to gas fields awarded
of Petroleum and Natural Gas, 2014) The under NELP rounds. Prices are determined
new formula is as follows: on the basis of arm’s length prices. Although
pricing is subjected to the Government’s
approval and is controlled by PSC terms.
Currently, NELP gas is priced at US$3.8 per
MMBtu. (The Hindu, 2015)
Where: Imported LNG pricing: Qatar imported
V: total annual volume of natural gas LNG prices are linked to Japanese Custom
consumed Cleared (JCC) prices and varies on monthly
PHH and PNBP: Annual average of daily basis. However, India depends heavily on
prices spot LNG to meet the bulk of demand.
PAC and PR: Annual average of monthly Further, spot LNG trade is expected to grow
prices in India on the back of low spot LNG prices
HH: Henry hub, AC: Alberta Hub, NBP: and subsidy provided by the government to
National Balancing Point, R: Russia gas based power plants to buy imported
LNG to make up for fuel shortage. (Ministry
Non-APM: It is divided into two categories of Power, 2015)
– (1) Imported LNG which is marked driven Table 1: Natural gas prices under different
and (2) gas produced from New Exploration regimes
Licensing Policy (NELP) and pre-NELP Regime Price (US$/MMBtu)
fields APM 4.20
Discovered field (Pre- 3.5 0– 5.73
NELP regime)
Pre- NELP gas pricing: Applicable for gas
NELP regime 4.20
produced in Panna-Mukta, Tapti and Ravva
LNG spot 7.6
fields. All the gas produced is sold to GAIL.
LNG long-term contracts 6.97-9.06
Gas prices are determined on the basis of the Source: (Ministry of Economy, Trade and
formula specified in the PSC. Industry, Japan, 2015)
E 490
results in a rise in feedstock costs and

Is new pricing mechanism fulfilling the working capital. According to the
industry expectation? Government’s Parliamentary Standing
The new reforms received a mixed response Committee on Finance, US$1/MMBtu
from the various quarters of the energy increase in the price translates to an increase
industry. in the cost of urea production of
US$25/tonne on an average. Consequently,
Upstream this would lead to an increase in subsidy
The new pricing policy was launched to burden. However, the subsidy burden can be
provide necessary thrust to upstream offset by additional revenues earned by the
industry by reviving the domestic Government from increased royalty and tax
production and attract new investments in collection. (Ministry of Finance, 2013)
India’s upstream segment. However, the
new pricing reform at its current level Power
(US$3.8/MMBtu) is unlikely to boost the The industry is the largest consumer of
domestic production. Additionally, it will natural gas. Gas based power plants have
fail to reverse the decline in KG-D6 high generation costs and a low average
production as it requires pricing in excess of plant load factor associated with it. The new
US$6-7/MMBtu to revive the production. gas pricing failed to raise the gas production
Furthermore, pricing alone is unlikely to in the country. Currently, the country has
attract investment in the upstream segment. around 14,000 MW generation capacity
Implementation of fiscal reforms for making stranded gas based plants due to no supply
exploration and production activities of domestic gas. However, the government
conducive for the companies would also has approved a scheme for utilization of
play crucial role for attracting investments. stranded and under-utilized gas based power
generation capacity in March 2015. Under
Fertilizers the scheme, R-LNG would be supplied to a
Natural gas is a primary feedstock for set of selected gas based power projects to
producing fertilizers. Change in natural gas generate power up to a target PLF at 30%.
price has a direct impact on the fertilizer The power generated would be purchased by
industry. Therefore, rise in natural gas prices state-owned distribution utilities at a fixed
E 491
price of INR5.5/kWh. The projects would be is imperative for the government to adopt a
selected through a reverse bidding process. market based pricing mechanism to boost
The scheme is applicable for FY16 and domestic production and attract investment.
FY17 and provides various concessions on The market based pricing would be
the supply of R-LNG such as waiver of reflective of the price volatility, geopolitical
customs duty and other applicable indirect and regulatory risks which are inherent in
charges, 50% reduction in pipeline tariff and India.
regasification charges, and 75% reduction in
gas marketing margin. (ICRA Research
Services, 2015) References
BP. (2015, June 10). BP. Retrieved January 2016,
from BP.com:
City gas distribution http://www.bp.com/content/dam/bp/pdf/ener
gy-economics/statistical-review-2015/bp-
CGD sector has witnessed a rapid growth in
statistical-review-of-world-energy-2015-
recent years. The surge in growth is due to full-report.pdf
increased penetration of Piped Natural Gas http://www.indianchamber.org/sectors/oil-and-gas-

(PNG) and Compressed Natural Gas (CNG) sector/. (n.d.). Oil & Gas Sector.
on the back growing urbanization, ICRA Research Services. (2015, April). Impact
Assessment: Scheme for utilization of
deregulation of petroleum product pricing, stranded gas based projects. Retrieved
capping of subsidized LPG cylinder and January 2016, from ICRA.in:
http://icra.in/Files/ticker/Scheme%20for%20
emphasis on low carbon fuel. However, the Utilisation%20of%20Stranded%20Gas.pdf
growth of CGD business is reliant on the Ministry of Economy, Trade and Industry, Japan.
availability of natural gas. (2015, December 9). Trend of the price of
spot-LNG. Retrieved January 2016, from
http://www.meti.go.jp/:
Conclusion http://www.meti.go.jp/english/statistics/sho/
slng/result/pdf/201511-e.pdf
Ministry of Finance. (2013, August 7). Economic

The new gas pricing formula has failed to Impact of Revision of Natural Gas Price.
provide the necessary impetus to the natural Retrieved January 2016, from
http://164.100.47.134/:
gas upstream industry. The upstream http://164.100.47.134/lsscommittee/Finance/
15_Finance_74.pdf
companies are not going ahead with the
development of complex and deepwater Ministry of Petroleum & Natural Gas. (2014,
December 22). Retrieved January 2016,
discoveries on account of low gas prices. It from Press Information Bureau:
E 492
http://pib.nic.in/newsite/PrintRelease.aspx?r from
elid=113867 http://www.thehindu.com/business/gas-
price-cut-to-382/article7706237.ece
Ministry of Petroleum and Natural Gas. (2014,
October 18). Revision of Domestic Gas
Prices. Retrieved January 2016, from PIB:
http://pib.nic.in/newsite/PrintRelease.aspx?r
elid=110696
Ministry of Petroleum and Natural Gas. (n.d.). India

PNG Stats 2014-15. Retrieved January
2016, from MOPNG:
http://www.petroleum.nic.in/docs/pngstat.pd
f
Ministry of Petroleum and Natural Gas. (n.d.). Report

of the Committee on Gas Pricing 2014.
Retrieved January 2016, from
http://www.petroleum.nic.in/:
http://petroleum.nic.in/docs/committee_repo
rt_on_gas_pricing_2014.pdf
Ministry of Power. (2015, March 27). Scheme for

Utilization of gas based power generation
capacity. Retrieved Janaury 2016, from
Ministry of Power:
http://powermin.nic.in/upload/Scheme_for_
utilization_of_Gas_based_power_generation
_capacity.pdf
Planning Commission. (n.d.). Twelfth Plan. Retrieved

January 2016, from
www.planningcommission.gov.in:
http://planningcommission.gov.in/plans/plan
rel/12thplan/pdf/12fyp_vol2.pdf
PPAC. (n.d.). Import of LNG. Retrieved January

2016, from PPAC:
http://ppac.org.in/content/153_1_ImportNAt
uralgas.aspx
RIL. (2016, January 19). Quarterly Release.

Retrieved January 2016, from RIL:
http://www.ril.com/getattachment/7323dbdf-
36e4-402e-ba5d-
4acb513bb46d/Financial%20performance%
20for%20the%20quarter%20ended%2031%
20December,%202015.aspx
The Hindu. (2015, September 30). Gas price cut to

$3.82 per unit. Retrieved January 2016,
E 493
Role of Oxidation Inhibition & Thermal Stability for the Development

of Next Generation Engine oils.
Shiv Kumar Vabbina*, Anil Bhardwaj*, Sanjiv Kumar Mazumdar*, Mukesh Saxena**
*
Indian Oil Corporation Limited, R&D Centre, Sector 13, Faridabad, Haryana
**
University of Petroleum & Energy Studies, Dept. Of Mechanical Engineering, Dehradun.
Abstract reduced spaces under increased temperatures
New generation engine oil is developed in this Engine and oil manufacturers are striving to
study to satisfy the needs of newer engine accommodate the harsh environment brought
on by the use of EGR systems [1]. The
designs of automotive segment. Performance
properties of optimized SAE 20W-40 capability of oil should be evaluated in terms of
Multigrade Engine Oil samples were evaluated withstanding higher temperatures and oxidation
and correlated with their respective heat inhibition characteristics. This has resulted to
capacities at different temperatures. Eight the development of Next Generation Engine
blends were formulated using different oils needed for the next generation of engines.
antioxidant combinations. Few of these have This Engine oil should be capable of
shown better performance in the laboratory - Longer Drain Intervals – Low Oil
tests which were validated on the High Consumption – Lower Volatility
Temperature Oxidation Engine Test bench Seq - Better Deposit Control – High Oxidative
III E. Also these blends found to have lower Stability
heat capacities at different temperatures of test. - Lower Emissions – Low SAP Technology
Lower Heat capacities depicts lower internal - Better Lubricity and Cooling Capacities
heat energy contained in sample at particular Recent Engine Design changes and
temperature which results the said sample to downsizing have made the engine to work at
dissipate heat faster. In this study chemistry of temperatures in the range of ~300-350 oC.
antioxidants is related to the performance These design changes put more stress on the
lubricant that circulates in those engines [2].
properties of the lubricant and the role of heat
capacity values in selecting next generation Component designs such as articulated pistons,
engine oil from formulated oils for high swirl chambers, and higher fuel injection
performance is illustrated. pressures put higher stress on the lubricant

because of thinner oil films and higher top ring
Introduction reversal (TRR) temperature [3]. It has been
Newer Engine designs have added an additional shown that top land carbon deposits can result
stress on engine oil to function properly in in loss of oil control. Loss of oil control can
E 494
also result in increased engine emissions [4]. The more resistant a lubricant is to oxidation,
Higher operating temperature results in less is the tendency to form deposits, sludge
oxidation of oil molecules and affects oil and corrosive by-products in either of the
properties [5]. In such environment engine oil grease, engine oil [13]. Base oils features in
has to be designed keeping in mind of the relation to the engine temperatures have been
following key factors such as Thermal stability, studied by Hsu [14]. The aromatic, paraffin and
Oxidative stability, Volatility and also its heat naphthenic content of base oils also decide the
dissipating characteristics [6] . Engine Oil lubricant properties [15-17]. Base oil quality has a
failure is mainly caused by the deposit significant bearing on the performance of
formation as a result of Oxidation Degradation lubricant oil [18, 19]. The thermo-oxidative
of Oil under high thermal stress [7, 8]. These changes in the chemical structure influence the
deposits further develop into varnish and properties of lubricating base oils [20].
lacquer content on the parts and finally lead to Base Oil & Antioxidant combinations can
complete breakdown of the engine. positively destroy the precursors that are
Antioxidants increase the time until sludge, responsible for formation of deposits and
lacquer, or deposits are formed due to viscosity increase. The effectiveness of
secondary processes [9]. To reduce the antioxidants, in controlling the deposits by
formation of deposits (sludge and varnish), due increasing the oils’ thermo-oxidative stability,
to oil breakup and viscosity increase, use of is linked with their chemistry in this study. The
new ash less antioxidants in engine oil is oil internal energy varies with temperature.
needed in turn oxidation stability of engine oil Heat capacity of engine oil at different
is increased. Oxidation stability of engine oil temperatures is evaluated in this study and its
not only influence the useful oil life but also possible role helpful in selecting from various
affects such related performance attributes as optimized oils for next generation oils is
wear, base depletion, deposits and thermal explained. Synergism of different Antioxidants
degradation [10]. Alkylated Diphenylamines are with Base Oil based on performance attributes
being used as antioxidants [11-12]. The need for like Compatibility, Thermo-oxidative stability,
selecting a good base oil is equally important as Deposit formation etc., are discussed in the
it constitutes about 80-90% of the Engine oil. study. Specific Heat capacity relation to
The contribution of base oils for reduction in internal energy of lubricants is explained [21].
oil consumption (Long Drain Interval) and Objectives
emissions (Low SAP Technology) has a prime Objectives of the study is to develop energy
importance. efficient engine oil which is highly thermo-
oxidative stable and is able to control deposits
E 495
formed due to oxidation with the help of about 3-5 mg of sample in pan is subjected in
selected antioxidants. pressurized DSC cell of 500 psi Oxygen
pressure at a constant temperature of 210 °C
Experimental Design and Methods [24].
according to ASTM D6186 method Heat
All the methods chosen to evaluate the flow w.r.t Time is plotted as graph. OIT should
optimized engine oils performance are well be high for good engine oil.
known standard methods being followed

Oxidation Stability is determined by Thin Film
worldwide like ASTM, DIN methods as
Oxygen Uptake test (TFOUT). The test is run at
mentioned. The references to the test
160°C in a pressure vessel under oxygen
procedures are also mentioned.
pressure (90 psi), and the sample with metal
Thermal Stability is determined by Thermo catalyst package, a fuel catalyst, and water to
Gravimetric Analyzer (TGA) instrument, in partially simulate oil conditions in high
which 20-30 mg of sample is taken in platinum temperature oxidation environments of Heavy

Duty diesel engines [25]. ASTM D7098 is the
pan which is subjected to a temperature 500 °C
at a ramp rate of 20 °C /min in a furnace cell test method. Pressure drop w.r.t to time is
under a continuous flow of Nitrogen at 60 plotted as graph. For good Engine oil the time
ml/min [22]. % Weight loss w.r.t Temperature is for the pressure drop should be high.
plotted as graph. ASTM E1131 is the test

Heat Capacity is evaluated in DSC instrument
method. Good Engine oils are stable at higher
by Modulated DSC method in which about 3-5
temperatures.
mg of sample in pan is taken in a DSC cell
Onset Oxidation temperature (OOT) is which is equilibrated at 35 °C and then ramp
determined by Differential Scanning rate of 3 °C /min to 250 °C after modulating the

cell +/- 1 °C every 60 seconds [26]. Heat
Calorimeter (DSC) instrument, in which about
3-5 mg of sample in pan is subjected in DSC capacity w.r.t Temperature is plotted as graph.
cell to a temperature from 50 °C to 350 °C at a

Deposit Forming Tendency is determined by
ramp rate of 10 °C /min under continuous flow
Thermo-Oxidation Engine Oil Simulation Test
of oxygen at 50 ml/min. ASTM E2009 is the
(TEOST) which simulates the effect of engine
test method [23]. Heat flow w.r.t Temperature is
operating conditions, especially in the ring belt
plotted as graph. OOT should be high for good
and piston ring areas of the engine on engine oil
engine oils. [27]. In this test sample oil along with catalyst is
Oxidation Induction time (OIT) is determined pumped on a heated coiled rod maintained at
by Pressure DSC (PDSC) instrument, in which 285 °C for 24 hours under air atmosphere.
ASTM D7097 is the test method. Weight of
E 496
deposit is reported. Better engine oils report Test Lubricants

fewer deposits. Engine oil samples discussed in this study
was formulated with Gp III base oils and
Coefficient of Friction – Sample is tested on
additive package comprising of VI, dispersant,
SRV Linear Oscillating tribometer [28]
detergent and a metal free ashless (no
according to test method DIN 51834. Friction
phosphorous/sulphur) Antiwear. The samples
between a steel ball and plate is measured after
are formulated with different antioxidant
placing the sample oil in between. For good 13
chemistry (structures by C NMR given in
Engine oil this coefficient should be the least.
Figure 1) having combination of Phenolic (P1,
Performance Engine test Sequence III E [29] -
P2) and Aminic (A1, A2, A3, A4) antioxidants. 8
Engine oil is run in an engine, which operates
different blends have been prepared based on
at 67.8 bhp, 3000 rpm, and 300 °F (149 °C) oil
different antioxidant chemistry. A comparative
temperature for 64 hours. Samples were drawn
study was conducted on these 8 samples and
at 8 hour intervals for oil level checks. The
results are validated on the high temperature
engine test evaluates lubricant's performance
oxidation test bench.
containing antioxidants in combating high-
temperature oxidation and in preventing cam
lobe-flat tappet lifter wear.
1(a)
E 497
1(b)
Figure 1. Structures of Antioxidants used by 13 C NMR Spectroscopy.

(a) Phenolic Antioxidants (b) Aminic Antioxidant
E 498
refineries due to its bad impact on the
Results and Discussion
environment emissions. On considering the
Next generation engine oils needs to have long tabulated data and TGA thermo grams it is
drain potential in addition to lower deposits and observed that group IV and group III base oils
emissions. Since base oil constitutes about 80-90 combinations are more stable. Group IV base oils
% of the lubricant, its study is of prime are fully synthetic and are used for some
importance. Base oil combinations with same specialized applications. Group III base oils are
viscometrics from different groups are prepared considered to be semi-synthetic. Based on the
for comparison purpose. Physico-chemical data literature group III base oil system is selected
has been evaluated on these different due to its consistent thermo-oxidative stability
combinations like Kinematic Viscosity (KV), over the other group base oils, the iso-paraffinic
Volatility Loss, Aromatic carbon (Ca), Paraffinic content is also more in group III than group IV
carbon (Cp-Iso & Normal), Naphthenic carbon which is also useful in giving better response to
(Cn) contents, Onset Oxidation Temperature the additives [15, 30-32].
(OOT) etc., are illustrated in the Table 1. From Selected Base oil is then optimized with primary
the table it is observed that while moving from (alkylated amines & hindered phenols) and
Group I to IV the aromatic and naphthenic secondary antioxidants and additive package.
carbon content is decreased while paraffinic Since there are two phenolic antioxidants being
carbon content is increased. The paraffinic used differentiated based on the sulphur content
carbon content is responsible for high Viscosity the total research study will be classified on the
Index (VI) and good low temperature properties basis of their interaction with the aminic
[14-15]. The OOT value, evaluated on Differential antioxidants used. It is observed that the thermal
Scanning Calorimeter, gives information about stabilities of antioxidants are in the order of P2 >
the oxidation stability of the base oil. All the P1 and A4 > A3 > A2 > A1 for Phenolic and
base oils have comparable OOT’s except for the Aminic antioxidants respectively withstanding to
Group I base oil which is due to the Sulphur temperatures more than 350oC. The onset
content present in it. oxidation temperatures of these antioxidants by
Thermal stability of the base oil mixture has been DSC are in the order P2 > P1 and A3 > A4 > A2 >
evaluated on Thermo-Gravimetric Analyzer A1 as illustrated in Table 2. The optimized
(TGA) and is been illustrated in the Figure 2. blends of engine oil as shown in Table 3 are
One can see from the curves above that the further being evaluated in various thermal and
thermal stability evaluated as weight loss for the oxidation stability using different laboratory
base oil combinations are in order of IV > III > II tests. Finally 2-3 best combinations are further
> I. The Gp I based oil is phasing out in many evaluated in performance test such as Deposit
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forming tendency, Tribological data and Engine Table 2. OOT values of Antioxidants by DSC
tests. Thermal stability of the antioxidants used is Antioxidants OOT (oC)
P1 260
evaluated by TGA and is illustrated in the Figure
P2 271
3.
A1 260
Table 1. Physico-chemical data of Base Oil
A2 287
A3 314
A4 311
Figure. 2. TGA Thermal Stability Curve of Base Oil mixtures
E 500
Table 3. Blend Compositions
Blend Compositions
I Base Oil mixture + Additive Package + P1 + A1
II Base Oil mixture + Additive Package + P 1 + A2
III Base Oil mixture + Additive Package + P 1 + A3
IV Base Oil mixture + Additive Package + P 1 + A4
V Base Oil mixture + Additive Package + P 2 + A1
VI Base Oil mixture + Additive Package + P2 + A2
VII Base Oil mixture + Additive Package + P 2 + A3
VIII Base Oil mixture + Additive Package + P 2 + A4
Figure. 3. TGA Thermal Stability Curve of Anti- Oxidants
These blends are then validated for thermal The TGA thermal stability curve of the blends
stability in TGA against the base oil mixture. against base oil mixture is given in Figure 4.
E 501
From the thermal stability curve it is observed thermal stability is reported for the Blend VIII
that all the optimized blends are more stable than (having P2 & A4) and the worst synergism in
the base oil mixture depicting that the thermal stability is reported for the Blend II
antioxidant and package combination has (having P1 & A2). To validate the oxidative
considerably improved the thermal stability. It is stability, the blends were evaluated for OOT &
also observed that the blends which contains OIT in DSC & PDSC respectively. For better
phenolic antioxidant P1 (Dashed lines – I to IV) engine oil both the values of OOT and OIT for
have lower thermal stability than the blends the blends should be high. These values for the
which contains phenolic antioxidant P2 (Solid optimized blends are depicted in the Table 4
lines – VI to VIII). given below. The curves of DSC and PDSC are
One possible reason for this behavior of shown in Figure 5 & 6 respectively. It is
phenolic antioxidant is the sulphur content in P2. observed that the oxidative stability of the blends
Also we see the aminic antioxidant response followed the same sequence as it is obtained in
towards the thermal stability is in the order of A4 the thermal stability discussed above for the
> A3 > A1 > A2 with phenolic antioxidant P2 blends.
and are in the order of A1 > A3 > A4 > A2 with
phenolic antioxidant P1. Best synergism in
E 502
Figure. 4. TGA Thermal Stability Curve of Blends
Table 4. OOT & OIT values for Blends
Blend Base Blend I II III IV V VI VII VIII

OOT (oC) 199 280.1 267.2 275.2 272.1 286.7 283.1 289.2 291.0
OIT (min) 15.52 32.9 21.97 28.09 25.75 36.73 34.04 38.46 41.26
E 503
Figure. 5. DSC Oxidation Stability curve of Blends
Figure. 6. PDSC Thermo-Oxidation Stability curve of Blends
As engine oil form very thin films while the Heat capacity gives valuable information about
engine is operating the thermo-oxidative stability the internal energy stored in the sample at a
should be excellent and very much essential for particular temperature. This stored internal
the engine oil in such harsh conditions. The energy is helpful in the heat dissipating
blends are tested in Thin-Film Oxygen Uptake characteristics of the said engine oil. Heat
test (TFOUT) for thermo-oxidative stability in capacities at four different temperatures of 150
which actual engine conditions are simulated by °C, 175 °C, 200 °C and 225 °C for all the blends
adding components of fuel, NOx catalyst and and were illustrated in graphical form in Figure
water to the oil films and is evaluated at 160 oC 8. It is observed that the heat capacities of the
under pressurized oxygen according to ASTM blends at different temperatures followed totally
D7098. The graph given in the Figure 7 opposite trend as per the results obtained by
illustrates the oxygen induction times reported by TGA, DSC and PDSC i.e., the blends which
the TFOUT instrument. The TFOUT induction reported higher stability values have reported
times reported are also in line with the results lower heat capacity values and vice versa. Lower
obtained from thermal stability and oxidation Heat capacities depicts faster cooling of samples
stability by TGA, as it has to lose smaller amount of energy at that
DSC & PDSC as discussed earlier. Higher temperature.
oxygen induction times depicts better performing
engine oils.
E 504
90
83
80
73
70 67 64
60 58 55
Induction time in min
49
50 46
40
30
20
10
0
I II III IV V VI VII VIII
Figure. 7. TFOUT Induction times for Blends
3 150 175
Heat Capacity in J/(g.oC)
200 225
2.5
2
1.5
1
0.5
I II III IV V VI VII VIII
Fig. 8. Heat capacity values for blends by Modulated DSC
Performance Validation Tests performance validation tests like deposit forming

3 best performing blends are selected from the tendency, Tribological properties against an
above samples and are further evaluated for industry standard.
E 505
The blends & standard along with a catalyst are selected blends against industry standard. The
tested for Deposit forming tendency in Thermo- blends and standard were tested at two different
oxidation Engine oil simulation test according to temperatures of 60 oC and 100 oC with other
ASTM D7097 which simulates the High conditions as 300 N Load, 1 mm amplitude, 50
Temperature piston deposits in the engine. The Hz frequency and test duration of 1 hour. The
total deposits obtained during the test on a coiled results are illustrated in graphical form as given
heated rod are reported for the 3 selected blends in the Figure 10. Form the graph it is clear that
are shown in Figure 9. It is observed that the all the selected blends reported lesser coefficient
blend VIII has reported the least formation of of friction than the industry standard at both the
deposits during the test followed by blend VII, I temperatures. The coefficient of friction was
and then standard. All the selected 3 blends have found to be the lowest for blend VIII and
reported far less deposits than the industry increased in the order of VII, I and the standard
standard illustrating that all the three blends have respectively.
superior performance than the standard. Blends with less deposits and coefficient
For evaluating frictional characteristics the of friction can increase the engine life and
coefficient of friction is calculated from the efficiency.
Linear Oscillating SRV Tribometer for the
60
49.3
50
Deposit on Rod in mg
40
30.2
30
20 14.1
8.2
10
0
Standard I VII VIII
Figure. 9. TEOST Rod Deposit for Blends
E 506
At 60 oC
At 100 oC
0.150
Friction Weight Mean

0.100
0.050
0.000
Standard I VII VIII
Figure. 10. Coefficient of Friction for Blends
Performance Engine test

20 15
Avg. Wear in Microns
These three optimized samples were further

evaluated for performance in high temperature 10
oxidation engine test for validation of the above 10 7
findings against an industry standard. This 2.3
engine test is run for 64 Hrs duration at an oil 0
o
temperature of 149 C. After the engine test
Percentage Increase in Kinematic Viscosity at
40 oC and Cam Lobe Wear in microns were
Figure. 11. Cam Lobe Wear for Blends
reported. The pass limit for the engine test
The results for the selected three
being the deviation of percentage viscosity rise
optimized samples along with industry standard
at 40 oC from fresh oil not exceeding 375 %
for average cam lobe wear and percentage rise
and average cam lobe wear not exceeding 30
in kinematic viscosity at 40 oC is illustrated in
microns.
the Figure 11 & 12 respectively. From the
figure 11 it is clear that all the three selected
blends have shown lower Cam lobe wear than
E 507
the industry standard. Blend VIII has reported  The higher paraffinic and naphthenic
the lowest averaged wear followed by VII, I content of base oil is responsible for
and the standard sample. The same result is also good response in antioxidants and
observed in the % rise in viscosity values for thermal stability.
these blends against the industry standard as
 The presence of sulphur group in
shown in Figure 12.
Phenolic antioxidants is responsible for
61.7
75 better thermo-oxidative stability of
% Viscosity rise
blends.
50 30.2 27.5
21.9  Higher Alkyl group present in the
25
Aminic antioxidants are responsible for
0 good synergism in oxidative stability,
i.e., (Undecyl, Naphthyl) [A4] & Nonyl
groups [A3] as reported in the results
Fig. 12. % Viscosity Rise at 40 oC for blends for VIII and VII.
For an engine oil to have better  Dioctylated DPA [A2] has reported
performance both values of Average cam lobe antagonism with both phenolic
wear and % viscosity rise at 40 oC should be in antioxidants as reported in II & VI.
lower side as found for blend VIII. Butyl Octyl DPA [A1] has given better
results than Dioctylated DPA though
Conclusions
having poor thermal stability.
 Both the thermal stability and oxidation
 Heat Capacity values of engine oils are
stability are enhanced by the addition of
found to be additional tool for screening
antioxidants while optimizing the
of optimized engine oils. Better engine
lubricants depicting synergism. The
oils reported lesser heat capacities at
optimized engine oils with phenolic and
temperatures as found in the study. This
aminic antioxidant combination have
information would be helpful in
reported synergized results in
screening engine oils on faster cooling.
controlling thermo-oxidation of engine
Better engine oils should dissipate heat
oil, hence resulting in increased drain
at faster rates to have stability.
interval and higher fuel economy.
E 508
 The thermo-oxidative stability of the 2. Signer, M., and R.E. Steinke. Future Trends in
Diesel Engine Design and Their Impact on
optimized engine oils are further
Lubricants. Warrendale, PA: SAE International,
validated in the tribological properties
November 1987.
and also in performance engine test. http://www.sae.org/technical/papers/871271.
Blend VIII performed exceedingly well doi: 10.4271/871271.
which is followed by the blend VII and 3. Hsu, S. M., J. M. Perez, and C. S. Ku.
“Advanced Lubricants for Heat Engines.”
I against an industry standard.
Journal of Synthetic Lubrication 14, no. 2 (July
1997): page 143. doi:10.1002/jsl.3000140204.
 Energy efficient oils optimized are
4. Gates, Richard S., and Stephen M. Hsu.
highly thermo-oxidative stable, giving
“Advanced Lubricants for Diesel Engine
lower deposits resulting in very less oil Particulate Control.” Tribotest 3, no. 4 (June
consumption as observed with the 1997): 393–406. doi:10.1002/tt.3020030403.
results for sample VIII. 5. Prasad, M.V. Ganesh, and P A
Lakshminarayanan. “Estimation of Oil Drain
 Thus the development of Energy Life of Engine Oils in New Generation Diesel
Efficient Engine oil depends on the Engines in Tropical Conditions.” SAE

International Journal of Fuels and Lubricants 5,
synergism of thermal stability and
no. 2 (December 15, 2011): 576–92.
oxidation stability/oxidation inhibition doi:10.4271/2011-01-2405.
characteristics. 6. Marolewski, T. A., R. J. Slone, and A. K. Jung.
High Temperature Liquid Lubricant for Use in
Acknowledgments Low-Heat-Rejection Diesel Engines.
Warrendale, PA: SAE International, February
Authors are thankful to the management of
1990.
Indian Oil R&D, Faridabad, India for granting http://www.sae.org/technical/papers/900689.
permission to Mr. Shiv Kumar Vabbina for doi:10.4271/900689.
carrying out his doctoral program with UPES 7. Gatto, Vincent J., William E. Moehle, Tyler W.
Cobb, and Emily R. Schneller. “The
and for permitting to submit this paper for
Relationship between Oxidation Stability and
publication.
Antioxidant Depletion in Turbine Oils
Formulated with Groups II, III and IV Base
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E 511
Socio-Economic and Environmental Impact of Salt Harvesting At

Sambhar Salt Lake - A Case Study of Sinodiya Village, Rajasthan
Pushkar Pandey*, Samraj Sahay**, Narendra Nath Dalei***
*
Integrated Research and Action for Development, New Delhi
**Department of Business Economics, University of Delhi, New Delhi
***
Department of Economics & International Business, UPES, Dehradun
Abstract
Introduction
Salt farming has significantly affected the
Over the years there has been a growing
villages around the Sambhar Salt Lake in
acceptance of the role of wetlands in
Rajasthan. Study attempts to assess socio-
economic development and biodiversity
economic vulnerability to salt farming of
conservation. Wetland ecosystems are one
Sinodiya village. Field visits, transect
of the most productive ecosystems of the
walk, FGDs and semi-structured
world & have significant biodiversity
interviews were carried out with the
resources. Typically, wetlands are areas
labours, supervisors and the local residents
where water is the primary factor
of the village to assess the vulnerability on
controlling the environment and the
the physical environment, manifested by
associated plant and animal life and the
increased salinity of ground water and
socio-economic conditions of the people
agricultural soil rendering them unfit for
dependent on them. They occur where the
use. Result shows that there has been
water table is at or near the surface of the
massive deterioration in the water quality
land, or where the land is covered by
available from different sources in the
shallow water. Under The Ramsar
village. Villagers have to rely on tankers
Convention wetlands are defined as "Areas
for the supply of drinking water. The most
of marsh, fen, peatland or water, whether
important impact has been the change in
natural or artificial, permanent or
the land use as due to increase salinity,
temporary, with water that is static or
uncertainty associated with water
flowing, fresh, brackish or salt, including
availability and more profit in salt farming
areas of marine water the depth of which at
has resulted in major shift in land use from
low tide does not exceed six metres"
agriculture to salt farming.
(Article 1.1, The Ramsar Convention
Keywords Manual, 5th edition).
Socio-Economic vulnerability, Salt
Farming, Land use change, Health impact.
E 512
The awareness of the issues has attracted In the recent past, there has been a
huge economic investment in this area growing concern about the status of
across the globe, but still there are many Sambhar Lake from different corners. The
difficulties in the management of wetland major issue that has taken the centre stage
use. Economic importance of these is the environmental degradation and
wetlands makes it very difficult to drying up of the lake. There are significant
successfully delineate the human interests evidences of the alarming decline of water
and conservation of the ecosystem. level, which may finally lead to the drying
Sambhar Lake in Rajasthan is one such up of lake in coming few years. The major
wetland, which is experiencing the problem prevalent in the area is the
difficulties of exploitation of the resources ground water depletion, disruption in
of the wetland resulting in environmental flow pattern in the catchment area, effect
and socio-economic damage in the area. of salt production, loss of agricultural
land, disturbance to migratory birds,
The Sambhar Lake is largest inland saline
illegal salt mining, and other related
lake of India (WWF, 1994). It is located
environmental and socio-economic
about 60 Km. from Jaipur city in
threats.
southwest direction. It is also the largest
Salt Lake of India and producing Search for the literature on similar studies
thousands tones of salt every year. carried out in other salt lakes did not yield
Sambhar Lake has been producing salt for very encouraging results as there are very
centuries and Sambhar salt is recognized few studies carried out to assess the
for it good quality salt through the country. environmental and socio-economic
The lake was listed as wetland of impacts of salt harvesting. There is hardly
International importance in the year 1990 any study carried out specifically in the
under the “convention on wetlands of Indian context and Sambhar Salt Lake in
International importance” especially as particular. Although reports prepared by
waterfowl habitat, also known as Ramsar NGO’s like Manthan working in the area
Convention. Sambhar Lake is one of the on solving the problem of drinking water
most ecologically sensitive wetland of and management of watershed area of the
India in terms of the avifauna as it is one Sambhar Lake do exist but they are limited
of the few migratory bird habitats that in their approach as they just provide on
receive thousands of water birds, specially the socio-economic conditions of the
the larger flamingos every year. villages affected by the salt farming.
E 513
Wolchok (2006) assessed the impact of that supports such large populations of
salt harvesting on the eastern coast of migratory birds; Sambhar lake is a Ramsar
Pemba island, Tanzani. Interviews with the site. It also expresses the need for the
day labourers, owners and the employees study of the impact of anthropogenic
were done to assess the impact of salt changes both in the lake and its catchment.
harvesting. Field visits were done to assess Review of the available literature shows
the environmental impact of salt that there is in fact very little information
harvesting on the health of the mangrove on the environmental and socio-economic
forest near site. Apart from the socio- impacts of salt harvesting in the catchment
economic impacts, the major focus of the area of Sambhar Lake.
study was to determine the biodiversity of
The evidences highlighted the need for the
the area and how it has been affected by
conservation of Sambhar Lake and the
the slat harvesting. Suggestions for
threatened environment in its surrounding.
improving salt production and quality
However, there is a very limited reporting
while minimizing adverse environmental
of the impacts of salt harvesting on the
effects were recommended based on the
villages surrounding the lake. Therefore, a
findings of the study.
careful study and analysis of the socio-
Study have provided enough evidences of economic impacts along with the
environmental degradation in the arid environmental impacts is needed to come
region of India (Dhabaria, 1984). Majority up with a comprehensive plan for the
of the study done so far on the degradation conservation of the lake and safeguard the
caused by salt harvesting is devoted either interests of the people living in the
to the salt production technology or to the surrounding villages.
biological impact analysis. The WWF
Study Area
report on Sambhar Lake (Gopal and
The Sambhar Lake is elliptical in shape,
Sharma, 1994) highlights the major
situated about 96 km north-east from
problem and conservation issues on the
Ajmer city and 64 km south-west of Jaipur
lake and its catchment. As per the report a
city and lies within the latitudes of
long-term comprehensive, ecosystem-
26°52′to 27°02′ North and 74°54′to 75°14′
oriented study of Sambhar Lake is required
East. The catchment lies within the geo-
to have a complete understanding of its
coordinates of 26°28′43″to 27°33′10″
biodiversity, adaptation of the specialized
North latitudes and 74°35′40″to 75°50′28″
biota, functions, and processes in a system
East longitude. The whole catchment is
E 514
spreads from north-east to south-west over capable of producing salt (WWF, 1994).
the four districts i.e. Jaipur, Ajmer, Sikar The most important of all these is the
& Nagaur of the Rajasthan state in India. Sambhar Lake. Salt farming in this lake is
The Sambhar Lake itself is centrally being carried out for the past 1500 years.
located in the catchement area. Figure 1 In the time of Emperor Akbar, income
shows the location of the Sambhar Lake from the lake was about Rs. 2.5 lakhs per
along with its catchment area. month. It had gradually reached to Rs. 15
Historical importance of Sambhar Salt lakhs, when Emperor Aurangzeb ascended
Lake to the throne. The salt used to go far and
wide. Detailed revenue records are
Though Sambhar lake does not find any
available of systematic production salt
place in the ancient written history but still
during the period of Mughal period. From
its past can be been traced down to 5000
1844 onwards, the lake was under control
B.C. Rajasthan as whole is saline in
of the Shamlat, the joint Government of
character with number of depressions
Jaipur and Jodhpur (Aggarwal, 1951).
Figure 1: Location of Sambhar Lake and its Catchment
E 515
Originally there were about 60 villages comes under the Sambhar Salt Ltd. where
attached to the lake. At that time Nawa and a developed network of infrastructure
Gudha were insignificant hamlets but they exists for salt production. The
gradually developed into salt marts. The transportation of the salt from lake to the
British government assumed the charge of main depot is done by rail line owned by
salt production in 1835 though the salt Sambhar Salt Ltd. The area is about 80 sq
production was managed by the rulers of km and the salt production activities in this
Jaipur & Jodhpur states, who jointly area are presently concentrated near the
owned the lake. It was only in 1870 British Gudha dam. Technically, the salt
Government had taken over the work of extraction is very simple. In the monsoon
salt production completely from the Jaipur period the water entering the lake become
and Jodhpur Darbars, and worked by it saline after reacting with the lake
until the attainment of Independence by sediments. The salty water is known as
India in 1947. Since 1947 it is being brine. As the temperature increases, due to
worked by the Central Government. evaporation the concentration of salty
(Aggarwal, 1951). water increases and at the time of complete
drying a crust of salt is deposited. This
After Independence the Government of
process takes almost 50 days. Sambhar
India took over the control of salt
Lake taps water from four seasonal rivers,
production and renamed it as Hindustan
the Mendha, the Rupangarh, the Kharian
Salt Ltd. Presently the salt production is
and the Khandel and numerous streams
managed by Sambhar Salts Ltd. a joint
and rivulets.
venture of Hindustan Salts Ltd. with the
The process of extracting salt from
state government of Rajasthan. The salt
Sambhar Lake has undergone a serious
production is done by evaporation process
transformation. The monsoon dependent
of the salty lake water (brine) and the
traditional process of salt extraction is
surface water collected in the rainy
almost gone and has given way for latest
seasons.
technology which is based on the
Salt Farming installation of bore wells, as deep as 400ft-
Two groups are responsible for the Salt 500ft, to pump underground water for
production in this area. The main producer harvesting salt; the salt- farms use water
is the Sambhar Salt Ltd (SSL) and the from the nearby jheel or lake through
second one is the group of private salt boring as it is more saline. Everybody is
producers. The eastern part of the lake permitted to take water from the lake.
E 516
Minimum boring of 500 feet is done. The  Water is then put into another set
cost for boring comes out to be around Rs. of manually constructed open pans
60000- Rs.70000. Electricity is made called ‘khaati’ through small
available for extracting groundwater using channels called ‘doraha’. These
the bore well at the rate of Rs.6.5 per unit khaatis have the same dimensions
(industrial rate) for unlimited usage. The as the kantaasars (40ft.*40ft.*2ft.).
cost of extracting 1 ton of water through  Khaatis are constructed 10 ft.
bore comes out to be Rs.800. below the kantaasars.
 15 kantaasars fill 10 khaatis.
The process of salt farming involves the
 In the khaatis, the labourers sweep
following steps:
the salt crystals using a wooden
 Wide open pans are manually spade called ‘katakdi’. (most of the
constructed on the surface of earth. times; it is men who do this
These mud pans are called sweeping part as it is physically
‘kantaasars’. The dimensions of strenuous work and hence
these kantaasars are 40ft * 40 considered ‘unfit for women’.)
ft*2ft.  The labourers sweep the salt
 The base of these kantaasars is crystals and form salt heaps, called
leveled with stones and pebbles ‘aaundi’, at the end of the khaatis.
(kaankdi or kankad). Leveling of  35-40 aaundis (salt heaps) are
these pans is done to prevent the formed in one khaati.
absorption of water into the land.  Labourers (mostly women
 The water is pumped into these labourers) then load these salt
kantaasars through pipes with heaps into tractors.
diameter of 2 and half meters.  These tractors transport the salt to
 The underground water is kept the nearest mandi- Nawa mandi
wide in these kantaasars for 4-5 (market).
days under direct sunlight.
The work done on salt farms is seasonal.
 At 25o-30o Celsius temperature,
Workers work on these farms from
water starts evaporating leading to
November- May and then turn to
crystallization of salt at the bottom
agriculture during the months of June,
of these brine pans. (brine- solution
July, August, and September for sustaining
of salt)
their livelihood. Salt farming is not done in
E 517
the rainy season as the rain water washes change. Villages in the catchment area of
away the accumulated salt piles. These the Sambhar lake is worst affected. Apart
workers cultivate other people’s land in the from the environmental damage, the socio-
‘chau-maasa’ season (June-July-August- economic conditions of the people residing
September) and work on the salt farms in in these villages have also been badly
the other months of the year. Thus the affected.
seasonal constrains both in the agriculture
Objective of the study
and salt farming provides incentives to the
The present study aims to assess the
agriculture labours to keep earning
environmental and socio-economic
throughout the year.
impacts focusing on the economic cost of
Problem at hand environmental degradation caused by salt
The major problem in the area has been the harvesting on Sinodiya village, one of the
shift from the traditional monsoon several villages affected by salt harvesting
dependent techniques of salt farming to the at Sambhar Lake. Field visits to the study
use of groundwater using bore wells. area was made to understand the actual
Private contractors wish to extract more scenario existing in the area and collect the
and more salt in small period of time. Most relevant data through structured interviews
of the contractors today use groundwater with the local residents, salt workers,
to reduce the reaction period to 15 days. owners and NGO’s involved in the
For this deep bore wells are installed. conservation programmes.
Between 15 to 20 bore wells operate in
Methodology
every bigha (0.6 acres) of land. Excessive
To fulfil the objective of the study
pumping of groundwater has lowered the
information on the existing procedure of
groundwater level in the area by almost 40
salt farming, the major environmental
feet. This has led to water scarcity in the
problems, the socio-economic damage
neighbouring villages. Increase in salinity
caused by salt farming in the study area
of the ground water has created a severe
was required. Field visits to Sambhar Lake
problem of already existent scarce
were carried out to collect the relevant
availability of potable water (drinking
information. Transect walk, group
water problem). Agricultural soil in the
discussion with the supervisor and labours
nearby villages has been rendered useless
and semi-structured interviews with local
due to increase salinity and water scarcity
residents of the villages (as there are
for irrigation resulting in a major land use
migrants also), salt workers, owners and
E 518
NGO’s involved in the conservation  How has the salt farming affected
programmes was done to collect the availability of water and
information. Around 6 group discussion agriculture in the village?
was carried out during the first field visit.  What are the alternative water
Around 20 workers from Sinodiya village, sources and the cost incurred in
5 supervisors (representing the owners as it access of clean potable water from
was not possible to reach them directly) the alternative source?
and 3 persons from the NGO-Manthan Sinodiya village comprise of 228
were interviewed during the visit. The households and it would have been most
group discussions and the interviews were ideal to conduct a door to door survey with
carried around to collect the following a formulated interview schedule to collect
information: information for our environmental and
Interviews with the labours and socio-economic impact analysis on the
supervisors: village households. Due to time constrains
this was not feasible. However, the socio-
 About the ownership of the land.
economic profile of the village presented
Did they own land in the past that
in this study is based on a comprehensive
they have sold, if yes to whom and
door-to door survey conducted by a NGO -
why?
Manthan, covering all the 228 households
 Were they involved in agriculture,
of the village.
why have they shifted their means
of livelihood? Case Study of Sinodiya
 How much do they earn form salt Sinodiya one of the most important
farms as a primary occupation as villages situated in the north-east of the
well as a secondary occupation Sambhar lake within the catchment area,
(primary being agriculture). having 228 households with a population
 Structure of each salt farms and the of 1256, of which 51% are males, and 49%
salary given to the workers. How females. The village was selected for this
does gender affect the wage study as it is one of the worst affected
structure? villages. Compared to other villages in the
 How does working in the salt pans catchment area, Sinodiya has witnessed the
affect their health? most drastic changes in the land use;
Interviews with the local residents of agriculture fields got converted to non
Sinodiya: arable land due to increase salinity, thus
E 519
affecting the livelihood pattern of the under pasture land. Cultivable land
village. Once known for the availability of (irrigated and non irrigated) amounts to
potable water, most of the water resources about 2360 acres in all. The village has a
in the village have become unfit for use semi-metalled road, kuccha pathways as
due to increased salinity and the same time well as a small river and a village pond,
water table has gone down considerably which together occupy 1752 acres of
due to overexploitation by the bore wells village land. 198 persons in the village are
used by private contractors. within the ages of 25-35 years, of these
107 are males and 91 are females. 287
Socio-Economic Profile
members fall within the ages of 35-65
The finding of the door to door survey
years. 36% of the total households in the
conducted by Manthan provides a
village are headed by members between
complete socio-economic profile of the
the ages of 45 and 60 years. Females head
village. The village is predominantly
only 15 households, while males head 213.
Hindu in composition with total area of
The Table 1 provides a detailed account of
about 4214 acres. Of this, nearly 25 acres
the age composition of the village.
is under habitation, while 75 acres falls
Table 1 Village Demographics

Age Group – All General OBC SC Others Total
<=6 17 73 76 4 172
>6 & <=14 22 84 119 4 229
>14 & <=18 10 53 77 2 142
>18 & <=25 15 77 98 6 196
>25 & <=35 21 70 104 5 198
>35 & <=65 31 117 134 5 287
>65 3 11 16 2 32
Total 119 485 624 28 1256
E 520
The households in Sinodiya are spread while 224 households use wood for
over three wards. 38% families reside in cooking (thus indicating the fact that 12 of
ward 7 and 8 respectively and 24% in ward 16 show a mix use of gas and wood for
9. Maximum number of General caste and cooking). There are no shared toilets in the
Muslim families are concentrated in ward village and 90% of the village population
7 whereas ward 8 has a dominance of OBC does not own private toilets.
households. The SC households are spread
There is 25% illiteracy in Sinodiya. While
over wards 7 and 8. Ward 9 comprises of
23% of the literate population has gone up
only OBC and Muslim households, the
to middle school, only 2% have pursued
former being more in number. Although
higher studies. More women, as compared
all the families own their homestead land,
to men, are literate in Sinodiya. Table 2
126 households have residential
provides the educational status of children
landholdings that measure between 500-
below the age of 16 in/out of school across
1000 sq feet, while only 44 families own
castes. There is one Government Upper
land up to 2500sq feet. 63% families have
Middle School and one private Middle
electricity in their houses, whereas 37%
school in the village. However, there is a
depend on kerosene for lighting.
severe shortage of teachers in the school.
Television and Newspapers are the most
Two teachers have been appointed to look
popular sources of information in the
after 200-250 children in all. The High
village. Cycles and motorbikes are the
School is located at Rupangarh, at a
most widely used means of private
distance of about 25 kms. Currently, most
transportation; 21% households own
village children, across castes, are enrolled
cycles and only 9% own motorbikes. Of
in schools- either the ones located in
the 228 households 163 own mobile
Sinodiya or others in the vicinity as
phones. Only 16 families have gas stoves
apparent from the table below.
Table 2 Children below the age of 16 in/out of school across castes
Current General OBC Other SC Total

Educational Status
(Age <=16 Years)
Going to School 77% 83% 100% 87% 85%
Non School Going 23% 17% 0% 13% 15%
Grand Total 100% 100% 100% 100% 100%
E 521
Occupational Details was undertaken during the months of May

Maximum households follow agriculture and June – and the figures indicate that
as their primary occupation, while 9% 44% of the population is not resident.
work as daily wageworkers. 4%
36% of the total population is involved in
households are directly involved in salt
salt work, of which 70% belongs to SC
work, though only 1% are occupied in any
and OBC communities combined.
other kind of factory labour (More people
However, there is a substantial number of
pursue salt work as their secondary
General castes also who seek employment
occupation though, 15% in all). Figure 2
in the saltpans. Most salt workers belong
provides the split of the population
to the SC community, followed by the
engages in different occupation at
General castes and OBC members, as
Sinodiya.
evident from the table 2. 78% households
As indicated in the figure 2, large section
own livestock, mostly goats. Some
of the population migrates seasonally in
families (20%) engage in poultry while
search of work – especially during the
fewer own cows (10%).
agriculturally inactive season. This survey
Figure 2: Engagement in different occupation

Source: Manthan Survey Report
E 522
Table 3 Salt workers across castes

Salt Worker General OBC SC Others Total
NO 73% 80% 100% 50% 64%
YES 27% 20% 0% 50% 36%
Grand Total 100% 100% 100% 100% 100%
Figure 3: Annual income of the salt workers

The 109 persons, representing 43% of the seasonal and in the off season (July to
total village population employed in salt October) these workers earn by working in
work and earn between Rs. 20,000 to the agricultural fields.
30,000 per annum through the saltpans,
Water Availability
indicating that income generated through
The village gets its water from a
the work contributes substantially to the
community run pipeline system that was
village families. About 30% of the
put in place with the help of SWRC,
individuals who work in the salt pans earn
Tilonia, about 10 years ago. The water
between Rs 15000-20000 per annum. Only
source is a tube well located in village
about 17% of the total number of people
Bakarwaliya, about 3 kms away from
engaged in salt work is able to earn more
Sinodiya. Water is pumped from the well
than Rs 30000 per annum. It should be
and channelled through pipelines in to
noted that income from salt works are
E 523
households. Over the years, the village has taps that have been installed in public
tried to avail some government support for spaces (from the same pipeline) in the
their community water system and village. Dependence on other water
currently the government looks after the sources such as hand pumps, tube wells or
basic maintenance of the source- the public wells seems to be low in the village
appointed caretaker of the water system because the degree of salinity in the water
draws a nominal government salary. they yield is very high. Except for one
However, the village continues to collect village well, which is located at a distance
Rs. 20 per household to maintain a of 1 kilometre from Sinodiya, most other
community fund for the upkeep of the water sources have non-potable water.
system. This community pipeline system This well also dries up during summer
was borne out of a pressing need for water months, creating an extreme shortage of
in the village even though the quality of potable water in the village. The salinity
water was never satisfactory. All families levels are particularly high during the dry
irrespective of caste depend on the months- (extreme summer and winter);
community-run pipeline for water. 61% of and given the fact that on an average the
the households have installed taps in their area has witnessed a meagre annual
houses from this pipeline as well. The rainfall of about 55- 100 millimetres over
same water (now gone completely saline the last decade, the water sources remain
since the last 3 years) is used for drinking saline almost throughout the year. But due
water as well as for household purposes, to limited options, families are forced to
while 31% of the households depend on compromise on their water quality.
Figure 4: Household Water availibity from different source

E 524
Caste wise access to water resource reveal Agricultural land holdings are usually
that a higher proportion of General caste small, with more than 40% of the
families, 50% in all, access taps located in households owning land less than 5 bighas.
public spaces as compared to SC or OBC However, General castes own larger land
members in the village who represent a holdings; only 3 General caste households
combined usage of 60%. have land less than 5 bighas. Figure 3
provides the share of agriculture
Land Ownership
landholdings.
55% of the General caste population owns
Agriculture is the mainstay of the village.
agricultural land ranging from 5-20 bighas
92% of the farmers have adopted new
as compared to 44% OBC and 45% SC
farming technologies in favor of old,
population who own agricultural land of
traditional methods of cultivation. Along
the same size. 44 households do not own
with these, some cash crops like Til,
agricultural land, representing 19% of the
Moong, Moth, Chawla, Gawar and
total households in the village.
Moongfali are also found here, of which
Landlessness is highest among the OBC
Moong and Moth are the more popularly
and SC population. 40 out of the 44
grown. Nearly all farmers utilize cow dung
households without agricultural land
as fertilizer with only 1% using chemical
belong to these communities. Among the
fertilizers for their crops.
General castes, 3 households are landless.
Figure 5: Agricultural Landholdings of the households

E 525
Result and Discussion rainwater, which passes through salt

The analysis of the information collected plant/factories, goes into fields and slowly
through group discussions, with the turns productive fields into barren land,
supervisor and labours and semi-structured resulting in even lower crop production.
interviews with local residents of the Maximising input of surface water, base
villages (as there are migrants also), salt flow or ground water inflow into the lake
workers, owners and NGO’s involved in is the solution to the issues of reducing
the conservation programmes revealed two quantity and deteriorating quantity of salt
major impacts of salt farming in the study and overall ecosystem of the Sambhar
area: wetland. The river Sambhar is shrinking
every year because of excessive pumping
 Environmental impacts which out water for salt farming.
included change in the land use due
to increase in salinity and high Impact on Water resources
profits in shifting from agriculture

The information provided by the
to salt farming, scarcity of water
respondents indicated that there has been a
due to degradation of the water
major shift in the salt farming process
quality and lowering of water table
from the traditional monsoon based
and health problems suffered by
farming to now most widely practise
the workers and villagers due to
farming technique using groundwater from
constant exposure to salts.
bore well by the private contractors. The
 Socio-economic impacts which
salt- farms use water from the nearby jheel
include exploitation of labours by
or lake through boring as it is more saline.
the private contractors engaged in
Everybody is permitted to take water from
salt farming and changed pattern of
the lake. Minimum boring of 500 feet is
livelihood-agriculture labours to
done; cost of which come around Rs.
salt workers.
60000- Rs.70000. High profit margins has
Environmental Impact resulted in indiscriminate use of ground
Given the constraints of limited water water with the depth of bore well
resources, recurrent droughts and lowering increasing every season to tap maximum
of the groundwater table every year, the water in the recent years. This has caused
possibility of bringing more land under lowering of the water table by almost 40
cultivation is limited. Furthermore, feet in the nearby village thus making
E 526
ground water inaccessible to the villagers tube well located in village Bakarwaliya,
as extraction using the existing set up about 3 kms away from Sinodiya. Water is
(hand pumps, tube wells, open wells, pumped from the well and channelled
reservoir etc.) has become very difficult. through pipelines in to households.
Scarcity of water for irrigation adds to the Increases salinity of the source has resulted
limited possibility of bringing more land in supply of completely saline water for
under cultivation. Furthermore, rainwater, the past the three years. The other source
which passes through salt plant/factories, for the villagers are the hand pump, well
goes into fields and increases the salinity and tanka (underground structures built to
of the soil which turns productive fields collect rainwater). Table 4 provides the
into barren land, resulting in even lower results of the physiochemical analysis of
crop production. The runoff also the water samples collected from the
contaminates the ground water sources different sources within the village carried
making it unfit for drinking. out by Manthan.
Sinodiya gets its water from a community

run pipeline system. The water source is a
Table 4 Results of the Physio-chemical analysis of the water samples

TDS pH Chloride Flouride Hardness
Sampling Site Remarks
(2000) (6.5-7.5) (250 mg/l) (1.5 mg/l) (300 mg/l)
Regar Mohalla
4200 9.5 1600 4.5 660 Not Potable
(Pip Line)*
Balai Mohalla
1200 7.5 160 1.5 160 Potable
(Hand Pump)*
Sharma Mohalla
2500 8 300 3.5 360 Not Potable
(Hand pump)*
School
1600 7.5 200 1.5 240 Potable
(Tanka)*
Sharma Mohalla
900 7.5 440 4.5 460 Not Potable
(Well)*
Note: ‘*’ Source of water samples

Source: Based on the analysis carried out by Manthan
E 527
Results of the water analysis show that the inhalable salt dust, salt crystals as well as
water reaching the households through the concentrated brine, physical stress of hard
community pipeline is unfit for drinking. manual labor, direct bright sunlight, and
At the same time water samples from the glare due to sunlight reflected by salt
hand pumps and well taken from the crystals and brine surface. Most common
analysis were also found to be unfit for symptoms observed among salt workers
drinking indicating contamination of the were those pertaining to eyes. These might
ground water due to salt farming in the be due to irritation caused by exposure to
region. This has forced almost all the salt dust and reflection of bright sunlight
households to look for the alternatives. by salt crystals and brine. Itching, cracks,
thickening of skin over palms and feet, and
Health impacts
burning sensation in skin might be caused
Outcome of the group discussions with the
by direct contact with salt and the
labours and supervisors revealed that
impurities found in salt, like sulphates,
although the Government has made
magnesium, calcium, potassium, etc.
provisions to provide free boots and
Ulcers on skin were mostly traumatic in
glasses to the workers employed in the salt
origin.
farm, a majority of the labourers did not
have access to them. Some said that if Impact on Land use
more than one member of their family is As disclosed by the local residents during
working on the field, only one member of the interview, till about two decades ago, a
that family is entitled to get it. While major portion of the agricultural land was
others said that only men were provided owned by the Lower cast farmer’s
with these boots and shoes. Many women community of village. They used the land
also told us that they were too shy and for agricultural produce. However, as a
uncomfortable wearing them and working result of a rocky terrain and lack of
on the field. We actually saw only a adequate rainfall, the fertility of the land
handful of people using these boots and started to fall and there were hardly any
glasses while working on the field. profits for agriculture or subsistence. Also,
As a result, many of these workers got the costs of irrigation started to increase as
wounds, bruises, cuts on their body while water was increasingly getting scarce.
working on the field without them. Poverty, lack of awareness and education
Working in salt industry exposes the among the farmers did not provide them
working population to direct contact with the luxury of using modern irrigation
E 528
techniques. These reasons plunged this The land s used for agricultural purposes
farmer community into severe economic 30years ago are now being used for salt
crisis. The only solution to overcome this farming. Usually, Rajput community held
crisis was to sell their lands off. The result major part of the landholdings then. This
was distress selling of land at a large scale. land was then redistributed to other SC
Meanwhile, a business family named communities (like Meghwal) by the State
Falaudis had started salt farming business government. So, the people from lower
in Jodhpur area. When they found that the caste used to work on the land of upper
farmers in the villages were keen on caste people. During the interviews one of
selling their pieces of land, this Falaudi the lower cast or Harijan labour revealed
family was quick enough to grab some that he owned the same land on which he
good deals for them. They bought some was working as a daily wage salt labour to
land from the distressed Meghwal farmers the pradhan for a meagre Rs. 50000/-. (15
at very low rates (Rs. 10000-20000/bigha) bighas). Though he was not forced to do
Following the Falaudis, some of the so but lack of knowledge about the profit
politically powerful and numerically from salt farming and unstable income
dominant caste group (Jat) initiated the salt from the agricultural practices due to water
extraction process on their lands. Since scarcity caused by salt farming in the
then salt extraction process has been going region forced him to do so. The other
on the lands previously owned by the major area where the labour was employed
Meghwals. Now a large number of was in marble industries of Kishangarh
landowners in that area are increasingly and Markrana.
getting interested in shifting away from
Socio-economic impacts
agriculture and starting salt farming on
When asked about the organization
their respective lands because of the high
structure of each salt farm operating in the
profit margins. Thus as can be observed,
region. It was disclosed that every
there has been a clear change in the pattern
landowner employs one supervisor to take
of land usage. The declining fertility of the
care of his entire land. He is popularly
adjacent land also led to an increasing
known as ‘munim’. He is responsible for
preference in salt farming. The reasons for
managing the land and payments made to
this changing land use are understood to be
the labourers. He is paid a monthly salary
the scarcity of water required for irrigation
of Rs 4500. He maintains a register
and the big profit margins in the salt
wherein he has all the details of the
business.
E 529
labourers working on the land, For mismanagement of the wages provided to

example, name of the labour, wage, the workers by the supervisors of the land.
attendance, nature of work. He monitors
While supervisors said that all wage
the work of the labourers and pays them
labourers are paid Rs.300/- per day
according to the work done by them in the
irrespective of gender, the labourers said
field on a particular day. The labourers are
that the male labourers are paid Rs.200/-
under the strict observation of the
and female labourers are paid Rs150/-. The
‘munim’. The ‘munim’ stays in the salt
reason found was that the female wage
field itself. He monitors the field in the
labourers are made to work lesser than the
night also. The owner of the land transfers
male wage labourers. The male labourers
the money to his bank account; the
are involved in separation of salt from
‘munim’ withdraws the money from there,
water using a wooden spade and making a
and then distributes it to the labourers.
salt pile out of it while the female
While interviewing the ‘munims’ of the
labourers collect the salt. Payment is made
various lands owned by the Pradhan,
in every 5-10 days and is done by the
Rajput and other land owners, we noticed
supervisor. However, the supervisor or
that none of the labourers maintained or
munim said that the labourers are paid on a
were given any record of the wage paid to
daily basis as some labourers may choose
them. There is no provision for the
to work on another land the next day.
labourers to stamp or signature anywhere
Geographical proximity matters as an
in the register. The wage distributed to the
additional wage is provided to people who
labourers and the wage maintained by the
come here to work from far- off lands.
munim in his register is actually different,
And the additional wage is an increase in
as we also observed from our interviews
the usual wage by Rs.50/-. Labourers pool
with the labourers that the wage told by
in Rs.20/- a day to take jeeps in order to
them and the wage told by the munim were
reach the salt plant (to-and-fro charges).
not the same. For example, many workers
The tractor driver who transports the salt
told us that they were paid only Rs 150 –
from the salt plant to the nearest market
Rs 200 per day, while the munim who
(which is Nawa Mandi) is paid Rs.200/-.
looks after the Rajput land told us that the
workers were given Rs 200- Rs 250 per Despite the irregularities in payments and
day. Hence, due to the lack of proper rules exploitation of the labours, the daily wage
and regulations, there is serious labourers prefer working on salt farms to
agriculture as salt farming is more
E 530
promising in terms of income. Agriculture alternative arrangement for water. Few

is completely dependent on rainfall which years back each household were required
is uncertain in this region. This makes to pay Rs. 20/- per month as a maintenance
agriculture in this region a gamble for cost for up keeping of the community pipe
these people. Therefore, people prefer to line system which was the main source of
work on salt farm where they are sure to water for the households. As the piped
get a fixed income. Even the rain factor in water has completely gone saline since the
this region has made people get into salt last 3 years, almost all households are
farming as the monsoon period (chau- forced to buy water from water tankers, the
maasa) is only for 3-4 months while the average capacity of which varies from
rest of the year is suitable only for the 4000-4500 litres per tanker. Most of these
cultivation of salt. Due to scanty rainfall are privately run and cost between Rs.
and salinity of underground water in this 200-250 per tanker. One tanker supplies
region, people prefer working in salt farms water for a family size of about 3-5
as salt farming has become members for a month only. If the family
commercialized and gives more profit. size is larger, the household is forced to
Whole discussion came up with the result buy two tankers every month, thus
how landowners became labour on their doubling the monetary cost. Though
own land. Scanty rainfall and salinity of government run tankers are available at a
underground was the major cause behind cheaper rate (for about Rs. 150),
the change in their occupational structure corruption and partisanship hampers
and forced them towards more profitable access and distribution of these to the
work or business. larger community.
Until recently people were forced to pay
Economic impacts
high prices for water supplied by the
The field visits and the interaction with the
tankers. Removing salinity from the
labours, supervisors and the local villagers
community pipe line and other local source
provides enough evidence of the
of water was beyond the scope of the
environmental degradation and the socio-
households. Cost of Reverse Osmosis units
economic impacts of salt farming in the
used to convert saline water to sweet water
village area. As discussed in the earlier
is too high and the households with limited
sections that there is a severe scarcity of
income could not afford it. The erratic
drinking water in the village and
electricity supply is also one of the
households of Sinodiya has to make an
limiting factors. Thus they were totally
E 531
dependent on the tankers for the supply of gynaecological illnesses. Even though
drinking water. To solve the problem of there is no conclusive evidence to this
safe drinking water, Manthan came with effect, excessive exposure to the dry
the idea of establishing installation of saltpans and salinity is bound to have long-
community based Solar Powered Reverse term repercussions on the community’s
Osmosis in village Sinodiya to convert the health. 11% community members suffer
saline water into sweet drinking water. The from some kind of physical disability or
plant became operational since August impairment.
2010. Each house hold has to pay a one-
The village does not have any primary
time security of Rs. 500/- and monthly
health care centres or clinics, so the
charges of Rs. 25/- for receiving not more
workers have to travel to Naushal for
than 20 litre of water per day. The price of
proper treatment and check up. This
the water paid by the villagers for the
further adds to the financial woes of these
tanker or for acquiring the RO water can
workers, as they have to spend a lot on
be considered as the cost of the
treatment as well as travel and transport.
degradation of the water resources caused
There is loss of pay as well because due to
by the salt farming in the area.
these injuries, they are absent from the
Sinodiya has one Health Sub-centre in the field for a long period and there is no
village, with one male and female health provision by the authorities to provide any
worker each, which provides basic first aid compensation to these workers on medical
facilities. The closest Primary Health grounds. Many workers told us that the
Centre is at Bhadun, at a distance of 6 km injuries would take fifteen or more days to
from the village. The nearest government heal, and they would remain unemployed
hospital is at Rupangarh or Kishangarh, for such long duration, without any other
the latter at a distance of 50 kms from the source of income. Thus on account of the
village. 18% of the population has suffered health problems male workers would lose
from some kind of illness in the recent Rs. 3000/- while female would lose
past, though only 6% have sought Rs.2250/- (considering the daily wage of
hospitalization. 60% of the illnesses have male worker to be Rs. 300/- per day and
been seasonal in nature. The most Rs. 150/- for female workers) in addition
commonly found ailments are joint pains to the travel cost incurred in going to
or dental problems. Women’s health is a Naushal for treatment and medicines.
concern with many women complaining of
E 532
Conclusion how much and how resources are to be

Sambhar Lake is one of the biggest distributed.
sources of salt in India. Although, it has
References
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this resource has an adverse effect on
Dying Sāmbhar Lake
people’s life, environment, land and labour
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dersertification hazard through Sambhar
salt- farms. In other words, the fulfilment
gap. A problem of environmental
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proving to be profitable for the farmers Ramsar Sites on India: Sambhar Lake
working on it. So, they switched to salt- WWF, India.
farming. In the course of our research, we
 Indian Water Portal. URL:
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(Regar, Meghwal) worked on the land of 95
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and Jat. The salt farming is also having an SANSTHA based in Kotri, Ajmer,
impact on the adjacent agricultural fields Rajasthan, India. http://manthankotri.in/
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of water in the salt field. Due to rampant sites of India: Keoladeo National Park’.
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http://digitalcollections.sit.edu/isp_collecti
political power and numerical strength, the
on/329
Jats are the decision makers of who gets
E 533
Sourcing and Securing India’s Energy Supplies

Rahul Mazumder*
*Student, M.A. Economics (Energy Economics) UPES
Abstract
Introduction
Energy security encompasses three main
Energy Security, as defined by the Integrated
direction: meeting large energy demands of a
Energy Policy of India, encompasses three
growing economy, provision of lifeline
critical dimensions: (a) Meeting India’s large
energy to meet the needs of all citizens to
energy demand to sustain an annual
address social development, health and safety
economic growth rate of 8 to 9 percent
of the energy poor and ensuring sustainability
through 2031-32, (b) Meeting lifeline energy
in energy supply and use. India imports 80%
needs of all citizens to address social
of its oil needs and is heavily dependent upon
development, health and safety of the Energy
the Middle East and other OPEC nations for
poor, and (c) To ensuring sustainability in
Her hydrocarbon requirements. Given their
energy supply and use. It is projected that the
political instability, such suppliers pose
global demand for energy will rise by 30%
serious challenges to the Country’s energy
between now and 2035(by International
security. Need of the hour is to diversify the
Energy Agency) with India accounting for
hydrocarbon resource base towards stable
approximately 20% of the increase. However
countries like Russia, emerging Kazakhstan
India is a net importer of energy in the world
and the US and other North American
market. As of 2012, India imports 75% of its
countries. Key recommendations include
energy needs in the form of crude oil, natural
reduction of dependence on OPEC, try to
gas, coal and uranium. It is predicted that by
import hydrocarbons through cross-continent
2035, India will import about 90% of its
pipelines, better diplomatic relations with
energy. It therefore becomes important to
emerging suppliers and initiatives to sign
analyze the current and future suppliers in
preferential trade agreements.
terms of their resources and reliability.
Currently She imports Her energy needs from
Keywords
countries which either enjoy significant
Energy security, Geopolitics
market power in the world market or
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countries which are politically unstable. At creation of technically qualified HR base in

times both of the above mentioned features the Energy sector.
characterize India’s key energy suppliers. (Singh & Khanna, 2012) observed that given
With this background it becomes imperative India’s potentiality of significant shale gas
to analyze India’s current energy suppliers, reserves and the United States’ rise as a major
taking oil as the focus of study and identify player in this field, possibility of mutual
future prospective suppliers which can help cooperation between USA and India in Shale
India to meet Her energy requirements resources sector should be explored.
sustainably and with reliability. The study at (PHD Chamber of Commerce/ Observer
hand seeks to do just the same. The following Research Foundation, 2014) in their
section outlines some of the existing summary of ideas generated at the
literature in this regard followed by the Conference on 'Dilemma of Gas Pricing:
research objectives and the methodology Implications for the Industry' held in April
followed. An analysis of India’s existing and 2014, concluded that there is a need for
prospective suppliers is then undertaken and reforms throughout the entire energy sector
is followed by a set of recommendation in the with Proper coordination between various
following section. The paper ends with a stakeholders in the sector. Also it is required
short conclusion. to eliminate inefficiencies in the energy
sector with market linked mechanism for
Review of Literature
pricing of natural gas being the need of the
(The Energy and Resources Institute, 2009)
hour.
in a report observed that India heavily
(Rajeev) in a paper on India’s energy security
dependent upon energy imports and therefore
foresees India remaining as a net importer of
needs to develop renewable sources of
energy supplies in the near future as Indian
energy like solar and nuclear power and
policymakers lack strategic intent while
requires investments required in bio-fuel
formulating policies for energy security. He
technologies. Also observed was the need for
also observes that in case of no major
development of long term integrated freight
domestic hydrocarbon discovery, India will
mobility strategies aligned with long term
be heavily dependent upon non environment
goals for efficient renewable energy
friendly coal and risky nuclear power.
utilization and the need for investment in
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(Ernst and Young for FCCI) in a report requirements oil? What are the major
underlined the challenges faced by the Indian concerns and challenges India is
oil and gas sector. These challenges include facing or may face while dealing with
inadequate upstream infrastructure, shortage such suppliers?
of oil field services, acute shortage of skilled  Which regions/nations have the
manpower, increased completion for potential to be India’s energy trading
overseas assets, underdeveloped gas partners in future?
transport infrastructure, tax and regulatory  What issues and challenges India may
issues, etc., among others. face in dealing with such new
One thing that clearly stands out from the partners with respect to their
above review is that scant attention has been reliability?
paid by researchers into the sources of the Research Objectives
energy supplies. In other words, the regions  Identify current Energy trading
of the world on which India is heavily partners of India for oil.
dependent for its energy security have not  Evaluate the issues and concerns that
been examined in detail especially regarding are or may effect energy supplies
their current and future prospects. Also the from the existing suppliers.
regions from where at present India is not
 Identify potential energy trading
trading but are potential suppliers have been
partners with whom India has little or
by and large neglected. Therefore a research
no energy trade w.r.t oil. Evaluate the
gap can be clearly observed in this space.
reliability of the supplies from these
potential trading partners.
Research Problem
Identification of Current and Potential Research Design and Methodology
Suppliers of Energy Resources with focus on
The research design to be followed during the
Oil, to India and their Evaluation in terms
course of this project will be exploratory
Issues, challenges and prospects as faced by
research design. The primary purpose is to
her in course of trade with such suppliers.
identify and evaluate current and future
Research Questions suppliers of energy on various parameters
 Which are the major regions/ nations mainly the quantum of their existing
supplying India her energy resources, political stability and relations
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with India. The plan of this research is to first

take note of current suppliers and observe the
above mentioned factors in respect of these
countries and their oil trade with India. Then
on the basis of current resources, a few
potential partners are selected and analyzed
on the basis of the chosen parameters. On the
basis of such analysis a set of
recommendations is generated. In this
fashion will our ‘research objectives’ be Figure1 India petroleum ans other liquids
satisfied. production and consumption 2000-15
Oil Sector: An Analysis of Current and

Prospective Suppliers
India imports around 80% of its oil
requirement. In 2013 India imported 2.5
million barrels/day of crude oil against a total
demand of 3.5 barrels of oil/day. Imports are
expected to grow to around 3.5 million
barrels /day in the current year with domestic Figure2 India petroleum and other liquids
production remaining constant at 1 million imports by source, 2013
barrels /day against a total demand of 4

million barrels/day. Also She imports about The above chart shows the breakdown of key
30% of her gas requirements. suppliers of crude oil and natural gas to India.
Clearly from the above chart, it is hard to
miss the dependence of India on Middle East
crude (52% combined). The Middle East
countries have 53% of the world’s total oil
reserves and are geographically closer to
India. However there have been several
problems while dealing with these nations.
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 Price volatility: Most of the Middle From the chart above, one can identify
East countries are a members of several countries, which contribute little or
Organization of Petroleum Exporting nothing to India’s energy mix.
Countries (OPEC), a multinational oil
cartel which coordinates amongst its Russia
member the output of oil to be Russia is world’s second largest producer of
produced and released into the world crude oil with reserves of 12.7 thousand
markets. This organization has been a million tonnes with production at 10.788
source of many oil crises in last 50 million barrels per day (at the end of 2013).
years, especially the 1973 oil crises. It is also has world’s second largest natural
Even though non-OPEC supply has gas reserves at 1103.6 trillion cubic feet with
increased over the 15-20 years, the production being around 604.8 billion cubic
same still exercises considerable metres (2013). Historically, India has shared
market power in the world oil prices. very close ties with the Russian Federation. It
 Geopolitics: India imports most of its has been a trusted ally who has come India’s
oil requirements from the Middle East rescue on many occasions, especially on
countries which are prone to political matters relating to national defense.
turmoil. Although its ties with China has substantially
Alternate options: improved, Russia remains an all-weather
The following chart shows the major oil friend of India.
producing countries of the world. Russia’s huge hydrocarbon reserves,
We shall adopt a one by one approach to therefore presents a very big opportunity for
evaluate India’s alternate options. a resource starved country like India. Already
ONGC Videsh Limited, a wholly owned
subsidiary of India largest E&P company
ONGC owns a 20% stake in the Sakhalin I
project, which has recoverable oil reserves of
307 million tonnes. In 2009, ONGC acquired
a British oil and gas exploration firm Imperial
Energy having hydrocarbon assets in Siberia.
Figure 3 Major oil producing countries Recently, Russian oil major Roseneft has
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offered oilfields for exploration to OVL in Issues

Siberia. With these developments taking However some concerns remain, especially
place, India can leverage its strategic ties Kazakhstan’s over reliance on China for
with Russia to get more hydrocarbons from energy exports (about 40% of total exports)
that country. and thereby China’s influence on the policies
Issues of the same. This was evident during the
The primary concern regarding Russia as an Kashagan field episode when the Kazakh
energy partner are the geographical barriers Government used its pre-emptive rights to
between the two countries. Unlike China, take away the oil block from OVL acquired
India does not enjoy geographical proximity from US company Conoco Phillips and give
to Russia which would have ensured greater it to CNOOC of China. Also there exists
Russian hydrocarbons at competitive prices. logistical difficulties to transport Kazakh
hydrocarbons to India. However the silver
Kazakhstan lining is that considerable progress is being

made at the diplomatic front by both
Another such country is Kazakhstan which
countries to improve ties. In January 2009, a
has around 30 billion barrels of oil and
civil nuclear deal was signed between the two
around 3.3 trillion cubic feet of natural gas
countries along with several other MoU in the
(2.5 tcm proven). Several initiatives are
field of space research and an Extradition
already been taken by both sides. Although
treaty, during the visit of Kazakh president
OVL missed out on Kashangan oil field,
Nursultan Nazarbayev as the Chief Guest of
Kazakhstan has recently offered an offshore
The Indian Republic Day Parade 2009.
block in the Caspian Sea. Also a new pipeline
Hence a reliable future collaboration in the
along the lines of TAPI is being proposed by
field of oil and natural gas with Kazakhstan
the Kazakhs to supply natural gas to India
cannot be ruled out.
through 3 possible routes – Kazakhstan-
Uzbekistan-Afghanistan-Pakistan-India,
Kazakhstan-Iran-India and a land route via North America
Kashmir. Therefore an opportunity exists to North America consists of USA, Canada and
source good amount of hydrocarbons from Mexico. The combined output of these is
the Central Asian nation. around 229,600 barrels per day. Although
currently USA exports oil only to Canada,
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India having already signed a civil nuclear  Develop Good Diplomatic Relations
deal could look to sign a similar agreement with major non-OPEC hydrocarbon
with the US. In the past 7 years, the domestic producing countries.
hydrocarbon production has rocketed due to  Attempt to find potential for import of
which the domestic prices have crashed. oil through Cross-Continental
Therefore producers in USA are looking at Pipelines from Russia and
markets abroad to sell their produce. India, Kazakhstan.
therefore presents to them the best  Attempt to sign Long Term
opportunities to sell their produce. With Concessional Trade Agreements
improving technologies the Canadian oil regarding hydrocarbon supply with
sands are now becoming economically key non-OPEC suppliers.
viable, thus proving India another
opportunity to diversify exports. Mexico is Conclusion
another option India could consider given its India is already importing about 75% of its
sizeable resources. energy need, which is likely to rise to 90% in
Issues the next decade. Therefore India needs to
The problem faced by India in this regard is ensure steady and safe supply of energy in
that of old domestic laws of US, which hinder order to meet its development goals.
oil export to other countries. Also the US’s Currently, India has a small supplier base
perceived unreliability as strategic supplier in which it needs to diversify as soon as
the light of the sanctions by the same over possible. She should therefore look to expand
India in the aftermath of nuclear tests Her energy ties with other energy rich
conducted by India in 1998. However as countries especially Russia and the US, by
mentioned above, this problem can be dealt entering into preferential trade agreements
by entering into a specific agreement with the and investing into their energy sector.
same on the lines of the Indo-US civil nuclear
deal. References
British Petroleum. (2014). BP Statistical Review of
World Energy .
Recommendations Ernst and Young for FCCI. (n.d.). India's Energy
 Reduce Dependence on OPEC for oil. Security: Key Issues Impacting the Indian Oil
and Gas Sector.
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PHD Chamber of Commerce/ Observer Research Singh, H. K., & Khanna, A. R. (2012). India's Energy
Foundation. (2014). IndiaEnergy Security Options: The Road Ahead.
Vision 2022: From Scarcity to Abundance. The Energy and Resources Institute. (2009). India's
Planning Commission, GoI. (2006). Integrated Energy Energy Security: New Opportunities for a
Policy. Sustainable Future.
Rajeev, S. (n.d.). India's Energy Security.
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Study to Identify Coal Market Opportunities in Egypt

Rajiv S*, Sonal Gupta**, Atul Rawat***
*Master Student, CoMES, UPES, Dehradun
**Assistant Professor, CoMES, UPES, Dehradun
*** Assistant Professor (Senior Scale), CoMES, UPES, Dehradun
Abstract The research consists of the analysis of
Egypt is facing various macroeconomic various factors related to the industry and
issues such as import and export, which is SWOT (Strength, Weakness, opportunities
majorly dependent on the global commodity and Threat) of Egypt which will help in
price boom of Natural gas and the fall in price explaining the market potential of coal in
of crude oil. The country is bound to shift each industry primarily focusing on thermal,
towards an alternative fuel which cement, iron and steel industry. The research
subsequently is coal as it is more cost also throws light on the end consumer of coal
efficient in comparison with other sources of of each industry and the capacity addition or
energy. the new coal projects which are coming up.
With the development in the economy, there The government based projects announced
has been identified a potential growth in the and proposed are also covered in the report to
coal as an alternative fuel in Egypt, where the determine and forecast the future market
government have brought in many policy potential of coal in Egypt.
work for the imports of coal into the country

and also considering the major industries Keywords
such as Thermal, Cement and Iron and Steel Thermal, Cement, Iron and Steel industry,
new coal technology, Alternative fuels
industries into consideration and the capacity
addition and the upcoming new projects in
Introduction
the country determines the potential growth
Emerging markets, even those that seek to
of coal. The new coal technology is also one
defy it, are inextricably the product of their
of the trump cards which will enhance the
past. The role that the legacy of bureaucracy
growth of coal which has less harm on the
plays in shaping institutional power
climatic barriers.
structures and the way in which cronyism
manifests itself are determined by the
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historical shape of a country. Real junctures Since there is a greater shift of commodity
in a country’s development are rare. prices, this paper will clearly explain the
Opportunities for a country to decidedly importance of coal as an alternative fuel and
separate itself from the past – to reform, will explain the variation in the market
transform and democratize power – do not dynamics of energy consumption in Egypt.
come often. Egypt, and as an extension of it
the country’s energy sector, has long stood at Recent Developments
one such juncture.
Coal imports can only take place after
approval from the ministry of environment.
Economic growth in Egypt was briefly
Companies wishing to use coal will present
interrupted by the 2009 global recession due
the government with environmental
to the drop in international demand and
assessment studies and approvals will be
structural problems with international
subject to renewal every two years. The new
competitiveness. Egypt recovered quickly
rules are an amendment to a law on
but GDP growth slowed again in 2012 as a
environmental affairs and allow the use of
result of weak domestic demand and spill-
coal for cement.
overs from the African debt crisis. Due to
domestic political events and the civil war in “Investments worth $30 billion in the coal
Syria, Egypt’s financial market has been industry are expected to be conducted within
under great pressure. Consequently private the next five years”, Egypt's investment
and public consumption has decreased in real minister. Coal as a source of energy will
terms, while the international price decrease the dependency on natural gas as a
competitiveness of Egyptian products and prime source of energy. It would also
services is improving. decrease the dependency on petroleum
products in steel and cement production.
The analysis of various factors related to the Egypt has been facing an energy crisis for
industry and SWOT (Strength, Weakness, years, with power outages surging in the
opportunities and Threat) of Egypt will summer. The peak was during last summer,
potentially explain the market potential of when power cuts were the most frequent.
coal in the individual industry in terms of Egyptian authorities have often owed the
Thermal, Cement and Iron and Steel industry. power crisis to a larger fuel crisis and have
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been taking measures in recent months to

diversify sources of energy. Egypt's cabinet
approved, in April 2014, the use of coal to
generate energy, a move that was seen as
supportive to the cement production industry
which alone consumes 10 percent of all
energy used in industry in Egypt. Figure 2: Production of Metallurgical coal
Source: BP Statistical Review
Analysis:
From the above figure, it has been identified

that there is a steady growth in the production
of metallurgical coal, where there is a huge
fall in the production in the year 2009 and
again there became a steady growth from the
year 2010.
.
Figure1: Production of Hard Coal

The above figure clearly explains the

production of hard coal from the year 2001 to
Figure 3: Consumption of coal
that of 2013. And as it can be seen that the
countries production dropped in the year
2004 and 2005, after that there was no
The above figure explains the coal
production due to the dominance of natural
consumption in Egypt from 2001 to 2013,
gas consumption in the country.
where it can be seen that the overall
consumption of coal have been stable,
whereas the percentage of change in the
consumption of coal varies according to the
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presences of the existing domestic production From the above figure we can understand the
and the amount coal being imported by the total imports and exports of coal taking place
country. Hence we can observe that there is a in Egypt from 2001 to 2012, where the
huge change in percentage in the year 2010, exports are along the secondary axis and the
where the domestic coal production of hard coal imports are along the primary axis.
coal and bituminous coal was zero, while
production of Metallurgical was more.
Figure 4: Total coal Imports and Exports:

Table 1: Dry Bulk Ports in Egypt
S.No Port Name Max Draft Terminals
Passenger, petroleum, general cargo, bulk, coal,

containers, molasses, vegetable oil.
1 Alexandria port 32feet/L.O.A no limits
Timber cargoes only discharged at inner harbor onto
barges.
Container, general cargoes, iron ore terminal, coal,

2 Dekheila port 42 feet/L.O.A no limits
grain silos
Mainly used for food products, urea, petroleum

3 Abu Qir 26 feet/L.O.A 300m offshore activities and some project cargoes also and
a lot of citrus exporting activities
4 Damietta port 43, 3 feet/L.O.A no limits Dry bulk, general cargo, containers and LNG
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West branch-43, 3 Containers, passenger, dry bulk, general cargo and Ro

5 Portsaid port
feet/L.O.A no limits. Ro
6 Arish port 23 feet/L.O.A 140m Mainly for salt exporting
Suez port/port 23.9 feet/ L.O.A max

7 Passenger / general cargo
Tawfik 150m
8 Adabiya port 39.6 feet/ L.O.A 435 m Dry bulk, container, general cargo.
Passengers serving lines between Egypt / Saudi

9 Safaga port 45.92 feet/ L.O.A 290 m
Arabia, dry bulk, grain
10 sokhna port 55.76 feet/ L.O.A 750 m Dry bulk, general cargo, containers and LNG
Cement Industry industry now accounts to around 3.7% of

Egypt is one of the greatest cement producers GDP (around EGP60 Billion). Local
all over the world and the leading country in consumption is about 83% and exports 17%
the Middle East, Africa, and the Arabian (2011). Energy consumption in the
Region with a total production capacity of 70 international experience accounts for 30-40%
million tons of clinker. Average Energy of production costs. Fuel cost accounts for
requirements 240 m GJ/y. Coal requirements 26-34% of Production Cost.
about 9.2 m t coal/y. In 2006, industry
produced 30 million t of cement. In 2010 that
number jumped to 50 mt, due to a 200%
increase in the producers. The following are
a few facts in cement industry, Total cement
production capacity stands at 70 million t.
While this figure is much higher than current
market consumption, it is anticipated that
demand will grow in the near future as
Figure 5: Breakdown of energy consumption
Egypt's economy and construction sector
in cement production
recovers. However, the industry will have
difficulty reaching full capacity due to
International Benchmark for Energy 3000 -
ongoing energy supply shortages. Cement
3800 MJ/t clinker of Grey Cement and 5000
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– 6000 MJ/t clinkerhite cement. Due to the Coal transport from ports to the plant.
nature of the raw materials in Egypt by-pass Unloading, handling, grinding, combustion
can reach from 10-25% as compared to 3-5%. and storage at plant according to EU best
90% of the stacks are presently linked to practice. Emission monitoring and control,
EEAA Continuous Emission Monitoring and waste management. Violations are dealt
System (CEMS) for TSP. The system is with compliance action plans in which
being upgraded to monitor other parameters. compensation for damage is specified.
Stack emission standards have been reduced Cement plants are to provide plans for
in the 2012 regulations from 300 to 100 gradual substitution of coal with alternative
mg/m3. With the introduction of Coal SOx fuel. Cement Companies will be committed
and NOx emissions will also be reduced. to implement measures or projects to reduce
Another challenge will be work environment CO2 emissions caused by the use of Coal.
limits for Coal dust which is 0.8 mg/m3 as
compared to PM10 of 10 mg/m3. To meet
this limit the companies will have to
implement strict mitigation and abatement
measures.
Egyptian Regulation for Coal Activities

GoE is in the process of issuing regulations
governing all aspects of coal activities related
Figure 6: Estimation for local gate price of
to the Cement Industry and ports. It is
fuel 2013
introducing some governing principles to
which all parties are committed. Stack
Switching to coal-firing is a significant and
emissions have been revised as per EU
long-term investment.
regulations. Emissions are monitored and
Cost of changing kilns to coal is hard to
linked to EEAA CEMS. Best practices are to
estimate because of lack of published data.
be implemented as per EU BAT Bref
Using coal for cement energy is wide spread,
Manuals for: Loading and unloading in ports.
but switching to coal is not a common choice.
Storage, transportation and processing.
Switching to coal is likely to involve a
Cement companies assume responsibility for:
replacement of the kiln burner, and a
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modification of the pre-calciner. In addition, expansion can reach up to 960,000 TJ, or

equipment for coal pulverization, size control around 29% of total primary energy in Egypt.
and on-site conveying will be required. Such an expansion will burn around 35
Switching kilns to coal requires state-of-the- million tonnes of coal per year and cause
art technology to minimize safety risks, and significant health and environmental costs of
is likely to be a long-term investment. Further water, soil and air pollution. A large-scale
research and analysis is required to survey adoption of coal is also likely to limit the
pollution abatement technologies for coal growing local renewable energy industry in
usage in cement production, their efficiency Egypt. A coal-driven economy in the 21st
and their relative costs. All technologies are century is not a small decision. There are two
accompanied by externalities. Externality is a major burners in the cement process: the pre-
term that comes from the discipline of calciner and the kiln. The kiln burner
economics. Externalities are generally consumes around 40% of the total energy,
unpriced costs, usually of side-effects of and is more sensitive to disruptions in
production processes, which impose costs on operations. Expert recommends full
third parties through their impacts on climate, switching of kiln burner to coal, deploying
human health, crops, structures and state-of-the-art coal-firing technology
biodiversity. The impact of greenhouse gas without using a fuel mix to minimize safety
emissions on climate provides the prime, and and operational risks. Expert recommends
most familiar, example of an externality. partial switching of pre calciner burners to
When the cost of an external impact like fuel mix of NG/HFO with solid waste fuel,
climate change is included in the price of a and expects that a mix of up to 50% solid
product such as electricity or cement it is said waste fuel will not cause problems.
to be internalized. Coal for the cement
industry might mean coal for therest of the Enforcement of the EIA-based permission
industrial sector, plus the energy sector. process on a case-by-case basis.
Using coal for power generation in Egypt can The analysis herein clearly indicates the
rapidly expand if unregulated to include most presence of health, environment, social and
of the other energy-intensive industries and economic external costs of fuel switching,
the power generation sector. Total possible particularly in the case of coal. The analysis
also suggests that the external costs are
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location and technology-specific, and cost of switching/subsidy removal for cement

therefore warrant a detailed case by-case companies are variable, and can be critical.
analysis. In accordance with Egyptian Law The study team therefore recommends the
4/1994, any process modification associated Ministry of Industry develop relief packages
with polluting industries must acquire in the form of loans to ease the transformation
permission by the EEAA by providing an for companies most at risk.
EIA study detailing environmental impact,
on a technology- and location-specific basis. Develop a centralized coal procurement
Ongoing attempts by some cement process for EEAA-approved plants.
companies to switch to coal outside the due To prevent an uncontrolled expansion of coal
process must be postponed in accordance and usage in the cement industry, coal
compliance with Egyptian environmental procurement must be regulated and
laws and regulations. controlled by a centralized process within a
centralized energy pricing strategy (without
Risks and Mitigation Measures eliminating the role of the private sector).
Environmental compliance in Egypt is low Only plants with EEAA-approved permits
and it is therefore difficult to ensure that that have agreed to pay external costs of coal-
approved EIAs are enforced. The study team firing as determined by policy are to be
therefore recommends: Cement plants with supplied with coal. The government must set
approved EIAs and in low risk-zones shall standards for incoming coal to guarantee
include in their plans an online monitoring of Egypt does not become the destination for
compliance system, to be operated by EEAA, lowest rank coal. Failure to centralize coal
and a clear fine payment process for procurement can result in the development of
violations. A payment system for external a secondary unregulated coal market. The
social and environmental costs incurred by study team recommends establishing a multi-
communities affected by a switch to coal institutional task force to study and develop
usage for cement plants after EEAA approval the procurement process. A decision to
must be developed. The study team strategically include coal as part of Egypt’s
recommends payments are proportional to energy mix will have significant economic,
the estimated external costs of switching to environmental, social, industrial and national
coal firing. The current financial position and security impact. The study team recommends
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that such a decision be framed within a wider 2.1 million tonnes /

13. Royal el Minya
vision for Egypt’s energy and growth plans. year
12 million tonnes /
The study team further recommends 14. Suez cement
year
initiating a holistic study with a multi-
15. Helwan Cement 1million tonnes / year
disciplinary team to analyze the costs,
benefits, risks and policy framework for a
potential transformation of such magnitude.
Thermal Sector
Table 2 Cement Producers with their
Proposed Power Stations
capacity
Safaga Power Station is a proposed 1,950-
Name of the
S.No Capacity megawatt (MW) coal-fired power station in
company
Arabian Cement 5 million tonnes /
Safaga, Egypt. A portion of the coal required
1.
company year at the plant would be imported from abroad,
Assiut Cement 5.7 million tonnes / according to the Ministry of Electricity and
2.
Company year Energy. The power plant is expected to come
Amreyah 5.5 million tonnes /
3. on line by 2020. Hamarawein Port power
Cement year
station - Orascom
1.5 million tonnes /
4. BMIC
year Construction and International Petroleum
1.5 million tonnes / Investment Company (IPIC) signed a
5. ASEC Cement
year development agreement for a 3 gigawatt
South Valley 1.5 million tonnes /
6. US$3 billion coal-fired power station and
Cement year
coal port near the El Hamrawein Port. News
El Nahda 1 million tonnes /
7. reports stated that the agreement guarantees
Cement year
10.6 million tonnes / the consortium access to the site to enable it
8. Lafarge Cement
year to undertake development studies "while land
Medcom- 0.7 million tonnes / allocation formalities are being finalised." It
9.
Aswan cement year
was reported that under the agreement the
3.5 million tonnes /
10. Arish Cement Egyptian government "has pledged full
year
Sinai White 4.1 million tonnes / support in assisting the consortium in
11.
Cement year satisfying the necessary regulatory
National 3.75 million tonnes / requirements" and that the agreement "covers
12.
Cement year
various operational aspects such as the Power
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Purchase Agreement (PPA) and connection

to the national grid." Iron and Steel Industry
Suez power station - Al-Nowais Investments In many ways, then, the steel sector is
Group signed a US$4.5 billion agreement atypical. After private juggernaut Ezz Steel
with the Egyptian Electricity Holding Rebars (ESR) acquired a 28 percent share of
Company to construct a 2460 MW coal plant government controlled Alexandria National
in the Suez region. Egyptian independent Iron and Steel Company (ANSDK), the two
news agency Youm7 cited that Electricity companies consolidated their marketing
and Renewable Energy Minister Mohamed operations under the name Ezz-Dekheila
Shaker stating "the environmentally friendly Steel (EZDK), of which Ahmed Ezz was
power plant, producing 2,460MW of energy, appointed chairman in March 2000. The
will not only sustain economic development marketing alliance of ESR and EZDK also
but will also position Egypt as one of the goes by the name Ezz-Dekheila (EZDK).
global leading countries in the field of EZDK has maintained a dominant position,
renewable energy.” The deal was signed and the company now controls around 54
between Hussein a-l Nowais, the chairman of percent of the total market capacity and 67
Al-Nowais Investments Group, and Gabr el- percent of the market share.
Desouky, the chairman of the Egyptian
Electricity Holding Company. Production of Steel in Egypt
Kafr el-Sheikh power station - it was also Table 3 Leading steel producers in Egypt
reported that the Chairman of the Egyptian Production
Market
Supplier (Million
Electricity Transmission Company Ahmed S.No Share
tonnes)
al-Hanafy entered into a $1.5 billion
1 Ezz Steel 1147 27.50%
agreement to "construct another coal-fired Alexandria
plant in the Delta governorate of Kafr el- 2 National Iron 1375 33.20%
Sheikh." It was reported that this was a 2300 and Steel
3 Ezz-Dekhela 2522 60.70%
MW plant proposed by Benchmark Power
4 Kouta Group 360 8.60%
International.
Int’l St. R.M.-
5 275 6.60%
Beshai
6 Delta Steel 91.8 2.20%
E 551
Suez Co. Al- Weakness

7 82 2.00%
Koumy The government policy in importing the coal
Egyptian Metal
8 80 1.90% is one of the major concern faced in the
Hatem
country. The demand and supply gap
Egyptian
9 56.2 1.30%
Iron& Steel estimated in the country, more demand and
10 Al-Said Steel 50 1.20% less supply. Also, the port facility for coal
Menouefya imports is poor in infrastructure.
11 46 1.10%
Steel
Opportunity
12 Ayyad Rolling 36 0.90%
The first coal fired power plant, which is the
Egyptian
13 34.2 0.80% largest constructed in the world with 6000
Copper Wk
Al-Arabi MW power is one of the greatest
14 Planet 33 0.80% opportunities for the country. The
Sharkaw implementation in the clean coal technology
Misr Iron &
15 24 0.60% will also benefit the environmental issues.
Steel
Threats
Al-Temsah
16 24 0.60%
Steel The price of natural gas fluctuation is a major
National Metal threat for the country. The government policy
17 16.9 0.40%
Ind for the coal imports are highly restricted. The
18 Sarhan Steel 3.7 0.10%
energy mix which majorly focusses on the
19 Total 3731 89.70%
natural gas also considered as a threat to the
20 Imports 440 10.30%
country.
Challenges
SWOT Analysis:
The following are the challenges for coal
The following is the result of SWOT analysis
market in the country.
conducted.
a.) The presence of the existing reserve and
Strength
the production of domestic coal.
The Government’s estimates 30 Million
b.) The government regulation for the
tonnes of imports in the year 2015. There is
cement and the thermal industries in the
an increase in growth of cement industry. The
imports of coal is a serious threat.
government has announced for importing
c.) The availability of the Natural gas and the
coal for other sectors apart from cement
depletion in the natural gas availability is
industry.
E 552
a serious challenge for the country to shift 10.International Herald Tribune(2006)

11.URL 2.1:www.ameinfo.com/28375.html
to an alternative fuel.
12.A.C.Neilson data of 2006.2011
13.URL 2.2 www.ameinfo.com/48503.html
Conclusion 14.URL2.3 https://maps.google.co.in/maps?hl=en-
IN&gbv=2&q=bahrain+map&um=1&ie=UTF8&hq
Though the country does not have much of
=&hnear=0x3e48524e6a47a211:0x2e9450e2dbda10
dependency towards coal, the country has 46,Bahrain&gl=in&sa=X&ei=99S3U9P7PNOfugSe
started shifting towards it. The government q4KwDg&ved=0CBMQ8gEoADAA)
announcement to import 30 million tonnes of 15.URL2,4http://atlas.media.mit.edu/profile/country/
sau/)
coal is the inception for the traders and
16.URL2,5https://maps.google.co.in/maps?hl=en-
exporters to target the country. The market
IN&gbv=2&q=egypt+map&um=1&ie=UTF-
shift happening in the European Union is 8&hq=&hnear=0x3e48524e6a47a211:0x2e9450e2d
with the technological development of the bda1046, Egypt&gl=in&sa=
clean coal technology. The other industries X&ei=99S3U9P7PNOfugSeq4KwDg&ved=0CBMQ8
gEoADAA)
allowed by the company to use coal in the
17.URL2.7http://atlas.media.mit.edu/rankings/countr
country have determined the growing
y/2011/kwt/ )
strength of potential in the country. 18.URL2.9http://atlas.media.mit.edu/rankings/countr
y/2011/qat/
References 19. www.eia.gov
20. www.egypt.gov
1. Walther, A., Opportunities and Challenges facing
21. www.knonema.com
developing Countries, UNDPDiscussion Paper 6
2. URL1: http://www.steelfabme.com/SteelTech.html
3.URL2:http://www.tradeandexportme.com/2013/05/
healthy-growth-for-gcc-foodindustry/
4.URL3:http://www.thenational.ae/business/industry-
insights/economics/risingpopulation-fuels-demand-
for processed-food-in-the-middle-east
5. URL6:http://www.arabnews.com/news/466247
6.URL7:http://www.cttech.org/vinal/lmc/projects/Mid
dleEast-geography.pdf
7.IMF Economist data 2006-2012 Qatar National
Bank data,2011
8.Wall Street Journal ( 2005 )
9.Yahoo Finance Handbook (2005,2010)
E 553
To Optimize & Excel the Quality Based Operation & Maintenance

Practices in CHP, for Smooth Functioning of Coal Handling Plant
O&M in 600 / 660MW Units
Mr. Sheshnath Dubey*
* Power Plant professional, Master-MBA/Corporate -PGDBA from the Symbiosis International University, Pune
Abstract the Operation & maintenance activities at

The Material /(Coal) handling system is the CHP. Our Technical paper presents the efforts
backbone of the any thermal Power generation to venture for the O&M best practices are to
Industry to generate or produce the Power / be done to save the fuel as well time, money,
Electricity .The crucial way of power energy and to increase the optimization of the
generation starts with the Fuel Management thermal power plants in CHP O&M processes
System .If coal handling plant is not properly by utilization of available resources at site in
managed and the availability of coal handling units of 600/660 MW. To increase the
system is not taken care adequately, the plant efficiency of the CHP as well as max.
performance will be deteriorated. The Availability of all equipment’s by adopting all
function of Coal handling is to receive, the best practices and make availability 100%
transport and transfer the coal from one of the CHP. The Top management focus is on
Transfer point to another transfer point. CHP- the CHP because total power plant cost about
O&M is very wide subject which consist all 70% revenue is involved in the CHP. If CHP
types of operations and maintenance of coal performance is not enhanced adequately then
handling system. There are several systems, PLF will be deteriorated. Our focus by
Coal unloading system, Coal transferring adopting there should be no single KWH
/conveying system, Coal stacking /reclaiming losses by CHP only by managing the losses &
system, Coal crushing & bunker feeding processes management in CHP.
system. Dust controlling system Ventilation
system & other facility system .The conveying Keywords
system consist many operations processes Coal Handling plant, Fuel Management
.Here, I am focusing in paper the best possible System, O&M practices
O&M practices to be adapted to optimizing
E 554
Introduction Inclusive approach to safety, quality, and

About the Power plant 4620 MW Capacity & health.
Technical Operational details, Awards, Adani Power Training and Research Institute
Recognitions & Achievements Highlights of (APTRI) was launched to provide intensive
our Organization - Adani Power Limited training support to functions like projects,
(APL) entered in the power sector with its first generation, transmission, distribution,
Super Critical plant in Mundra in 2006. business development, techno-commercial,
Mundra has a total installed capacity of 4620 Finance, human resource and other services.
MW. Adani Power is committed to Nation APTRI is a center of excellence and
Building . knowledge built on the deep, rich and diverse
*APL-Mundra is the world’s largest single experience of senior experts from top national
location coal based private power plant. and international organizations.
**Mundra power plant also holds the The institute has established industry tie ups
distinction of introducing supercritical power with several reputed training providers to train
generation technology in India. APL has three employees on power generation, transmission
thermal power projects under various stages of and other related areas. To take the institute to
implementation totaling to 9240 MW, which the next level, the Central Electricity
is operational. Our commitment keeps us on- Authority (CEA) accreditation is in process.
course to achieve our vision of 25000 MW by APTRI is a permanent member of Indian
2025. Society for Training and Development (ISTD)
We strive to not only deliver the targeted and is actively associated with activities and
performance but also to raise the bar and set events at International Association for
new industry benchmarks. Adani is committed Continuous Education and Training (IACET),
to achieve excellence in Occupational Health Institution of Electrical and Electronic
& Safety (OHS) by maintaining safe, healthy Engineering (IEEE), Society for HR
conditions and adopting safe operating Management (SHRM), and Conference
practices. The quality management system at International des Grandes Reseaux
Adani has ISO: 9001-2008 certification from Electriques France (CIGRE). Empowering
TUV Nord. The participation of all employees our assets.
in OHS management systems through Awards and recognitions---industry
OHSAS: 18001-2007 ensures a holistic, recognizes the Adani excellence. Most
E 555
Admired Developer in Power Sector by •Longest earth electrode line of approximately

KPMG. 187 kms at Mohindergarh
• Infrastructure Today’s Infrastructure • First steel structure pre-fabricated valve hall
Excellence Award 2011 by CNBC TV18 in India
• Best Corporate in Power Sector by Infra’ • First converter transformer from Siemens
2011 India, Kalwa factory, Mumbai (11 out of 14)
• Golden Peacock Award for occupational • Fastest Open Converter test conducted
safety within 26 months of project inception
• National Energy Conservation Award 2011 • India’s fastest executed HVDC transmission
• National Energy Conservation Award 2012 line / terminals
Adani-Power High Voltage Direct Current • In-house design, engineering, testing, and
(HVDC) Transmission inspection
Integrating innovation and efficiency • Designed special tower for river crossing
HVDC is a firewall against cascading with a height of 90m
disturbances and it improves transmission • Executed typical π (Pi) shape tower @ Sami
efficiency. HVDC system also requires fewer s/s with 6 phases Quad Moose strung on same
towers thereby reducing the number of right of beam
way issues when compared to an equivalent Apl-Bench Marks –Highlights--Largest
AC system. HVDC also enables Controlled Thermal power station in India among private
Power Exchange (125MW to 2500MW) and sectors at single location. First super critical
aids in power transmission and stabilization unit in India.
between asynchronous AC Distribution First & only one private sector having HVDC
systems. Overall, HVDC improves the (inter- in India. 500 KV Bipolar HVDC from Mundra
region) grid stability. to Mahindragarh (1000 MW power
transmission capacity per pole).
Key Achievements of Our Power Plant First Company in the world, who has
• First private company in India to build developed methodology and got it approved
HVDC system over 1000 kms. With for High Voltage Direct Current power
maximum capacity of 2500MW transmission for CDM with UNFCCC.
• Second longest line in India after Talcher –
Kolar
E 556
Mundra 4620MW power plant consists of 7-Belt loading factorPH-1,2 & 3-4 —60%-
(4X330 & 5X660MW) units have been 70% achieved –65-75%
installed 8- To achieve & sustain coal feeding of 100%
Data Collection Summary: CHP-O&M to all apl bunkers in conformance with plant
1-Overall chp- availability ---target 98% -- requirement as well as to have a coal stock of
achieved 99% 2, 50,000 mt in apl coal piles.—95%
2-System reliability ---89% --achievement 9 To achieve &maintain the availability of all
90% chp critical equips above 95%--achieved 98%
3-Mtbf-crusher ---03 months--- 04 months 10-100% compliance of all chp
4-Mttr --crusher. –40 hrs---36hrs, notifications—100% ---------99-100%
5- To achieve average maint. Cost of coal
handling per mt 8.5 /-tons.—8.9/-mt
6- To achieve auxiliary power consumption up
to 1.10 kwh/mt ---0.99kwh/mt
Table 1 - Availability of Equipment
Equipment PH-I PH-II PH-III PH-IV
Crusher 96.10 --- 98.92 98.92
Stacker Reclaimer --- 90.46 98.92 97.22
Belt conv. 99.05 98.86 98.71 98.90
Vibro-Feeder --- 98.92 100.00 100.00
Coal Sampler Unit Avl Avl Avl
Table 2 - Fire Fighting Equipment’s Availability Status
Particulars PH-I PH-II PH-III PH-IV

Installed 12 55 27 46
DV System
Available 12 55 27 46
E 557
Not Available 00 00 00 00
Hydrant
----- Avl Avl Avl Avl
System
Other Maintenance Practices Also Covered Inventory Mgmt.

FMEA, DISHA, RCA- SAP. PO & SO Mgmt.
Preventive Maintenance ISO 14001
Condition Base Maintenance ISO-18001 ISO9002
Corrective Maintenance ISO-50001
Operation Coal Yard Pile Mgmt. Energy Conservation Award
5S Management 5S Certification
Quality Circle Best Maintenance Practices Adapted
Table 3 Coal Receipt, Consumption, Closing Stock Status 2014-15
E 558
Table 4 - Belt Utilization factor (BUF) Monthly

Coal Feeding (MT) 104121 125186 203313 635753
Belt Running Hours 367 307 264 471
Loading factor % (Target) >60 >60 >60 >60
Loading factor % (actual) 69 68 61 67
Remarks:- Considering the idle running hrs of the system
Table 5 - Compliance of SAP Notifications Monthly

Notifications Department Total Comp.Work Pending %Completion
Orders Order Order
Preventive C&I 62 62 0 100%
Maintenance Electrical 112 112 0 100%
Order Mechanical 116 116 0 100%
Total 290 290 0 100%
C&I 62 62 0 100%
Electrical 55 55 0 100%
Mechanical 70 69 1 99%
Total 187 186 1 99.66%
Table 6 - CHP-Oil Consumption Monthly

S.No. Type Ph-1,2 Ph-3,4 Veh
INSTALLED QUANTITY 3588 8480 13852
25920LTRS.
1 SERVO 68 - 40
2 ISO VG 100 30
3 ISO VG 320 10 2
4 X”MER OIL 15
5 TRANSMISSION OIL 42
6 ENGINE OIL 270
7 HYDRAULIC OIL 68&10W 246
8 GER OIL EP 90&140 67
Total Oil Consumed In Month 722 Liters
Total Oil Credited To Store 1800 Liters
E 559
Research Methodology weighted before installation for proper

5S is an integrated concept for efficient work balancing.
place management. In fact, it is the gateway *Condition monitoring and condition based
for introducing TQM in any organization. preventive maintenance on all conveyors and
An orderly mind alone can create a sound and crushers.
well-ordered surroundings. Conversely, an *Numbering of conveyor idler frames on
orderly environment promotes an orderly conveyor gallery for quick identification.
mind. *All the scrapes are categorized based on
metallic, plastic paper &cotton waste and
The 5S is like a mirror reflecting the attitudes collected separately.
and behavioral patterns. Many of the day to *Regular use of dust extraction &dust
day problems that we encounter would be suppression system for controlling the dust
cleared up if only we give more attention to during coal feeding to create friendly
5S activities. environmental for operation as well as
concerned maintenance workforce.
Best Practices at Coal Handling Plant *Oil changing of coupling hydraulic system
Mundra gear boxes filtration of oil done and oil
*Regular use of dust extraction system for the related parameters like viscosity, moisture
controlling the dust during coal feeding to impurities are checked at chemistry labs. Oil
create friendly environmental for operation is changed on the basis of lab quality report.
as well as concerned maintenance work *lubrication is done on the basis of running
force. hours of crushers and not on the monthly
*Regular use of sprinkler system at coal yard basis.
to avoid dust generation during stacking *New auto mode lincon make centralized
reclaiming &storage. lubrication system installed with SS piping
*Installation of centralized vacuum clearing and with lubrication failure feedback features
system at transfer towers for quick and in stacker reclaimer#2.
automation for clearing fine coal dust at *The conveyor take up weight boxes are
CHP-Phase1/2 bunker floor /TT7&6of ph-2. sealed to avoid ingression of coal dust
*Hammer replacement of crusher statically &possibility of fire hazard conditions.
balanced hammers used set of hammers Cleaning of take up areas also became easier.
E 560
Best Practices at Coal Handling Plant FMEA for Equipment’s

Mundra Philosophy of working: classified all
*collection &return of used/scrap oil from equipment’s based on criticality like impact
equipment to store for further processing. on generation loss, Health, safety
*During replacement of conveyor belts the &environment
joints are planned in such manner that only Classification all equipment based on
final joint needs to be done at position on criticality
conveyor gallery. 1-generation loss Category -
*the other multiple joints from different belt 1:100%generation loss Category -2: Partial
rolls which requires long for preparation are load, Category -3 No generation loss.
done on the ground before actual replacement Category –1: Major environmental impact on
work. the community major fire /potential fatality.
*the set up time of belt is saved and Category-2: Medical treatment /minor fire
equipment down time reduced. /environmental impact on the entire plant.
*Actual weight of the gravity take up box is Category- 3: First Aid /minor environmental
displayed at take up weight box of all impact
conveyors in order to ensure the use of right Category -4: No HSE Impact.
capacity chin block and slings by workmen
during take up lifting for maintenance works. Target Setting
1-Enhance the belt loading factor
Uses of O&M SAP Module 2-To achieve &sustain coal feeding of 100%
*100% monitor PM/ CM/ BDM/ CBM/ to all APL bunkers in conformance with plant
RCA/ FMEA requirement as well as to have a coal stock of
Through SAP O&M tools. 200000 MT at APL Stock pile.
*Monitor Equipment availability 3-To achieve axillary power consumption.
*Spare management 4-To maintain equipment availability of
*Material Procurements critical equipment’s.
*Contracts works management 5-Compliance of all CHP equipment’s PM
*work orders management for PM/CM/BDM notification 100% &95% corrective
*Inventory management notifications.
E 561
6-To achieve average maintenance cost of and option of 50% stacking &50% direct
coal handling plant per MT of coal handled. feeding provided.
*At ph-2 only single stream was available for
In House Inventions feeding at time as per logic. Logic modified
*Conventional diamond pattern lagging at for parallel operation and provision was
head pulley of conveyors have been replaced made to operate (R2, R4, CR2 R5 & VF4 )
by ceramic lagging strips for long life of SCADA. *TTTR5A&5B used over travelled
lagging. frequently. Replaced simplex chain by
*Frequently jamming flow divider are duplex. & additional weights provided
replaced with in house fabricated flap gates .benefits over travelling problem solved.
with 3 positions arrangement. *provision of additional air cleaner to
*In plant ph-3 capacity of belt 2000TPH prolong engine life of fork lifts used in ash
before the gate utilized to maximum extent handling.
now due to possibility of dual stream *to reduce jerk &shock, replacement of solid
operation after the gate. rubber wheel with pneumatic wheel in
Ph-4 screen discharge in house chute forklift make Godrej used in handling of ash.
inclination angle changed and problem of *Currently the capacity of tech pro system
frequent jamming and tripping resolved. conveyor at ph-1 is 900 TPH and on av.
Stacker /reclaimer long travel right side end 7000-900 TPH feeding taken place. The unit
bogie wheel bearing cover, shaft and seal 1-4 total consumption requirement about
fund damaged. New shaft bearing cover 660TPH which is just neck to neck of feeding
fabricated at APL work shop &replaced capacity. This gives tight schedule time for
same. maintenance of stand by stream. It is
*Frequent failure of communication due to proposed to enhance capacity to 1000TPH
control cable fault between S/R #1, 2, 3 like the PMC System by increasing the size
&control room. CCRD Cable was replaced of the pulley .with capacity enhancement the
with wireless communication system. bunker feeding criticality and equipment
*At ph-1 &2 PMC S/R there was only one running hour duration reduces in future.
option of either stacking or direct feeding To produce defect free product, it is a
50% limit switch provided at center position prerequisite to have well-ordered work place.
5S is a simple, systematic method of creating
E 562
working environment in such a way it leads approach their work, and using what they
to improved productivity and quality, learn in every aspect of work environment.
reduction in wastage of materials and
inventories, enhanced safety and ultimately Results and Discussions
motivated and enthusiastic human force. Cost benefit analysis
Although the 5S movement obviously results Saving may be realized: ---by adopting the
in major improvements in 5S areas, it creates only two best practices following benefit
a lasting impact in changing the way people realization.
Sl.no. Benefit description Owner dept. Start End Impact in terms of

rupees
1 Crusher rotor CHP 1.2.2015 20.3.2015 Rs.429997
refurbishment
2 During the year BUF CHP APR 2014 MAR2015 Saving Is @ Rs. 27
and APC targeted there Lakhs Considering
by reduced apc by 3/-Per KWH
1,017 to 0.973 i.e.
4.12%
1- Cost of one rotor replacement is more On the basis of best practices the availability
than 4800000/-and repairing cost may be reached to 100% of each equipment
comes only 5.0 lakhs so about 0.43 by adapting the checklist and best
Crore may be saved. methodology and keep equipment’s updating
2- BUF increased and APC –Reduced on regular basis.
also saved the auxiliary power saving By only hard facing of rotor new cost may be
and saving about 0.27 Cr. saved .of about 0.48cr.
Conclusion &Future Scope of Work By adopting the best practices 0.27 cr
Conclusion electricity saved.
By only applying the Best practices we save By adapting best practices we save oil
a lot of resources and we can reduce consumption in HEME equipment’s.
drastically the budget of dept. which will By practicing housekeeping we can save the
reduce the cost of generation and we can environment.
survive in power industry.
E 563
By practicing the good ISO 9002-2008, & Maintenance practice may be adapted to
14001, 18001, 50001 we can do the IMS – enhance the reliability of their systems.
integrated mgmt. system.
It will be the bench mark for any coal References
handling plant in thermal plant for any unit M/s. F.L.SMITH & M/s. SEPCO China OEM --
Manual
in India and abroad.
Internet / Web site links & dept data of chp 660X5 MW
cema safety committee, best practices Downloads-
Future Scope of Work • CEMA Safety Best Practice 001 – DESIGN
This technical paper gives them a general AND SAFETY APPLICATION OF CONVEYOR
study of best practices to be adapted to all the CROSSOVERS FOR UNIT HANDLING
CONVEYORS (PDF)
thermal power plants coal handling plants in
• CEMA Safety Best Practice 002 - E-STOP
India and abroad. This is the practical tested
APPLICATION GUIDE FOR UNIT AND BULK
method in world best power plant in BELT CONVEYORS (PDF)
operation currently. • CEMA Safety Best Practice 003 - DESIGN
May Power plants are not functioning only AND APPLICATION OF SPILL GUARDING FOR
UNIT HANDLING CONVEYORS (PDF)
due to CHP so this paper will give them the
ENGINEERING CONFERENCE-
boon to restart their coal handling plant and
• CEMA Technical Report, 2007-01 – NOISE
give profit to them. CONSIDERATIONS FOR CONVEYOR SYSTEM
This paper is giving the plate form to DESIGN AND APPLICATION (PDF)
concerned CHP people about best Operation Technical data collected from Dept
E 564
Transportation
Challenges in Service Deliver in Fuel Retailing
Rajnish Mehta*, Dr. Atul Razdan**, Dr. Geo Jos Fernandez***

*General Manager & Head (Aviation Business), Hindustan Petroleum Corporation Limited, Mumbai, India
**Professor and Associate Dean (Undergraduate Business School), CoMES, UPES
***Assistant Professor, CoMES, UPES
Abstract Reconstitution, Dealer Commission,

In matured economies Gas Station networks Marketing Discipline Guidelines to name a
are automated and conveniences dominate few.
the business. These economies with their
liberalized markets witness power of brands, Keywords
pricing and services in addition to that of Service brands, Automation, Dynamic
location and efficiency of operation. Even Pricing, Credit and Debit cards, Self
though India is a very large fuel retailing Service, Conveniences
market with a 30% growth in network in last
5 years but it has challenges in terms of Introduction
adoption of technology, payment The closest to the Gas Stations, as we see
conveniences such as credit/debit cards, them today, happened on December 1, 1913
availability of non-fuel conveniences ,self- in downtown Pittsburgh, Pennsylvania.
service options, delivery of brand promise Most agree that when “Good Gulf Gasoline”
on the forecourt and dynamic pricing arising went on sale, it was America’s first true
out of competition. I have tried to identify drive-in service station opened by Gulf
challenge for executives of Indian Oil Refining Company. Unlike earlier simple
industry to achieve the best global standards curbside gasoline filling station, it has an
in fuel retailing. I have also pointed out architecture purposefully designed with
additional complexities of these challenges pagoda-style sales room and a facility which
as market is dominated by Public Sector offered free air, water, crankcase service,
Companies which are governed by policies tyre and tube installation. This was a Fuel
of Govt of India thru Memorandums issued Service Station offering both fuel and
time to time as regard to Network service thru it staff including a manager to
Expansion, Dealer Selection, Dealer oversee the functioning and four attendants
I1
standing by the dispenser. It provided a only by oil majors but also by independent
shelter from bad weather for the customers retailers. It mostly started in US and Europe
too. This was arguably the first incidence and later majors brought them to other parts
when services such as free air and water of the world as well. Looking at the journey
were introduced in the market and this of some them gives an idea how far the
station also sold the first roadmap in US. business has moved, challenges retailers
Gulf Refining Company made beginning but faced then and are facing now. Credit cards
very soon thousands of new Gas Stations and fueling have been bound together for
opened in US and Europe on a similar last 90 years. First usage of credit card has
pattern. As millions of Auto mobiles were been recorded in 1924 just 11 years after the
getting sold every year number of Gas first drive-in Gas Station opened in
Stations started multiplying exponentially. Pennsylvania. These cards followed a simple
Today US has more than 1.5 lakh Gas dog-tag style metal plates issued by
Stations while Europe has approximately 90 department stores prior to World War I. In
thousands Gas Stations. Similarly in Japan, 1950, the modern credit card system was
inspite of large number of closures, still introduced by Frank McNamara and Ralph
have 40 thousands stations while economy Schneider with their Diners Club Card. In
like China has 90 thousand and still 1958, Bank of America introduced “Bank
counting. Indian’s fuel retailing landscape Americard” which later on become Visa. In
is dominated by three Public Sector Oil 1964 concept of a simple innovation of
companies and after addition of 15515 being able to pump your own Gas, without
number of retail outlets(OMC data) in last 5 a service attendant, and then pay, was
years it has 53419 as of 2014-15(Petroleum revolutionary. It allowed customers to save a
Planning and Analysis Cell ,2015) few cents a gallon because of reduced labor
costs, but they still had to go inside to pay,
Numerous facilities and services evolved as whether by cash or by credit card. In 1986
the business and competition in fuel retailing E-Z Serve and its subsidiary AutoGas in
increased. Retailers experimented with new Abilene, Texas, installed dispensers
concepts and conveniences to lure more featuring a built-in credit/pre-paid card
customers to their Gas Stations. In its peak reader system. The concept had been
vibrancy periods innovations were added not introduced in Europe in 1982.Only 13% of
I2
convenience stores had pay-at-pump of the station. NPN November 1957

technology by 1994, but number reached reported ’There has been a marked shift by
80% by year 2002. Built-in card reader oil companies in favor of Tune-up for their
system are virtually there at all Gas Stations dealers. Only six majors were clearly in
in US and at Europe and most other favor of tune-up then now there were 16’.
developed economies. By August 1962 NPN was publishing an
article as to how to fight back the traditional
Johnson and Romeo (2000) stated, “In retailers of TBA. Selling of TBA was very
1968, only 27 states allowed the self-service popular amongst Petrol Pump dealers in
Dispensing of gasoline, and some of those India too introduced by Esso and Caltex it
required that attendants be standing by.” By had soon caught up their fancy. With
the late 1970s, all states except New Jersey powerful other retailing channels of TBA
and Oregon had overturned their self-service and dealers who concentrate only on one
bans. These two states continue the ban on line of business its number at Petrol Pumps
self pumping of gasoline till date however it has reduced but never the less it still remains
is permitted for diesel dispensing to cars or an important channel for tyre and battery
even trucks. ‘A few reasons the public companies.
strongly supports statewide self-service bans
are that they (a) provide a valuable service By 1960s petroleum retailers in US were
for disabled and elderly citizens, (b) help trying to enter some other schemes. Their
ensure environmental safety, and (c) create attempts on auto rentals, did not have much
thousands of jobs, all of which come at a staying power, but car wash, was to become
negligible cost to consumers’( Robert Scot a major profit center. New technological
III , Challenge, 2007). innovations in the equipment spurred further
interest in the area. In 1964, even though
Sale of Tyres Batteries and Accessories coin-operated self-service car washes
(TBA) had been started by petroleum market equipment were less than one year old but
years since 1930s,by 1960s it had become a considering the interest they were garnering
major trend. The majors also started to turn their future appeared certain. Pairing food
in favor of it. Introduction of sale of TBA service and convenience stores with selling
from Gas Stations was coined as "Tune-up” gas was growing stronger in US and
I3
European markets. This was also time Some marketers took a more basic approach,
when convenience store chains started to as reported in NPN August 1963 "Florida
enter the retail gasoline market. In August Station staffed 100 percent by girls," with
1964 article appeared in NPN titled the intention to attract male motorists. It is
"Grocery Chains Eye Gasoline Sales." It evident that the rise of feminism in that
was reported that one of the chains decade hadn't quite permeated the culture of
"Supertron" was entering the market using US as yet. The first Indian example Retail
self-service pumps, which incidentally was outlet staffed 100% by the girls happened in
also the first substantial entrance of self- Delhi in the beginning of 21st century and
service in the US market. pioneer was one of the Gas Stations of
BPCL on a busy road of South Delhi called
Today’s market clearly shows how the Shantipath .It also attracted the publicity and
concept of these conveniences introduced became very popular very soon.
four to five decades back have been tightly
embraced by the retailers as well as The above possibly sums up some of the key
customers. If we look at today’s US market development which took place in fuel
convenience stores sell more than 80% of retailing globally and evolution Gas Stations
fuels purchased and dominance continues to business from bucket to conveniences. Many
grow. Over the past decade, the number of services introduced decades earlier are
convenience stores selling fuels have grown popular today and have even changed the
by 15% from 110,895 to 127,588 stores. dynamics of business with pivot shifting
from fuel to conveniences. Services at Gas
This period also saw advances in pricing Stations in India have also evolved over the
strategy as new marketing methods period with some serious work done by
proliferated throughout the decade. Some OMCs in Service Marketing. But there is
of the majors introduced ‘Station pricing’ need to study gaps between services being
and few others priced by wide areas rather provided at Gas Stations in developed
than station by station called ‘Zoning’. markets and India. There is need to
With the popularization of Zoning method, understand what steps are being taken by
some price stabilization started taking place. stake holders to overcome challenges as
market moves towards maturity. It will
I4
involve firstly to review the status of Esso, or promotion of Indian companies.

services being provided at the Gas Stations Petroleum industry in India was controlled in
in some of the important markets globally all stages of exploration, refining, and
and comparing them with what is happening marketing by the Govt. through its Public
in India. Internal and external challenges Sectors during 1970s and most of 1980s.
being faced by Indian Petro retailers need to With the liberalization of the Indian
be identified in their efforts to deliver the economy, government allowed private
services of Global standards. companies to enter the refining sector in late
1980s and early 1990s. The pricing of
Literature Review petroleum products was brought under
Thru literature review different aspects of Administered Pricing Mechanism (APM)
Indian and Global Petroleum retailing effective July 1975 when pricing of
landscape will be looked into to explore petroleum products was shifted from import
some key aspects as how they differ. With parity principles to cost plus principles.
help of literature it will be captured as how Under APM, during 1975 to 2002 a
market is changing in matured economies complex system of pool accounts was
and some of new challenges faced by the maintained with an intent to maintain
retailers in the first world. There are stability in Indian market. Effective April
challenges before petroleum retailing 2002, APM was dismantled and Govt
companies of India to address concerns of decided to provide subsidy on sale of PDS,
Indian customers, meeting their overt and Kerosene and domestic LPG at specified
latent needs. Major hurdles to be identified flat rate under budget. The sharp rise and
which Indian managers need to overcome volatility of prices of oil and petroleum
before they reach global standards of fuel products in the international markets since
retailing. 2004 became a matter of serious global
concern. Indian basket of crude oil which
Intensity of competition was averaged at $ 23per bbl at the time of
Public sector oil companies - IOCL, BPCL, dismantled of APM in March 2002 went up
and HPCL have been created through either to an average of $ 85.09 per bbl during
nationalization of multinational petroleum 2010-11. The average price of Indian basket
companies like Burma Shell, Caltex, and crude oil as of December15, 2015 stands at
I5
$38.30 . Dismantling of APM had sparked disposals of companies like Shell and RIL
huge interest in India’s downstream it was expected that war for the market share
petroleum retailing. It attracted large Indian is about to break out in urban and highway
players such as Reliance and Essar markets of the country.
immediately. Another Public Sector
Company ONGC also was keen to But final outcome of events tell different
integrating forward by setting up its own story. Even though APM was dismantled in
infrastructure. On March 7, 2003 the The 2002, but the consumers of India continued
Economic Times reported “Shell applies for getting insulation from the impact of
license for sale of petrol, diesel in India”. unprecedented high international oil prices
As per the policy of Govt of India, by the public sector oil marketing
marketing rights to retail petrol and diesel companies which resulted in huge under
are contingent on investment of minimum recoveries of the companies with
Rs.2000 crores in oil infrastructure like corresponding subsidies of prices for the
exploration, refineries, pipelines or consumers. . The actual under recoveries in
terminals. Any new entrant was also 2013-14 were Rs.139869 crores out of
required to furnish Bank Guarantee of 500 which Diesel along accounted Rs.62937
crores for obtaining authorization to retail crores. These under recoveries were on
petroleum and diesel. Royal Dutch Shell account of sale of only OMCs and no
which operated 40000 outlets globally at private player such as Shell, Reliance and
that time applied for a license to sell Essar was entitled for the any
petroleum diesel from 1500 petrol stations. reimbursement from Govt. This
Report also stated that Petroleum Ministry discrimination obviously made them to shut
had agreed to Shell’s request to be freely their network as soon as OMC’s started
allowed to import Petrol, diesel and jet fuel selling fuels under their purchase price. If
(ATF) for retailing in India. During the we look at today’s data of service station
period Reliance had received authorization numbers and volumes it tells a very different
to set up 5849 retail outlets, Essar Oil 1700 story.
and ONGC 600. Numaligarh Refinery had
also got the marketing rights. Having made While the network share of private players
such huge plans and resource at the was reported at 6 % the total market share
I6
cornered by them was 1.1 %. Even today negotiated between the state, the refiners
when MS prices have been decontrolled on and CAMPSA. Industry controls were so
26th June 2010 and HSD effective 18/19 deep that the state was even controlling the
October 2015 presence of non PSU refiners’ processing capacity and the supply
suppliers is marginal. RPL has not made of crude oil. A major step was taken in
even its existing network operational and 1992 by the splitting up the monopoly as
Shell is restricted to its urban market of Govt. divided the retail network amongst
Bangalore, Hyderabad and Pune without refiners according to their market share in
addition of single outlet in last 5 years. refining. CAMPSA thus became a
Numbers do not display the intensity of transport company and its shares were sold
competition which gets visible with the to Spanish based refiners plus shell ( Ignacio
entry of private players. Their activity as of Contıń-Pilart a, _, AadF.Correlje´ b,c,
now also indicate that they are waiting for M.BlancaPalacios d, 2009) . CAMPSA was
deeper reforms to happen which may renamed as “Compan˜ ıá Logı´stica de
remove the barriers to their access to Hidrocarburos (CLH)”. During the phase of
infrastructure. Permanency of decontrol of dismantling of Spanish Monopoly due
prices is another issue as they have protection was given to the traditional
experienced roll back to price control and refiners to ensure stability in the market. In
pump price subsidies when crude prices 1993, 85% of 5983 service stations were
spike. controlled by the refiners. Density of service
station in Spanish was also one of the lowest
If we look at the story of liberalization of in Europe. With the reforms from early
Spanish Oil Industry its ending is quite 1990s 30 new operators entered the market
different. Between 1927 and 1992, and their market share went up from 15% to
customers in Spain were supplied by a 30% in the decade following 1993. Next
single state monopoly CAMPSA. step authorities took to create an even field
CAMPSA had monopoly on import and in terms of logistic infrastructure. Even
export of oil products, its storage, though CLH had undergone important
transportation through trucks and pipelines structural changes but it was still
and retail sale at service stations. The distributing under monopolistic conditions
volumes and prices were used to be because it had become an exclusive property
I7
of three Spanish Refiners save for a small competition and competition has further
shareholding owned by Shell. To resolve intensified with entry of hyper markets and
this, the Royal Decree 6/2000 resulted in independent service stations. All this has
significant changes on competition within happened in a national industry which
the industry. This decree demanded the remained in monopolistic era for more than
original owners jointly cannot hold more 60 years and it has happened rather fast.
than 50% of CLH, and that none owned India which gained independence in 1947
more than 25% (The Spanish retail and was under administered pricing regime
petroleum market: New patterns of for 55 years till 2002 could have been in a
competition since the liberalization of the similar situation with a stronger political
industry Alejandro Bello, Sandra Cavero- will. India still has very high concentration
Energy Policy 36 (2008) 612–626). of PSU’s and marginal presence of private
Measures which gave rise to competition and international players while Spain is
include structural and strategic political different because
steps taken by Spanish Govt as they helped  In India we could not create a
immensely in bringing new players in the downstream logistic company which
sector. This long term commitment to could have been independent control
reforms had been missing in reforms done in of dominant companies as done in
downstream Indian Petroleum sector. In case of Compan˜ ıá Logı´stica de
few years, Spanish Industry shifted from Hidrocarburos(CLH) which was
being state monopoly to a free market with a turning out to be major barrier for
dynamic competition. There was a increasing competition in Spanish
significant improvement in terms of market.
modernization of Gas Stations, brand  Any new entrant is bound to invest
publicity and serious promotional efforts Rs 2000 Cr as per investment norms
even by two main competitors Repsol and as pre-condition to start retailing but
Cepsa. Leaving behind their legacy of creating a parallel infrastructure in
monopoly days they consolidated their such a vast country creates a serious
positions in the market and gave a tough barrier. By creating a suitable regime
competition to the new entrants. Market has of charges for usage of infrastructure
been witnessing aggressive price
I8
by new entrants some of these  Essar with 1650 outlets has the
barriers could have been removed largest presence which is operational
 When Govt. decided to subsidize but network is low cost one without
HSD and MS to the customers due to automation doesn’t throw a serious
high international prices the policy challenge to OMCs
of compensating under recoveries  Even though Indian Petrol and HSD
should have been uniform for all market was 79 MMT in 2014-
retailers as even private players were 15(PPAC) but no new player is
also catering to same customers . A heard to be knocking at the door to
fair and effective regulatory enter
framework with independent Lack of real competition has been a major
regulator in India could have been in obstacle which has denied Indian customer
place in 2002 to ensure stability as true benefit of brands and dynamic price. It
well adherence to code of conduct by will be a formidable challenge for OMC’s to
all stake holders rise upto the occasion when market moves
towards competition in true sense.
India continues as Petroleum Retailing Technology and Automation
market which is:
 Hugely dominated by PSU’s with India happens to be the fourth largest
98.9 % market share in 2014-15 consumer of Petroleum products. India has
 Even as of October 2015 only 3 a network of 52864 retail outlets (P-60
private players are active and MOPNG Report 2014-15) and as per its
formidable one is Reliance which ‘Hydro Carbon Vision 2015’, all Gas Station
has 1400 outlets but has only 600 selling above 100 KL will be automated by
active. This is when even HSD have 2015. MOP&NG report records that there
been decontrolled for more than a are nearly 23686 number of retail outlets
year and they are own the world’s selling more than 100 KL of fuel per month
largest refining hub at Jamnagar and out of that 13011 outlets have
 Shell is stagnant at 71outlets with automation. Report also informs that ‘No
presence in only 3 cities and even Automation No Operation (NANO)’ has
has closed some sites been implemented as on 1st December 2014
I9
on the outlets which are already automated. Canada found traction with customers
In another step towards adoption of almost instantly.
technology OMCs have been directed to
install GPS for complete monitoring of Challenges to reach desired standards of
movement of all fuel carrying trucks. automation and adoption of technology for
Research by Quadra for formulating retail OMCs starts from getting right model and
SBU strategy for one of OMCs revealed that vendors to meet the Indian needs. Current
the largest need gap in consumers mind was models of automation are designed for high
found to be in obtaining fuel of assured volume urban and highway outlets as they
quality and quantity (Jain, Dixit, Bhat and require investment in range of Rs 20 lakhs.
Maheswari, IIM Ahmedabad of 2006). They also have stability issues in Indian
Clearly steps are being taken to stop conditions. For outlets selling moderate
pilferage from the trucks enroute and volumes low cost automation solutions need
adulteration at the outlets thru automation to be worked out. India also faced a serious
and compulsory operation of automation by problems in terms of quality of electricity
the dealers but still lot work is left to be being supplied and connectivity. Upkeep of
done. automation system in dusty and ,hot
environment has been turning out to be
When Reliance Industries Ltd (RIL) started another challenge. Very small purchase
operating its network in its fuel capacity in quantity by two wheelers in very large
2008 it quickly garnered market share of 12 numbers also making it very difficult for
% of HSD mainly due to its fully automated forecourt staff as automated outlets require
retail outlets. This was possibly the biggest more steps in each transaction. Then there
indication given by the customers as how are issues of logistics for maintenance
much they are concerned about quality and personnel to reach station at the earliest
quantity but more importantly how much of country as wide as India where automation
their concern gets addressed by a network is down as retailer loses customers and
fully automated with centralized control. volume. That is the reason they resorted to
Reliance network designed on the lines of operate outlets in manual modes when
chain of Truck Stops of ‘Flying J’( Now system malfunctioned and OMCs had to
called Pilot Flying J ) in markets of US and introduce ‘No Automation No Operation’.
I 10
on price irrespective of it being high or low .

Situation in developed economies couldn’t It is of utmost important for the retailer to
have been more different as far as adoption keep it flexible and upto date. Oil majors
of technology is concerned. As of February and big network owners use sophisticated
2014, US market had 152995 service pricing tools to maximize their volumes and
stations which includes the ones selling returns. They resort to very frequent price
gasoline including service station, truck, changes using dynamic pricing softwares to
shops and convenience stores. Only 2% of do the analytics and use centralized price
these stations are owned by the major oil changing mechanism linked to the network
companies and they operate 1/3 of what they through automation. The game is to get the
own (Energy API). 58% of these stations customer inside the store but today that first
are owned by individuals or families which you have to get him inside the Gas Station.
own single store.Indian market is also Without adoption of automation, technology
dominated by network operated by supported by pricing tools retailer can be in
individuals even though majority of them serious trouble as he is already operating on
are leased to OMC’s and they have made razor thin margins. That is possibly the
major investments on the infrastructure at reason the adoption of technology to cut cost
the outlets. Network in US is operated have been rather quick in developed
through sophisticated automated system. markets.
Considering the high cost of labour, card
swiping at the island, severe price History of US retailers adopting technology
competition and fuel being one of the is quite old. Devise of automatically filling
offering at convenience stores automated vehicle tanks with motor fuel was patented
systems have been necessarily adopted. by Irwin Ginsburgh in 1967 (Publication
Another factor which is most critical in US number US3527268 A). Fully automated
or any advanced country and a genuine sign and properly networked Gas Stations with
of competition is dynamic price. In US, fuel minimalistic human intervention is the only
is 5% an overall consumer spending (as per reality in advance countries such as US,
US EIA).Consumers can do price shopping Europe, Australia and Japan etc. You may
at a speed of 40 miles per hour. Data find Just one attendant at a station looking
suggests 2/3 of consumers constantly shop after both convenience store as well has the
I 11
station but unmanned stations are also quite convenience store brand operated by BPCL
big in number. Virtually every dispenser is at its outlets. By 2011 it has 209 “In & Out”
with a card swiping facility and prices are stores at its Petrol Pumps (BPCL Annual
dynamic changing morning to evening or Report 2011). ‘The total estimated size of
even more frequently. forecourt market is estimated at just under
Rs 400cr, however the potential size of the
In India there are issues as regards to an market in the non-fuel retailing sector is
acceptability of technology by the dealers expected to be much higher and is also
and people at large as it needs adherence to expected to grow exponentially over the
prescribed system. Market also has to be next decade. (Sandhya Rai, 2 Dr. Atul
prepared to accept the concept of self- Razdan & Dr. M.S. Pahwa, Journal of
service as card swipe to get full advantage of Management , Volume 1, Number 2, July-
automation in terms of lower prices. Overall December 2012)’. Penetration of Non Fuel
creating fully automated network including business in India is currently at very low
at large number of legacy outlets is a huge level. One of the major downstream Public
challenge in terms of execution, Sector Oil Company having a turnover of
maintenance and returns. Indian companies 2.17 lakh crores has a non-fuel of revenue in
are grappling with all these issues to find the range of 60 crores which to say the least
right solutions which are affordable and is negligible. This company has fuel
effective. retailing at 70% of its total business hence
impact of non-fuel business on its
Conveniences profitability is small too. Most popular non
fuel activity at the Gas Station is ATM.
Conveniences or more popularly known as Total number of ATM at different Gas
Non fuel Retailing (NFR) in India is not as Stations in India will be numbering around
old as it is in developed countries. In most 3000 and that means 6 % Gas Stations have
of Indian Gas Stations, fuel retailing is still ATM’s. ‘There is no doubt that non fuel
the key activity which generates most of the retailing in India can become very popular
profits. Non fuel retailing started in 1990s offering to the customer and profitable
and most prominent brand which became proposition for the oil companies but right
visible was “In & Out” which is the model needs to be worked out’ stated the
I 12
authors in a paper ‘Opportunities in Non- facility, oil changing facility for two
Fuel Retailing in India’ (Sandhya Rai, Dr. wheelers, outdoor media renting. On
Atul Razdan & Dr. M.S. Pahwa). This study highways OMC’s have attempted to provide
of NFR in India concludes : dhabas and restaurants on their large format
stations which cater to truckers as well as
“NFR also helps in creating brand image by car customers. In rural segment where
providing superior experience to the offering of HPCL is “Hamara Pump” and
customer. It also enhances retention of the that of IOC is called ’Kisan Seva Kendra”
customer as well as adds new customers by companies have attempted to provide
attracting them to their outlets for one or the services of seeds, fertilizers and agricultural
other reason. This helps in pushing fuel sales implements. BPC has tied up with an Indian
also as the people who come there to buy the company to place their Gas Station next to
products are likely to purchase fuel also their large format agricultural store. With
from these outlets. In this way companies changing face of Indian highways and rising
are trying to attract the customers by per capita incomes more and more people
converting their fuel buying experience in to are travelling long distance in their cars.
a whole lot of fun. They also help in brand Many of these facilities are becoming very
building and act like a differentiating factor popular and have started generating good
in the profit enhancing.( Opportunities in revenues. There are approximately 15
Non-Fuel Retailing in India)” MacDonald’s on these highway outlets all
over the country where OMC’s have built
In spite of such opportunity being available and provided facilities with a revenue
OMCs in India have not tasted much success sharing models. OMC’s have attempted
in terms of substantial revenue and different revenue models for different NFR
additional profits. Activities which are non- activities. In some cases like ATM’s or
fuel retailing activities found to be existing courier centers they get the revenue for the
at a Petrol Pump in India mostly include space they have provided on per sq ft basis.
convenience stores, eateries, cafes, ATMs, In activities like cafes and convenience
tyre shops, battery shops, courier counter stores model has minimum rental plus
center, book shops, branded and non- additional share of revenue if sale of activity
branded service stations, vehicle insurance crosses a predetermined limit. For a busy
I 13
truck stop outlet companies not only provide There is clear movement towards better and
toilets, resting facilities and safe parking at better conveniences.
no cost to the drivers but also provide a low
cost dhaba thru a service providers There are some interesting developments
sacrificing most of the revenue they could such as one which is being unfolded in
have earned out of the space. Berlin and Germany. Seventy service
stations are being equipped with small office
Future of a Gas Station without a and conference facilities. Regus is creating
convenience store appears to be very bleak a global network of business services at non-
in these markets. Europe is a market where traditional locations such as transport and
consolidation of Gas Stations has been retail hubs across Europe. The two
continuing for last 10 years and there is no companies already have a partnership in
end in sight. Period from 2007 to 2012 saw France. Another UK supermarket fuel
closure 4573 stations in Europe and total operator, Sainsbury’s, made a pioneering
count came down to around 90 thousand by acquisition of six standalone service stations
September 2013. Most of these closures in 2013. The first Sainsbury’s Local service
were of small sites which did not have station, not attached to a supermarket, is in
proper convenience stores or service station operation in Harley, UK. All of the major
to sustain its profitability. Even though fuel retailers have developed a premium fuel
gasoline sales are also flat in Europe but it offering. In UK some of the major players
continues to be very large market. Major such as BP, Esso, Jet have 100% sites with
international companies hold approximately the conveniences. Story of the US is not
50% Europe Service stations. In recent very different even though most of operators
years, super markets have claimed a major own single Gas Stations. In US over the past
share in UK and France but they are not decade number of convenience stores selling
dominant. North and West Europe continue fuels has grown by 15% while there is a
improving their retail offering, while Central serious drop in the overall number of fueling
and Eastern Europe still has basic stations. Big box grocery stores and mass
convenience offering mainly small shops merchandise stores more popularly known
(European Petroleum Retail sector Market as hyper markets had reached a number of
View – CBRE consulting September 2013). 5236 in May 2014 which were involved in
I 14
retail fueling garnering 13.8% of total US patronage. This kind of behavior is visible in
gallon market. bigger towns of India too.
The top five hypermarkets selling fuel, by In India inspite of efforts of Oil Companies
store count in US: Non Fuel activities are more sporadic in
 Kroger (1,220) nature and have not truly embedded into fuel
 Walmart (999 stations, mainly retailing landscape of India. One major
Murphy USA with small mix of reason is that fuel retailing is not as old as it
others; up to 200 new Murphy USA is in developed countries. Upsurge in
sites are due by end of 2015 per retailing and consumption also started
agreement) happening post liberalization in last 15-20
 Sam’s Club (505) years and was not considered as part of
 Costco (381) design of legacy network. Some of the
 Safeway (346) (Source: Energy challenges which is holding back
Analysts International) achievement of desired scale in non-fuel
If we look at consumer behavior as regards include :
to consumption on go, it reveals that  Most of the legacy Petrol Pumps in
significant relationship exists between India have small sites and with the
patronage preference in on-the-go explosion in 2 wheeler population
consumption and the assortment offered as they have already become very
per the opportunity to consume products congested. Any NFR activity of
without effort. (Refer Rephal Heider & reasonable scale can be by
Sabine Moeller, Journey of retailing and sacrificing fuel volumes.
consumer service 2012). In a world where  Non fuel activities at Gas Station
time is at a premium customers are looking require various approvals including
for convenience at the Gas Stations from department of explosives and
including cafes to save upon time. Their local municipal authorities. In most
behavior indicates that availability of a municipalities existing land use laws
burger or sandwich with a coffee on the go do not permit any activity other than
from a Gas Station can improve its fuel retailing. Approvals are very
time consuming and are normally
I 15
granted with several conditions Payment Options for Customers

which are difficult to comply and India is by and large a cash economy and
diminish the interest of NFR partner. this is applicable to Petro Fueling to.
 Non fuel potential is much higher at Handling huge cash collected daily and
the urban sites but very high cost of banking the same safely is a major worry for
land in these areas a major stumbling all dealers here. But it is changing slowly
block. Many times additional but surely. The Economic Times report of
investment on land is not justified by 6th October 2013 stated:
return thru NFR activities.
 Returns on the investment especially “More impressive is the secular growth in
in the rural and highway market on volume and value of transactions. Credit
NFR activity are much lower than card spends (in value terms) have more than
viability levels. Potential partners doubled to Rs 1.23 lakh crore despite a dip
find cheaper options for activities in the number of credit cards between 2007-
such as seed shop in rural areas or 08 and 2012-13. And debit card spends (in
dhaba space on highways. value) have risen six times to Rs 74,400
 OMCs have not been very successful crore during the period. The number of
in creation of a model for NFR processing terminals too has doubled to 9.5
which can be scaled up to large lakh in these five years.”
percentage of network and generates
good revenue for the company. Oil companies moved in promoting adoption
‘There appear to be need for the of credit card rather fast. HPCL introduced
companies to understand the market its co-branded credit card with ICICI way
dynamics so that they can gather back in 2000 while IOC had introduced in
expected footfalls’. (Sandhya Rai, 1998. HPC’s credit card number reached 15
Dr. Atul Razdan & Dr. M.S. lacs by 2003(IIM, Ahmedabad,2006). IOC
Pahwa)’ had tied up with Citi Bank for its co-branded
credit card and later on with State bank of
India. Banks quickly realized that it is very
important that customer should use their
credit card at fuel purchasing transaction.
I 16
Many banks waved transaction fee at any located in the rural areas where plastic is
Gas Station irrespective of the company and still not part of economy. Now majority of A
HSBC was first off the block. Activities class and B class city outlets accept
which started from metros like Delhi, credit/debit cards. However major
Mumbai, Chennai and Kolkata soon spread dependence of increased card usage is with
to cover most of other urban centres. OMC’s the customer who still prefers cash over
made smart and credit card as a part of card. For one of the companies for which
brand promise by HPC way back in 2002 transactions date is available it shows that
(IIMA/ MAR0382,2005) . 11.5% of MS sales takes place thru credit
card and rest is still happening in cash. Fuel
Annual report of Indian Oil(2004-05) noted retailers are no more resistant to
in their coverage of launch of XtraCare acceptability of payment thru card and some
brand: prefer it because banks are now imposing
additional charges when they deposit daily
“The non-fuel activities received a major cash collection while credit card amounts
fillip at the Indian Oil XtraCare outlets and a seamlessly get deposited in their accounts.
wide range of loyalty programmes like Another factor which is favourable for
XTRAREWARDS, XTRAPOWER and co- Indian market is the ‘inter change’ fee
branded cards give customers added benefits applicable at the Gas Stations. To promote
(available at present at select Petrol Pumps)” the usage of plastic interchange fee is mostly
in the range of 2.5 % and out of that upto 0.9
Even after 15 years of efforts by OMC’s % is absorbed by the oil companies for co-
have mixed results in terms to total brand cards. There is no additional fee
percentage of non-cash transactions. As per payable by the customer as issuer absorbs
the information available about one of major rest of the charges for co-branded credit
oil companies in India, cards are acceptable cards of oil companies. However for other
at approximately 2000 number of retail cards charge of 2.5% is levied. Fuel retailer
outlets out of a total network of 15500. This has been incentivized as most of his cost is
13 % of card acceptable outlets may look covered by amount shared by acquirer from
low but we must consider the diversity of his ‘off us’ income i.e income generated
Indian markets where a big portion is
I 17
when swiping of other bank card takes place Europe is not separately available but
on acquirer’s terminal. appears it should be high and should have
grown in line with growth in total retail
If we look at the picture in US and other transactions. In Europe card payment
countries In 2003, first time Americans account 44% of all transactions.
made more payments by credit or debit card
at stores than they did with cash or cheques While India not withstanding its population
(American Bankers Association). Usage of size, diversity and digital divide is moving
plastic at Gas Station has accelerated at very on a path of cashless economy atleast in
fast pace in US market. As per 2015 report urban areas but desired goal is still quite far.
of NACS Consumer Fuels Survey, 78% of There are some serious challenges in
buyers are fueling up by paying through converting Indian fuel retailing business
plastic. However, this activity also has some from cash to plastic which include:
contentious issues. As per the estimates of  Usage of card by more middle age
NACS every year since 2006 overall customers at the Gas Station as more
convenience store profits have been lower acceptable social behavior.
than fee that they paid credit card companies  Higher penetration of credit cards in
and banks for processing transactions. As the country and reduction in a
per them in 2013 ‘Industries reported profit geographies being considered as
was $ 7.1 billion and credit card fee was negative area for issuance of credit
11.2 billion dollars’. Plastic is equally cards by the banks.
entrenched in European economy. In  More customer communication and
Europe’s retail sector total transactions in education on usage of credit and
the 2000 were in the range of 13.4 billion debit cards by the govt.
per annum which have gone up to 43 billion  Promotion by OMC’s and co-brand
per year in 2013 (European Central Bank partners as regard to reward schemes
Press Release 9th Sept. 2014). As per and loyalty programs to increase
European Central Bank debit transactions in frequency of use
retail have gone up from 12 billion per year  Acceptability of credit/debit cards at
to 24 billion per year. Data for usage of all fuel retail outlets in the country
credit and debit cards at the Gas Stations in
I 18
 Ability of service providers to players held association in the minds of

service Electronic data capturing consumers none of them provide
(EDC) machine to cover remote distinguished reasons for consumer to
geographies including parts of operate a specific brand offer. The largest
highways efficiently. net gap in consumers mind was found to be
 India has a parallel economy which in obtaining fuels of assured quality and
keeps itself away from tax net. They quantity. Consumers expected high outlet
are not keen to move to plastic as all loyalty based on the location of the outlet
transactions get recorded. and assurance of quality and quantity”.
(IIMA, 2006). HPC pioneered in its effort to
Forecourt service brand its outlets and also to initiate various
Indian Gas retailing market has been more steps to deliver the promise of the brand. As
of distribution kind of model between 1990s a part of the retail strategy of HPC it
and 2004 with limited branding effort even promised to change the way fuel is being
though there were some attempts to create retailed in India thru its new retail brand
an impression about the image of Club HP. HPCL launched Club HP on
retailing company in the minds of customers March 26, 2002.Few months later they also
by making outlets look better and brighter. launched fuel brands Power of petrol and
Efforts for providing attended services and Turbojet in category of Diesel. HPCL’s
even creating a brand gathered momentum retail brand position was to change its
when market was liberalized in 2002 and current reality as large fuel provider like
private players announced their plans to other companies .New position was ‘Club
enter the market with aggressive plans. HP retail outlets takes care of my vehicles
This was the time when OMCs had relooked and my needs on the road’. Some important
on the comprehensive retail strategy, services to be offered at Club HP Retail
conducted surveys and started moving Outlet included
towards building a loyal customer base.  Quick Care Point
Research results from Quadra for 2006 for  Tyre Care
one of marketer HPC indicates the situation  Under the hood checks
at that point of time. Research results state  Air Tower
“While corporate brands of oil industry  Puncture Repair
I 19
 Vehicle consumables wipes, to quick oil checks and snappy air

 Quality and Quantity Assurance service and overall experience of superior
 Invitation to customer to check services which will leave the vehicle feeling
quality and quantity special. Their Annual Report describe the
 Vehicle Servicing proposed brand as “Indian Oil's XtraCare
 Wind shield cleaning branded full-service petrol stations are a
 Pure drinking water result of a series of processes in retail

design, product and service upgradation,
 Clean toilet
capability training, automation, loyalty
 Vehicle insurance
programmes, retail site management
techniques – all benchmarked to global
While HPCL took the position of
standards. Today XtraCare petrol stations
exceptional vehicle care and customer care,
are synonymous with world-class petroleum
BPCL had already introduced their brand
retailing”.
“Pure for Sure” promising delivery of
assured quality and quantity. During the
Towards the deliverance of quality and
first and second week of December 2004
quantity all three OMC’s had taken a
Indian Oil advertised that vehicle owners
uniform position. However IOC claimed it
should not buy any fuel till Saturday
is moving several steps ahead by introducing
December 18, 2004 as something new was
fortnightly random sampling with specific
to happen on that day. On December 18,
importance given to RON (Research Octane
advertisement appeared in all the major
Number) sampling, which is truly the
newspapers delivering the customer that
definitive test for quality and quantity.
their wait for best of fuel and best of
They incorporated surveillance audits by BV
services ended that day. Indian Oil
on comprehensive basis. Special training to
announced the opening of 300 XtraCare
the forecourt staff was integral to the
Outlets. Introduction of XtraCare brand
delivery of brand such as Club HP and
figured prominently in the Annual Report of
XtraCare to the customers.
Indian Oil 2004-05.
IIM case study of Club HP noted “Training

As per the brand they were committed to
dept. came up with new training program.
provide branded fuels, to speedy windshield
I 20
This was prepared in collaboration with the crank case service and tyre & tube
training agency. The new training program installation but several innovations down the
consisted of 12 steps formulated by training years changed the scenario completely.
dept to deliver the required service level. Customer’s affinity to the lower prices
The training was to last one full day. accelerated the pace of disappearance of
Annual Report of IOC also captures the most of the services which were enjoyed by
similar importance towards the training as it the customers in their earlier years. First
states “Another vital differentiator in the self-service pump opened in 1947 in
XtraCare outlet is the importance given to California. But by 1993 up to which data is
the frontline customer attendants. They are available 88% of the sales were happening
trained at three levels of competencies-- through self-service pumps in US in the
customer service, personal states where it is legal. In Europe
hygiene/grooming and customer complaint increasing number of stations have become
redressal. XtraCare dealers also undergo unmanned. Data of Austria states that
extensive training on 'retail site business unmanned station have increased by 68%
management', a unique training module over last year bringing total number of
incorporating the best global practices in unmanned stations to 412 (Petrol Sector
retail sales management”. Market Review 2015).
BPC which committed itself to the promise
of supplying right quantity and assured India is a low wage economy so it is not
quality fuels to the customers started the very expensive to provide services such as
initiative with enrolment of 764 Retail fueling or even manned air facility of wind
Outlets and has reached a number of 2653 screen wiping. It is also expected these
Retail Outlets representing 48% network as services are not going to disappear soon.
per their Annual Report. They claim their Indian society has shown no inclination
volume handled in Pure for Sure Outlets is towards ‘self service’ at Gas stations and it
even higher than rest of the network has been noticed that they expect that
fueling and other services have to be
Even though the first drive in Gas Station in provided by retailer. While the commitment
Pennsylvania had the services such as of much upgraded services have been made
fueling by the attendant, free air, free water, by the oil industry but their initiatives have
I 21
been facing serious challenges including the  Different customer profiles in urban
gaps in delivery of promised service which and rural schemes requiring
was to be of the level of being ‘Excellent”. adjustment in brand positioning
Some of these challenges include:  Limitation of oil industry in
 Deliverance of superior customer choosing their dealers.
care as promised through the brand  Implementation of minimum wages
thru their branded network. or market wages for forecourt staff to
 Uniformity and consistence of the attract right staff with customer
services across the network. service orientation
 Motivation of the dealer to meet the
standards prescribed by the oil These are serious challenges in front of
company. OMCs who have to deliver promised
 Hiring, training and retaining of services thru the legacy network and will
forecourt staff committed to desired require additional effort to change their
service standards image in minds of the customer. They also
 Maintenance of high housekeeping understand that any new player can enter
standards and clean toilets. without any historical baggage will start
 While the services have mainly been business with uniformly fully modern and
designed for car customers sale of automated network with firm Standard
MS (estimated to be upto 40%) has Operating Practices as happened in case of
been shifting to 2 wheeler customers. Shell network.
Hence service promise of this
segment needs to be studied. Who should run Gas Station?
 Even though incentives have been Markets of US, Europe, Australia, Japan and
given to dealers for compliance in similar economies are in consolidation phase
form of additional dealer where large number of closures is taking
commissions but OMCs have place. But India on other hand is adding
limitation for disciplinary action on retail outlets year after year. In absence of
the ground of serious lapses in real competition from private players most
customer service of the addition is happening in Public Sector

Oil companies. While Indian Oil marketing
I 22
companies have several challenges in terms otherwise highest bidder will win the right
of deliverance of promised services and of dealership. Thus criteria of dealer
meeting the customer aspirations, it also has selection does not include any major
a serious limitation in terms of chosing a relevant experience of the candidate in
person who will operate the outlets. This handling service related business or having
problem was there in the past when dealers experience in the hospitality industry or any
were selected by ‘Dealer Selection Board’ other businesses where customer service
instituted by the govt where Oil Industry truly counts. OMCs limitation in selection of
officers had limited say and it exists even dealers of their own choice meeting their
now in liberalized phase when dealers will own business ability criteria’s puts them at a
be selected thru a lottery great disadvantage vis a vis any new
marketers. Amongst OMCs there is a
In market like India where OMCs intend to restriction that one person can be dealer of
provide differentiated services in terms of one location hence even excellent quality of
superior customer and vehicle care the major dealership management and service
selection criteria as stated by the MOP&NG orientation also cannot be leveraged in
in their communication dated 17th April another market. These are restriction
2014 is availability of land (for the category applicable to selection of dealership falling
Corporation Owned Dealer Operated Retail under ‘open’ category. Under ‘Social
Outlets). Land eligibility criteria states that Objective’ category which covers upto 50%
land offered by the candidate will be taken of OMC dealership criteria are different as
on lease/purchase by OMC. Under this there is no compulsion of providing land but
category security deposit for non-rural strong experience norms supporting
dealership will be Rs. 5 lakh and dealer customer service orientation are not
selection will be required to pay non- included in those cases too.
refundable bidding amount of Rs.30 lacs.
New change which were also advised Situation is almost the reverse of what
through this letter from MOP&NG was the happens in other international oil companies.
selection will be through the ‘draw of lots’. If anyone wants to become a retail business
This process will be resorted in case the bid partner of Shell, he needs to submit a form
amount of candidates is found to be same or on the Global Retail Business Agreement.
I 23
The form available on the website has an following requirements for its potential
important question for the potential partner business partners.
which states
“United is currently seeking expressions of
“Shell is committed to delivering excellent interest for opportunities to operate and
customer service and our Retailers play a manage a retail fuel and convenience store.
vital role. To help you achieve this, we will
provide you with full training and support Requirements
and will encourage you to look for every  Previous retail convenience
opportunity to use your skills and talents. experience preferred
This is your opportunity to tell us as much  Excellent customer service skills
as possible about yourself. It will help us to  Strong work ethic
make a fair decision to select the people who  Experience in managing people in a
can naturally give excellent customer fast paced retail environment
service”.  Join this rapidly growing retail
organization and become a member
It also asks “Please describe what you feel of a dynamic and professional Retail
good customer service looks like and how team “.
you would motivate your staff to constantly
deliver it?” Another international player JET In the conditions when India’s per capita
states, ‘We respect that independent dealers income is on upward trajectory,
are capable business people and that our job liberalization is integrating the Indian
is to listen, communicate and support their economy to global markets and customer
needs’. The form of Esso Branded Sales expectations are changing managements of
Association in Canada asks for any special OMCs have challenges such as:
education and training completed by the  Training and retraining of the dealer
candidate or his staff including any previous till he can be brought up to the level
supervisory or relative or relevant where he understands corporation’s
administrative experience. Another needs in terms of customer service.
successful company United Petroleum Pty They need to have different approach
Ltd in Australia wants in Australia the for different dealer profiles as
I 24
minimum qualification criteria for says” People must come first. You can’t
dealership is matriculate and they start off by asking which direction you’re
also get professions with MBA,CA, headed in … First you figure out if you’ve
LLB and PhD. got all the right people on the bus, then you
 Large part of new dealers come from figure out where to drive”.
families who have never been in any
business of any kind big or small. Thus challenge of converting dealers you get
OMCs have to teach them from into the ones who will take the brand of
scratch how to become effective OMCs which is loved by the customers is
dealer and do the man management. the final frontier they need to conquer.
 Maintenance and upkeep of
sophisticated automation systems, Analysis
technology led loyalty programs and Challenges being faced by Indian Petro
similar technologies provided by the retailers identified in the paper include:
oil companies through the dealers  Lack of genuine competition is
not educated enough. At time they resulting in unaddressed issues of
get cheated by their staff posing customer perception about Quality
serious risk to continuity of business and Quantity
itself.  Customer is not able to get exposure
 Learning of financial and credit risk to international brands to make a
management also requires efforts on choice
part of dealer as well as company  Indian Gas Stations have non
Jim Collins the famous management guru uniform infrastructure partly due to
and author of famous books ‘God to Great’ legacy issues.. Even though Vision
and “Built to last” stated “Before a good 2015 document of MOP&NG states
company can take its performance to the that all outlets selling above 100 will
next level and become truly great, it needs to be automated by 2015 but there are
have the right staff in place”. As per him major challenges to meet the
many companies think that a cunning deadline. New outlets are still
strategy or great performance will attract the commissioned without automation.
right applicants but that’s backward, Collins
I 25
 International markets have ability and experience of providing

competition in terms of price and it customer services happens to very
has been identified that customer important criteria in addition to his
looks for price as major value. India financial standing. In Indian context
has not experimented with the latest guidelines are for selection
concept as such as market is thru lottery or auction. Customer
dominated by OMC’s orientation and ability to lead team to
 Conveniences being offered at most deliver superior customer service is
of Indian Retail outlets are not in line not part of selection criteria for
with markets in US and Europe. OMCs and that makes deliverance as
There is scope to identify Non Fuel promised in the brand such as Xtra
Service needs of the customer and care , Club HP and Pure for Sure
provide the same even more difficult.
 India has limited penetration of
Plastic (Credit, Debit and Prepaid
cards) and also there is challenge in Scope of future research
acceptance of the same at Gas All these challenges for managers of OMCs
Stations. Handling of cash is a and the ways they plan to overcome them
problem for retailer but still small have not been analyzed in any available
percentage is using cards for fuel literature. Thus there is scope of further
purchases research by interviewing executives of
 In developed world ‘Self Service’ is OMC’s as how they intend to overcome
a universal option where customers them and move the industry towards Global
get slightly lower price. This concept standards.
is yet to be analyzed and

experimented for adoption in Indian Conclusion
market India is 4th largest consumer of Petroleum
 Selection of dealers in OMC’s is Products in the world and it has been
done as per ‘Dealer Selection growing at the rate of 11.06% in MS and
Guidelines” issued by Govt of India. 6.48% in HSD in last 5 years. India has
Globally the criteria of candidate’s added 15500 Gas Stations in last 5 years.
I 26
This poses a serious challenge before the service design and standards to build
executives of the Oil companies as they customer relationships which will critical
have to not only add the network to meet for their growth and profitability. It is very
growing needs of 1.3 billion people but at crucial for each one of them requiring
the same time meet their aspiration in terms introspection, discussion, further research
of fast changing need of services, facilities, and analysis.
conveniences, technology , payment options
, competitive prices etc. This challenge gets References
a multiplier effect as PSU companies are 1. 2014-15 “Annual Report of MOPNG”
2. 2004-05 “Annual Report of IOC” announcing
bound by dealership selection norms and
XtraCare
network management guidelines from
3. 100 years of “National Petroleum news“ (1909-
MOP&NG. This puts a limitation on the 2009)
companies in terms of taking an innovative 4. 2014 “NACS Retail Fuels Report”
approach to address many such issues. 5. Robert Scott III “A Study of Statewide Self-
Service Gasoline Stations Bans” in Oregon and
Indian customer now much more aware of
New Jersey (Fill’er up)
and aligned with global trends has fast
6. 2015 “NACS Retail Fuels Report”
changing service expectations. Oil 7. 2003-04 “Annual Report of BPCL”
companies operating today need to design 8. 2014 “Brochure for Selection of Dealers for
their service offerings meet their Regular & Rural Retail Outlets”
9. Competition, regulation, and pricing behaviour
expectations and also to create a
in the Spanish Retail Gasoline market
differentiator to improve loyalty. A thriving
10. “Guidelines for selection of Retail outlet Dealers
competitive market creates urgency for for setting up of new ROs” – MOP&NG letter
improved customer orientation but that No. P-30024/33/2012-MC dated 17th Feb 2014
factor is still missing in Indian Petroleum 11. “Guidelines for selection of Retail outlet Dealers
/ LPG Distributorship on Draw of lots” -
downstream, Lack of level playing field for
MOP&NG letter No. R-30024/33/2012-MC
new entrants due to unequal access to
dated 23rd June 2014
existing infrastructure and inconsistent 12. • European Central Bank 2013 press release
reforms has been the cause of market being “Payment Statistics for 2013”
highly skewed in favour of existing 13. Sept.2012 “CBRE Market view on European
Petroleum Retail Sector”
government companies. Under these
14. Sept 2013 “European Petroleum Retail Sector
circumstances Oil companies need to create
Market View”
I 27
15. Anurag Dugar “Marketing of Petrol in India-

transformation of an undifferentiated , Low
involvement commodity into high involvement
brands”
16. Shell applies for licence to sell petrol, diesel in
India - The ECONOMIC TIMES
17. Atul Razdan (2012) “Non Fuel Retailing in India
2012” , Volume 1, Number 2, July-December
2012, Issue 2277-4076
18. Raphael Heider n, Sabine Moeller - Outlet
patronage in on-the-go consumption: “An
analysis of patronage preference drivers for
convenience outlets versus traditional retail
outlets”
19. Industry Retail Outlet commissioning from 2004-
05 till 2014-15 zone wise
20. • P.Kumar & A.Sahay (2003-04) “Retailing
at Petrol Pumps : from Commodity dispensing to
customer service” - Journal of Services
Research, Volume 3, Number 2 (October 2003-
March 2004)
21. Marco Alderighi and Marco Baudino b (2015)
“The pricing behavior of Italian Gas Stations:
Some evidence from the Cuneo retail fuel
market” Energy Economics 50 (2015) 33–46
22. Alejandro Bello, Sandra Cavero (2008) The
Spanish retail petroleum market: “New patterns
of competition since the liberalization of the
industry” (Energy Policy 36 (2008) 612–626)
by European Petroleum Retail Sector
I 28
Changing the Indian Administrative mindset – From Bureaucracy

to Buddhist Collectivism
Dr. Anil Kumar*, Dr. Ashish Tripathi**, Dr. Vipul Sharma***
*Professor and Head, Department of Power and Infrastructure,
**Associate Professor and Head, Department of Accounting and Finance
***Associate Professor, Department of Accounting and Finance,
CoMES, UPES, Dehradun
Abstract collectivism. It can be safely surmised that

The world economic system seems to have leaving the self-ego aside and consciously
come full circle with the Capitalist order adopting the process of collective
seeming to have reached its nadir since the deliberations can lead to better decision
year 2008. In 2008 the deep recession started making and a more sustainable business
with a kind of unravelling never witnessed model.
before. It began with the demise of the
Key Words
Lehmann brothers and gradually the domino
Sustainable, Collectivism, Buddhism,
effect took over the world’s strongest
Administration
economy, namely the US. Some experts have
argued that the twin human vices of greed and Indian Bureaucratic System
fear have led to this ultimate denouement. India has a rich legacy in terms of spiritual
Ever since this debacle the world has been and moral codes of conduct that have been
groping for alternative models of decision outlined in the various shastras. These led to
making which can be more sustainable. The the development of an extremely evolved
individualism of the capitalist system led to (spiritually) social order in India. The advent
excessive managerial hubris and ultimately of the British into India saw the gradual
resulted in insatiable greed and self- dismantling of the social structures and
acquisition. On the contrary the East Asian systems which were the cornerstone of the
economies like South Korea, Taiwan etc. Indian society. The British were less in
seem to have ridden the trough of recession number (compared to the millions of native
relatively unscathed. On looking more Indians) and needed an effective mechanism
closely their decision making models have to perpetrate their Raj. In order to keep the
the roots in the Buddhist philosophy of masses under their thumb they introduced the
I 29
system of bureaucracy. The term leanings that the government of India

‘bureaucracy’ was initially coined by Weber. possessed at the time. Thus the business and
Under bureaucracy there are many layers of free enterprise were construed as adversaries
government. In the lower echelons of the to the bureaucratic and the political
governmental pyramid, the officials establishment in power. As a natural
comprised of mainly the native Indians. As corollary the bureaucracy created a system
the pyramid numbers narrowed down whereby there were clearances required for
towards the top, the Indians were replaced by every small action and decision by the
the British officials. Thus virtually a handful entrepreneurs and the business organizations
of the British rulers were able to control the of the private sector. This proved to be a
vast majority of the Indian subjects. death knell for the Indian industry and
subjected the nation to what was mocked as
In the bureaucratic system of governance it is
the Hindu rate of growth for many years since
in the interests of the upper class to try and
independence. Only in 1991 when India
maintain the status quo. The aim is to control
faced a severe Balance of Payments crisis did
and suppress the vast hoi polloi by the ruling
the government embark of the path of
British. To enforce the same, everything that
liberalization, privatization and
can be legally done is penned down in the
globalization. Even then the bureaucracy has
form of the complex web of rules and
proved to be extremely resilient and the
regulations. These rules and regulations are
vestiges of the command and control system
so restrictive that they virtually eliminate the
still seem to persist with the instances of
independent thinking and actions by the
retrospective taxation etc. rearing their heads
suppressed majority. The natural tendency of
from time to time.
a bureaucrat is to throttle free enterprise and
out of box thinking by the silent majority. Buddhist Collectivism
Contrary to the pyramidal structure of the
After the demise of the British rule the
Indian Bureaucratic framework, Buddhism
bureaucratic tradition continued with the
recommends a flat structure in any
Indian bureaucrats at the helm of affairs. This
governmental/business organization. In the
translated into the license, inspector and
Buddhist monasteries during the course of
permit raj in independent India. It also
religious confabulations, the (so called) head
seemed to be in sync with the socialist
I 30
monk sits on a pedestal only slightly higher is a natural system of checks and balances
off the ground than the other participants. which is incorporated through this method.
This is not to highlight his higher position or Spiritually also such a process is more
authority but to enable him to see all the other evolved and superior as it leaves little scope
participants and vice versa. The head monk for the person in power to let that position go
never tries to force his conclusions/decisions to his head. It is sometimes said that power
down the throat of the others but indulges in corrupts and absolute power corrupts
a healthy discourse and discussion with his absolutely. This leads to deleterious
fellow monks. In fact he encourages dissent consequences both for the concerned
and voicing of view contrary to his own. individual as well as the organization as a
Finally, after due deliberations, the actual whole. Such a possibility is almost eliminated
decision pertaining to any issue is not left in the collectivist approach to decision
only to the head monk’s discretion, but is making.
arrived at collectively by all the members of
A possible criticism of the collectivist system
the gathering.
can be the slow pace of decision making (due
One ostensible advantage of such an to the en-masse deliberations). However, this
approach is the sense of ownership that each deficiency is more than made up by the lesser
member feels towards the decision taken. possibility of error. In addition the sense of
This is mainly because her views have been ownership drives the individual players to
duly considered and nothing has been give their best to the organizational pursuits.
implemented per force. Another positive The obvious advantages of the collectivist
aspect of the collectivist approach is that approach are borne out by the meteoric rise
diverse viewpoints and perspectives have of the Asian Tigers on the stage of the world
been incorporated in the process making the economy. Most of these nations like Japan,
chance of something relevant being Korea, Taiwan, Thailand and now China
overlooked very remote. If the decision have their core philosophy comprising of
making process is left to the whims and Buddhist values.
fancies of a single individual, in the position
These countries have defeated the middle-
of authority, there are chances of errors
income trap of emerging economies and have
creeping in due to the personal biases. There
been successful, with their collectivist
I 31
approach, in areas where individual oriented bureaucrats are well entrenched in the present
countries (like those in Latin America) have setup and will undoubtedly resist any move
failed. Another important facet in which the that challenges the status quo and their
Buddhist countries have been far ahead of the authority in turn.
individualist (and economically advanced)
It is important that the change in culture from
nations of the West is the low crime rates
bureaucracy to collectivism be initiated by
prevalent in these nations. The Buddhist
the top leadership. In order for this to happen
emphasis on non-violence coupled with the
the legislative leader of the ruling party has
collectivist approach and the negation of the
to get convinced about the merits of such a
self-ego has enabled them to be far more
change. He has to initially accept his own
prosperous in terms of the quality of life
limitations as a single individual in full
index.
humility. From this would flow the process of
Roadmap for India change in which the bureaucrats need to be
Buddhism and other spiritual philosophies sensitized about the merits of the collectivist
like Vedanta, have their origin in India. attitude. By its very definition a collectivist
Indians are thus sufficiently exposed to the approach cannot be thrust upon the wide
basic tenets of Buddhism. This makes it quite majority. There has to be created a culture of
natural and automatic for the Indians to be openness and trust whereby the issues can be
able to execute them in practice. It seems that thrashed out in the public domain through a
because of the long years of subjugation by constructive debate. Any decision of national
the British colonial rulers, the Indian citizens importance has to be taken collectively and
have adopted their bureaucratic structure not via the competitive route. One crucial
without questioning its utility today. requirement for such a drastic change to be
Presently, bureaucracy is not encouraged successfully implemented is that the
even in the country of its origin, namely, the individuals have to learn to let go (of narrow
UK. Technology has advanced so much that selfish gains) for furtherance of the society’s
the organization structures have benefit. This would in turn require a complete
automatically become flatter in the West also. change in the mindset of the higher ups which
However, the emphasis is still on the will in turn gradually trickle down to the
individual rather than the group. Indian lower levels. However, if India is to emerge
I 32
at the top in terms of the quality of life index Raghuram Rajan said. “Policy is dependent
(which measures the material prosperity as on one person, which means you can make
well as the societal peace and harmony) there mistakes. Committees would be less prone to
is no alternative but to bring about/execute mistakes because there is a discussion among
such a fundamental change from bureaucracy people of different hues. Committees are less
to Buddhist collectivism. A relevant quote to susceptible to pressure, both internal as well
buttress the line of argument taken up in this as external pressure. It is harder to push a
paper is as follows: “The difficulty in the committee. But I think what is also important
current system is it personalises the policy,” is continuity.”
I 33
CSR Perspective of Employee Satisfaction
G. Ramakrishnan*, Dr. Nikhil Kulshrestha**, Dr. A. Lakshmana Rao***

*PhD Scholar in Oil and Gas Management, UPES, Dehradun
**Associate Professor, CoMES, UPES, Dehradun
***Assistant Professor, CoMES, UPES, Dehradun
Abstract employee satisfaction but very few studies

In this paper, review is conducted on various have been made on Employee satisfaction
CSR related research papers with special from CSR perspective. According to Caner
reference to Employee satisfaction. The and Banu7, managers of corporations and
review is presented chronologically, decade research scholars have started giving
wise, starting from 1950s. This paper will importance to the impact of CSR initiatives
help readers to get an idea about how regarding the perceptions, attitudes and
employee satisfaction is viewed from CSR behavior of external stake holders such as
perspective in various time frames. This will consumers. Unfortunately, very few studies
provide an over view and agenda for future have dealt about the internal stakeholders
empirical research on employee satisfaction (Brammer21 et al. , 2007; Rupp22 et al. ,
and Company CSR activities in various 2005).
industries.
This short coming is very well brought out by
Key words Aguilera23 et al. (2007) and May24 (2008),
CSR, Corporate Social Responsibility, who urged research scholars to focus more
Employee Satisfaction on topics such as employee engagement,
because if the society has to get benefited
Introduction from CSR, then organizations must first turn
Employee satisfaction is a key element for their attention to employees, as the
Organizational performance. Employee employees are responsible for corporate
satisfaction is, quite simply, how content or strategy, decision making, strategy
satisfied employees are with their jobs. A formulation and decision making to prioritize
satisfied employee will perform his job well social issues. (Caner and Banu7).
and in turn help the Organization to perform This review paper is aimed at providing
well. There are a lot of research conducted on insight to readers as how employee, as a stake
I 34
holder of corporate social responsibility, is defined CSR is not limited to legal

viewed in various time frames and depicted obligations and it is in fact extending beyond
by various authors of CSR over a period of that. Carroll is of the opinion that McGuire
time. This paper also provides information on later elaborated CSR by saying that the duty
how employee participation, empowerment, of the corporations include politics, welfare
morale, satisfaction etc. are looked upon of the community, education and ensuring
from Corporate Social Responsibility (CSR) happiness of its employees and in short the
Perspective. whole social world.
An attempt has been made to provide the In 2009, Archie B. Carroll and Kareem M.
views of CSR authors on employees in a Shabana2, published another review paper on
chronological order, decade wise, starting CSR. The paper was titled " The Business
from 1950s. Case for Corporate Social Responsibility: A
Review of Concepts, Research and Practice".
CSR Perspective of Employee Satisfaction Carroll and Shabana have reviewed a lot of
during 1950s research papers on CSR and provided their
In his work "Corporate Social Responsibility comments.
- Evolution of a definitional Construct,
1999", Carroll1 chronologically brings out Carroll and Shabana2, say that CSR was little
the evolution of definition for CSR which known during 1950s. According to them,
started in 1950s. In defining CSR, Carroll has Frank Abrams, in 1951, wrote about the
cited various studies and the following is responsibilities of management in a broader
relevant from Employee point of view. sense. He was a former employee of Standard
Oil Company. Abrams was of the view that
Carroll1 refers to the work of McGuire in companies had to think about their
which he speaks about employee happiness employees, customers and general public and
as an obligation for Organizations in addition not limiting themselves to making profits.
to their economic and legal obligations.
Bowen's 1953 book in which he urges
Carroll1 says that McGuire’s definition about corporate to be socially responsible has been
CSR is better than previous ones in that he
I 35
hailed by Carroll1 and he terms Bowen as

father of Corporate Social Responsibility. CSR Perspective of Employee Satisfaction
during 1970s
Carroll and Shabana2 speaks about protection Harold Johnson, 1971, in his book, speaks
of stake holders moral rights. For ensuring about the requirements of managerial staff of
this the business has to follow those standards a socially responsible firm. According to
and norms that has a concern for consumers, him, the managerial staff should balance a
employees, shareholders and the community. multiplicity of interests. They should not only
strive for the profits for their shareholders,
CSR Perspective of Employee Satisfaction but also take in to account their suppliers,
during 1960s employees, dealers, community and the
"Historical background of corporate social nation. (Carroll1, p.6 / 28)
responsibility" by Rosamaria C. Moura-Leite
and Robert C. Padgett5 in the year 2011 Lijie Yang13 state that definitions of CSR
reviews the evolution of CSR and its impact began to proliferate in the 1970s and were
on Organization's behavior. They cite various more detailed as well as diverse. This period
authors including Lee25 to prove that is termed as an era of differentiation and
inclusion of employee improvements as a prosperity for the concept of CSR. They
part of CSR emerged during 1960s and cited Johnson (1971) stating that a socially
1970s. responsible enterprises are equally concerned
about interests of suppliers, employees,
During the end of 1960s Heald spoke about dealers, local communities and the nation,
socially responsible business practices. These instead of only striving for the profits for its
practices include customer relations, stockholders.
philanthropy, stockholder relations and
employee improvements. During this time, During 1971, a landmark contribution to the
the relation between American countries and concept of CSR came from the Committee
the public was affected as a lot f legislations for Economic Development (CED)
regulated business's conduct for protecting publication for Social Responsibilities of
employees and consumers. (Rosmaria5, Business Corporations (Carroll1). A public
2011). opinion survey was conducted in 1970 by
I 36
Opinion Research Corporation. According to As the late 1960s and early 1970s was a
the results of the survey, two thirds of the period during which social aspects such as
respondents felt that business enterprises workers safety, employees, consumers and
have moral obligations to help other major environment were in transition from special
institutions for achieving social progress. interest status to Government regulations. It
This should be done even at the expense of is very useful that CED was responding aptly
profitability. The CED then articulated a during this time. (Carroll1).
three concentric circles definition of social
responsibility: CSR Perspective of Employee Satisfaction
during 1980s
 The inner circle is about the prime According to Carroll1, in 1980, Thomas M.
responsibilities of business for its efficient Jones defined CSR as follows:
execution of economic functions — products,  Corporate social responsibility is the
jobs and economic growth. notion that corporations have an obligation to
 The intermediate circle gives constituent groups in society other than
importance to changing social values and stockholders and beyond that prescribed by
priorities. It is about exercising the economic law and union contract. Two facets of this
functions with due care to social values and definition are critical. First, the obligation
priorities: for example, hiring and relations must be voluntarily adopted; behavior
with employees; and more rigorous influenced by the coercive forces of law or
expectations of customers for information, union contract is not voluntary. Second, the
fair treatment, and protection from injury are obligation is a broad one, extending beyond
considered important. the traditional duty to shareholders to other
 The outer circle highlights the newly societal groups such as customers,
emerging and still unstructured employees, suppliers, and neighboring
responsibilities that business should get communities. (Jones, 1980, pp. 59-60)
actively involved in improving the social
environment. (For example, poverty and In 1984, Freeman proposed his Stake Holder
urban blight). (p. 15) Theory of CSR. In his theory, the concept of
stakeholder was defined as "those groups
without whose support the organization
I 37
would cease to exist." In the list of stake Caner and Banu7 in their work also cite the
holders, share owners, employees, works of Clarkson27 (1995) and Donaldson28
customers, suppliers, lenders and society and Preston (1995). These researchers
were included. applied Freeman's (1984) stakeholder theory
to CSR. They argue that corporations should
According to Lijie Yang13, management of mainly manage relationships with
stakeholder refers to managing relationships stakeholders and not society. According to
with key individuals or groups such as Clarkson (1995), the primary stakeholder
customers, stockholders, employees, group consisted of employees, shareholders,
communities, etc. In this period CSR of a investors, customers and suppliers. The
business firm was measured by how business secondary stakeholder group consisted of
owners and managers treat their stakeholders Governments and communities.
based on ethical duty. Even today,
Stakeholder Theory has been one of the most In their work "Corporate Social
commonly used theories in CSR field. Responsibility from Friedman to Porter and
Kramer", Maria Teresa8 Bosch-Badia, Joan
CSR Perspective of Employee Satisfaction Montllor-Serrats, Maria Antonia Tarrazon,
during 1990s 2013, reinforce the above concept. They also
Caner and Banu7 in their work cite the work agree to the fact that the Fried man's concept
of Grunig26 and Repper (1992 in which they has been countered by Freeman's Stakeholder
concluded that maintaining good theory. The go on to say that the
relationships with strategic public is essential responsibility of corporate governance does
and it will increase organizational not end with protecting the interests of
effectiveness. They also argued that shareholders but also that of the stake holders
employees form part of strategic public and such as employees, customers, suppliers etc
hence the organizations should have good who are affected by corporation's actions.
relationships with them. This will increase
the employee satisfaction with the Liu (1999) is of the opinion that bearing CSR
organization and they will become less prone was not only to maximize the profit of
to disrupt the mission of the organization. shareholders. It should also take into
consideration, the maximizing the profit of
I 38
all stakeholders such as consumers, reduced costs and risks. This is possible by
employees, creditors, debtors, local firms involving in CSR activities in the form
community, small - and medium-sized of equal employment opportunity policies
competitors, environment, vulnerable groups (EEO). He says that such EEO policies
and the whole society (Lijie Yang13) reduce employee turnover by improving
morale. This arguement is consistent with
CSR Perspective of Employee Satisfaction contentions of other researchers (e.g.
during 2000s Robinson and Dechant 1997; Bermanet al.
CSR was defied with different dimensions by 1999; Thomas and Ely 1996) that lack of
organizations with the coming of the new diversity may cause higher turnover and
millennium. According to the European absenteeism from disgruntled employees’
Commission, the CSR contained internal and (Bermanet al.1999, p. 490)
external dimensions. Employees related
issues and environmental issues about the use T Smith29 (2005) also feels that such explicit
of natural resources for production were statements of EEO will have additional
considered as internal dimensions. Local benefits to the cost and risk reduction of the
community and other stakeholders such as company. Such policies will provide firms
business partners, customers, and with competitive advantage as recruiting and
environment, etc were included in the retaining employees in the widest talent pool
external dimensions. (Lijie Yang13) will be very difficult for companies without
such policies.
N. Smith (2003) contends that CSR activities He concludes that many institutional
enhance the ability of a firm to attract investors do not prefer companies that violate
consumers, investors and employees (N. their organizational mission, values, or
Smith 2003, pp. 61–63). He strongly feels principles. Companies with good records on
that employees prefer to work for more environmental stewardship, employee
socially responsible companies. (p. 63). relations, community involvement and
corporate governance are preferred by them.
According to Carroll and Shabana2, T.
Smith29 (2005) propounded that enhancing of In the year 2005, Abagail McWilliams,
long term shareholder values is achieved by Donald S. Siegel and Patrick M. Wright4,
I 39
include employee empowerment as part of also aware of the fact that their various
CSR in their work "Corporate Social divisional managers and heads are under
Responsibility: Strategic Implications". They constant pressure from suppliers, community
state that CSR activities should include the groups, employees, NGOs, and government
following : to increase their involvement in CSR
 incorporation of social characteristics
or features into products and manufacturing Michael E Porter3 and Mark R. Kramer in
processes (for example aerosol products with their work titled "The link between
no fluorocarbons or using environmentally- Competitive advantage and Corporate Social
friendly technologies) Responsibility" in the year 2006 provides
 adoption of progressive human new dimensions to employee participation in
resource management practices (for example CSR activities and the benefits arising out of
- promoting employee empowerment) the same for the organizations.
 achievement of higher levels of According to Porter3, the initiatives taken
environmental performance by use of towards corporate citizenship does not end
methods such as recycling and pollution with providing finance: it should also specify
abatement (for example - adopting an goals for future and the results of the past. A
aggressive stance towards reducing good example that can be cited is GE's
emissions) and program of adopting underperforming public
 advancing the goals of community high schools in US near several of its major
organizations (for example - working closely facilities. The contribution of the company
with groups such as United Way) was between $250,000 and $1 million. This
Williams4, 2005, points out that managers of amount was spent over a period of five years.
MNCs and multi divisional companies have The company also made in kind donations.
growing interest in the antecedents and The company managers and other employees
consequences of CSR. These corporate took active role by working with school
leaders know the fact that business norms and administrators to find needs and mentor or
standards, regulatory frameworks, and tutor students and provide them with
stakeholder demand for CSR vary solutions. An independent study of 10
substantially across nations, regions, and schools in the program between 1989 and
lines of business. At the same time they are 1999, found that nearly all schools showed
I 40
significant improvement. The graduation rate their professional skills for a social need.
four of the five worst performing schools Microsoft also could achieve results that has
showed substantial improvement and in fact benefited many communities.
doubled from an average of 30% to 60%.
This achievement made the employees of GE Peter Utting and Kate Ives19, 2006, very
to be proud of their participation and clearly explain that CSR activities of a
contribution. company will increase employee morale and
reduce employee turnover. In their work
Another example cited by Porter3, is that of titled “The Politics of Corporate
Microsoft. Microsoft is having working Responsibility and the Oil Industry", they
connection partnership with American explain as follows:
Association of Community Colleges
(AACC). The significant constraint to  In contrast, many corporations,
Microsoft's growth is shortage of Information business associations and other actors argue
Technology workers. Community colleges that there is a solid business case for CSR,
with an enrolment of 11.6 million students, which is associated with ‘win-win’ strategies;
around 45% of US undergraduates could be doing good environmentally and socially can
considered as a major solution. However, simultaneously improve a company’s
Microsoft recognizes the problems faced by competitive advantage, reduce costs, enhance
community colleges such as non- staff morale and reduce staff turnover (p.5 /
standardization of curricula, outdated 24).
technology being followed, no systematic
professional development programs etc. When it comes to analyzing to whom the
Microsoft started a $50 million program with firms should be responsible, Freeman's stake
a five year plan period. This initiative was holder theory is used as a basis. But
aimed at all the three problems. Microsoft not according to Carroll, 2008, within the
only sent money and products to the AACC stakeholder framework, there is no difference
but also sent employee volunteers. Their role between the social and economic goals of a
was to assess needs, contribute to curriculum corporation as the central issue is corporate
development, and create faculty development performance. According to him, the
institutes. The volunteers were able to use corporate performance is not only affected by
I 41
shareholders but also by other stake holders the ‘Workplace Giving’ campaign. This is an
such as employees, customers and employer-sponsored program in which the
governments. employees are provided with the opportunity
to make a charitable contribution through
Kinder, Lydenberg, Domini (KLD) a social payroll deduction’ (Global Impact 2009a).
performance index is widely known and This program was coordinated by Global
accepted measure of corporate performance Impact, which ‘is a not-for-profit
regarding social goals. Environmental, organization dedicated to helping the world’s
governmental and social issues are covered most vulnerable people’ (Global Impact
by the index under corporate performance. 2009b). By doing such contributions, the
The index also covers controversial business employees feel pride and their morale is high.
issues and provides measures for the same.
Products and services, climate change From the view point of Carroll and Shabana2
operations and management are covered adopting certain CSR activities helps a firm
under Environmental issues. Diversity, to build strong relationships with its
employee relations, community, governance stakeholders which in turn help them to gain
issues include reporting and structure; human their support in the form of low levels of
rights and product are included in social employee turnover, customer loyalty and
issues. Finally, adult entertainment, access to higher talent pool. Thus the firm is
contraceptives, abortion, alcohol, firearms, able to gain competitive advantage. The firm
gambling, military, nuclear power and will also be able to differentiate itself from its
tobacco are covered in controversial business competitors.
issues (Carroll and Shabana2) .
Engobo Emeseh18, 2009, in his paper
Carroll and Shabana2, state that many describes the absence of CSR practices of Oil
corporations encourage philanthropic companies and Shell in particular in the Niger
activities, as part of their CSR activities. This delta. He argues that Social responsibility
is executed by their employees and customers should involve active participation by the
by various forms of collaboration. They have local communities in the decision making
cited the examples of Ashland Oil, Microsoft process on resource development in their
and JPMorgan Chase among the members of communities. To prove his point he cites,
I 42
Matiation, 2002, for example, that in the customers (better products at lower prices),
responsibility of mining corporations in and local communities (jobs, growth, tax
indigenous communities in Canada where revenue). All these increase stakeholder's
public participation in the decision making utility. Those stakeholders, in turn, spend or
process of the mining development is central. donate money, increasing others' utility, and
so on. Managers and employees give the
CSR Perspective of Employee Satisfaction company life and make the decisions that is
during 2010s: attributed to the company.
Recent researches on CSR speak about
organizational ethics which has a positive According to Spence16, employees like to
relationship with employee behavior. work for socially conscious companies,
Satisfied employees exhibit positive which may lead to improvements in
behavior. As far as the employees are employee productivity and better retention of
concerned, basic organizational ethics and good employees. Similarly, customers may
integrity are the two most vital dimensions of also be willing to pay a premium for "green"
CSR construct. To attain these dimensions electricity or oil that comes from a relatively
from their employees, organizations should green oil company. He opines that if a
start practicing high standards of company is perceived as a good corporate
transparency, corporate governance, citizen, it makes the employees feel happy to
accountability, fairness and ethics before work for it and customers and suppliers
taking up larger social problems or happier to work with the company.
concentrating on maximizing profits. (Caner
and Banu7). Paul Andrew Caulfield6, 2013, quotes the
David B Spence16, 2011, in his work on CSR Microsoft initiative in his paper. To cite an
in Oil and Gas industry, says that the CSR example where the corporate company
activities of firms brings benefits to directly undertakes stake holder engagement
employees in addition to other stake holders. to help it positively influence its operating
According to him Efficient firms not only environment, Microsoft's partnership with
provide benefits to shareholders (for example community colleges is quoted.
(ROI) return on investment), but also to
suppliers (revenue), employees (wages),
I 43
According to Huchhe Gowda10, 2013,

Voluntarism of CSR activities among In the words of Gulzhan Buldybayeva17,
employees should be encouraged and 2014, CSR is a positive concept. It is a very
institutionalized through recognition and nice result of positive thinking of mankind. In
incentives. He says that employees are the research paper, the CSR activities carried
crucial to this process as the CSR programs out by Tengizchevroil (TCO), an oil
are put into practice by them. company in Kazakhstan is studied. TCO
implemented SIP (Social Investments
Amogh Talan15, (2014) defines CSR as a Program) to improve the quality of life of its
process with the aim to embrace employees. The study observes that when it
responsibility for the company's actions and comes to education, the company aims to
encourage a positive impact through its educate its own staff for the further
activities on the environment, employees, development in order to invoke them in the
consumers, stakeholders, communities and strategy of nationalizing the staff.
all other members of the general public Nationalization of the staff is a practice
who can be considered as stake holders. that all the TNCs use when they enter
According to him, a French poll on CSR developing countries. In TCO is already
indicated that employees were seen as the taking place, today it is almost 85% of the
most important stakeholder group toward staff are local employees compared to
whom corporations have to exercise their 1993 when it was only 50%.
social responsibility.
Amogh Talan15 says that results showed that A. Lakshmana Rao (2014)20 , in his review
market-oriented cultures as well as paper, has cited a study on 111 Dutch
humanistic cultures are positively related to companies to test the hypothesis that a
proactive corporate citizenship, which in turn positive strategic and moral view of CSR
is associated with improved levels of stimulates small and medium enterprises to
employee commitment, customer loyalty, undertake CSR efforts. The moral view is
and business performance. He also concludes about employees, customers, competitors etc.
that In Indian finance firms context there is a and the results have proved that positive CSR
positive relationship between CSR and stimulates small and medium companies to
employee commitment. undertake.
I 44
level and other attitudes and behaviors.

CSR helps the employees identify themselves Hence, if an employee feels proud of his/her
with their organization and mould their organization’s social responsibilities towards
attitudes towards the organization various stakeholders, then it will lead to
(Manimegalai Santhosh9 and Rupashree positive work attitudes (Manimegalai
Baral, 2015). According to them, Hoeven30 & Santhosh9).
Verhoeven, in 2013, came up with result that
employees exhibit affective commitment The Study "Corporate Social Responsibility
when the distance between employee and and Employee Commitment" by Pavitra
stakeholders’ relationship is less and also that Rajput11, 2015, reveals the following:
particular stakeholder is highly benefitted of  The perceptions of CSR towards
CSR activities. external stakeholders are positively related
to employees’ commitment.
When employees perceive their organization  The perceptions of CSR towards
as exhibiting pro social characteristics internal stakeholders are positively related to
towards their stakeholders, it will also employee commitment.
motivate them to display citizenship  Female employees show stronger
behaviour towards their organization as well preferences for the CSR initiatives in the
(Cha31 et al., 2013). Literature reveals that organization than male employees.
there is a positive relationship between The study conducted by Mohamed Kirat14,
perceptions of employees towards their 2015, reveals that participants in the study
organization’s CSR activities and intention to believe CSR improved the organizations’
quit and exhibiting OCB (Hansen32 et al., culture and attracted and preserved best
2011) as quoted by Manimegalai Santhosh9. employees.
Discussions
9
Manimegalai Santhosh reinforces Khan, We have gone through various studies from
1990 study that when employees perceive 1950s to current period of 2015 regarding
that their organization is not having good Employee Satisfaction from CSR
external image, then this may lead to Perspective. The following table will provide
depression and stress, which in turn the gist of the review and central theme of
negatively affect the employee engagement
I 45
CSR from Employee satisfaction point of

view in each decade starting from 1950.
Sl.No Period Central Theme of CSR from Employee Satisfaction point of view
Corporate social responsibility emerged. in 1951, Frank Abraham

introduced his concerns in which he elaborated about management's broader
responsibilities apart from core business activities.
1 1950s
In 1953 Howard R. Bowen in his book set forth the initial definition of CSR.
During this period, CSR was considered as welfare work of the corporate
towards society.
Inclusion of employee improvements as a part of CSR emerged during this

2 1960s period.
Harold Johnson in 1971 said firms should strive not only for stock holders
but also for employees, suppliers, dealers etc.
3 1970s
CED, in 1971, defined CSR based on three circle concept. The middle circle
was concerned about employee welfare.
In 1980, Thomas M Jones, defined CSR in which obligation towards

employees is spelt.
4 1980s
In 1984, Freeman proposed Stake Holder Theory of CSR. According to the
theory, employee was considered as one of the stake holder.
Grunig and Repper, in 1992, said maintaining good relationship with

employees would increase their satisfaction.
Clarkson, 1995, applied Freeman's Stakeholder Theory.

5 1990s
Liu, 1999, opined that the aim of CSR is not only to maximize share holders
profit but also the other stakeholders such as employees, suppliers,
customers etc.
I 46
In 2003, N Smith, in his study contented that the ability of a fir to attract
investors, consumers and employees will be enhanced by CSR activities.
T. Smith, 2005, said that Equal Employment Opportunities policies, as a

part of CSR, reduce employee turnover by improving morale
Williams et al., 2005, include Employee Empowerment as part of CSR.
Porter, 2006, provided dimensions to employee participation in CSR with

6 2000s examples from GE and Microsoft.
KLD social performance index was introduced which measure employee

relations also as part of the index.
Carroll and Shabana, 2009, states that contributing to CSR programs by

employees make them pride and their morale is high. Carroll and Shabana
also state that by adoptig CSR activities, firms experience lower level of
employee turnover.
David B Spence, 2011, in his work on CSR in Oil and Gas industry, says
that the CSR activities of firms brings benefits to employees in addition to
other stake holders.
According to Huchhe Gowda, 2013, employees are vital for implementation

of CSR
Gulzhan Buldybayeva, 2014, explains the employee welfare programs

carried out by TCO in Kazakhstan.
7 2010s
A. Lakshmana Rao , 2014, in his review paper states that positive strategic
and moral view of CSR will stimulate small and medium enterprises to
undertake CSR efforts
According to Amogh Talan, 2015, a French poll on CSR indicated that

employees were seen as the most important stakeholder group and business
corporations have to exercise their social responsibility towards them.
I 47
Manimeghalai Santhosh, 2015, points out that CSR helps the employees in
identifying themselves with their organization and hence they can mould
their attitudes towards the organization.
Pavithra Rajput , 2015 says that perceptions of CSR towards stakeholders is

positively connected to Employee commitment.
Mohamed Kirat, 2015, reveals that CSR improved the organizations’

culture and attracted and preserved best employees.
We have seen from the above that from the Implications", Rensselaer Working Papers in
Economics, May 2005
perspective of CSR, Employee satisfaction
5. Rosamaria C. Moura-Leite Robert C. Padgett,
has been evolving through various stages.
(2011),"Historical background of corporate social
The CSR authors did not clearly identified responsibility", Social Responsibility Journal, Vol. 7
Employee satisfaction during 1950s and 60s. Iss 4 pp. 528 - 539
But later Employee satisfaction started 6. Paul Andrew Caulfield , (2013),"The evolution of
strategic corporate social responsibility", EuroMed
getting importance and during current period,
Journal of Business, Vol. 8 Iss 3 pp. 220 - 242
it is one of the main features of CSR.
7. Caner and Banu , (2015),"Are Employees
Concerned about corporate social responsibility",
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I 50
Digital India and its future - The potential and challenges
Dr. Karunakar Jha*

* PROFESSOR, University Of Petroleum & Energy Studies(UPES)-College of Management and Economics
Studies(COMES), kjha@ddn.upes.ac.in.
Abstract This research paper has been drafted with a

Digital India initiative is launched by Indian view to fully understand the goals of Digital
Prime Minister, Mr. Narendra Modi and India scheme and its prospective benefits for
Government of India in order to digitize the the people of India. The paper will also
services offered by the Indian Government. investigate the opportunities of the scheme
The initiative includes better internet and the challenges that can come in the way
connectivity and an improved online of implementation of the digital programs.
infrastructure for the government services so
that people can utilize them more effectively. Design/approach/methodology
Launched in July, 2015, Digital India scheme The research paper will be completed using
aims to connect rural people with the help of the proper sampling of data available in
internet at high speed like Tabao.com, which journals and through electronic resources.
is considered a successful revolution among Secondary research method has been selected
rural China. to conduct the research as government
entities and involved in it so personal
The benefits of Digital India initiative also interview is not a viable idea. Researcher has
include development of online learning, e- selected few relevant journals and
banking and online travel booking facilities government websites to collect data for the
for the rural people. Moreover, when the study. All data used in the research is
online activities increase, the employment authentic and properly sourced.
opportunities also increase, bringing more
development for the people of India. With Findings
emergence of online platforms, even Once the data collected from various sources
Government services also has the chance have been studied thoroughly, researcher will
improve their functioning by reducing red present that data with proper findings in this
tapism. paper. The findings will inform about the
future scope of the Digital India scheme. This
In 2015, the ecommerce industry in India study will also identify the challenges and
touched the mark of $22 billion with a growth prospects of the Digital India scheme.
rate of 34%. However, India is still in an Findings of the research will also include the
undeveloped stage in terms of online benefits that the general public and India can
business. In this scenario ‘Digital India’ derive through this program. Additionally,
initiative is expected to bring a change in the the report will also display the data that can
way of online business.
I 51
tell the benefit of Digital India to government researcher is unable to interview the
enterprises and their functions. government officials. Moreover, if the
interviews are conducted with general public,
Research limitations this may also lead to confusing and
As already said, this research has been impractical data, which can give irrelevant
conducted including the government entities results.
and data related to government services
hence personal interviews are not viable Originality
without prior permissions. This is the reason The researcher has taken all necessary steps
that researcher has chosen the secondary and precautions while choosing the resources
research method. for research. All the data and information has
been taken from genuine government sources
Practical implications to avoid ambiguity of data.
Practical implications here are also related to
the involvement of government entities. The
Introduction of innovation. However, for a better
Amidst different successful projects understanding of this program of Digital
launched by the new Indian government, India, it can be stated as a program, which is
Digital India is one of the most talked about being initiated to make India transform
assignments, which is stated to change the digitally and give empowerment to the
future of India and its youth. The experts society and knowledge to the economy
have stated the program to one of the finest (Digitalindia.gov.in, 2016).
ideas that has ever been generated as it is full
I 52
Along with this, it has even been stated that the Indian market as the economy is seen to
with digital India program, a digital be rising. Being one of the skilled nations by
infrastructure will be provided to the youth so the year 2020 has become a dream of every
that they can prove their worth and skill for Indian citizen and they are thriving for the
the betterment of the economy. In addition to same as the government is taking various
this, the services that are being provided to initiatives to give India a push that is required
the residents of India will also improve for the success. Starting from administration
drastically. It is an innovative thought of the to policymakings, various things have
India government to bring a revolution of changed in India by taking Digital India
digitalization, as it would help the people of concept into use, which in result has helped
India to attain the best of the best services in enhancing the economic condition. Seeing
across different horizons. As development is the current stock market conditions, one can
concerned, it has even been stated that notice the changes as the rate of INR is seen
process of starting a new business would also to be stable. Along with this, the investors are
be easy, as all financial transactions would be also seen keen to invest in the Indian
done online (Digitalindia.gov.in, 2016). economy because of promised results and
good return on investment
From the past one year, changes and
(Moneycontrol.com, 2016).
development has been seen and monitored on
I 53
The new government has changed the in mind the results of the study, this report
scenario and mindset of people about doing will allow the researcher and scholars to
business with India as it has opened new analyze the opportunities and challenges of
ways and have initiated new measures for ‘Digital India Initiative’.
new market horizons through Digital India
Objective of study
program where companies from across the Following are the objectives of the study:
world can come in with ease. The new Indian  To identify the factors that affects the
government is making the changes by effectiveness of Digital India
removing the bottlenecks, which came as a program
hindrance in the growth of economy. Along  To assess the effects of Digital India
with giving the Indian economy a boost, the initiative on the youth of India and on the
Indian government is also taking various general public of the country
steps so that human potential of the country  To identify the challenges that can
can be known and tapped for better hinder the growth of the country with
performance. As “Digital Development” is Digital India program
now being the focus area, the section of  To identify the opportunities that can
arise in the country after the successful
“Digital professionals” is guided in a
implementation of Digital India program
direction so that initiatives can be taken for
 To identify the factors that would refrain
better performance. In addition to this, the
the people of the country to be a part of
skilled group is even helping the unskilled
Digital India.
people in the process of digital development
so that they can enhance their potential to be Research question
This research paper aims to answer the
employed (Moneycontrol.com, 2016).
following questions:
 What exactly is Digital India
Purpose of study
program?
Purpose of this study is to analyze the
 Why digital India is needed in the
effectiveness of the ‘Digital India’ initiative
country?
started by the Prime Minister of India, Mr.
 What are the requisites of Digital
Narendra Modi. The study has been
India Program?
conducted using various relevant journals,
websites and books to extract the facts and
figures related to the research topic. Keeping
I 54
 What are the opportunities that may  73.26% people have said yes to
arise after the launch of Digital India apprenticeship in the year 2015 while
program? only 55.31% said yes in the year 2014
 What are the difficulties that can (Najar, 2015).
come in the way of successful  In comparison to 2014, 2015 has seen
implementation of Digital India a rise in job in all the sectors, which
program? in result has even given a growth to
the salary structure. The minimum
With the help of this study, scholars will be
salary range for a skilled worker is
able to understand the digital India
now 2.6 lakhs and above (Najar,
thoroughly. The facts and figures that have
2015).
been displayed in the study will allow the
 A rise of 25% to 59.5% is seen in all
scholars to know the exact status of the
the sectors and industries when it
success of Digital India program.
comes to hiring (Najar, 2015).
Literature Review  Domain wise hiring is also seeing a
To check the market potential in the year rise in the year 2015
2015 in comparison to 2014, various studies  Both male and females are provided
and research programs have been conducted. with equal opportunities to rise and
All these research programs have given shine
satisfactory results, which are listed below:
I 55
Digital India – An approach to make India entrepreneur and government. Education will
a global economy also be given equal importance so that a
Along with making different plans and
person is able to reap benefits from the skills
structures for skilling the employable section
they possess. As India is having a section in
of the society, campaigns launched by the
the society where nearly 90% people are in
Indian government such as Digital India is
the unorganized sector of working, it is a
playing a pivotal role in making India a hub
hectic task for the Indian government to take
for the manufacturers. With such initiatives,
the necessary steps and bring them into
the per capita income of the country is also
practice (Thomas, 2015).
increasing along with creating numerous jobs
in India. For making way for economic Technology and Education
expansion, the government is planning on For making a move towards a dream of
urbanization and shifting its focus on export Developed India, extensive steps has to be
(Thomas,2015) taken that will include extensive use of

technology. As India is a land of huge talent
and workforce, only technology can be taken
into use for making the dream come true.
With the process of digitalization, students of
the remotest section of the society can take
dip from the ocean of knowledge. It is also
being discussed that employee exchange
points should be changed to career centers so
that people can get the right direction of
working. Measures are taken for making
these centers a meeting point for jobs and
candidates. When a combination of
The industry experts have stated that the steps
technology, process, and people will be done,
taken by Indian government will help in
this transformation will not take much time.
reducing the dependency ratio. As the
unorganized work force will be taken into Need of skilled working class in India
line and will be given a motive to work in the The experts have always stated a fact that if
desired manner, it would be beneficial to both skilled workforce is initiated in India, then it
will not take much time to become a
I 56
developed nation and give economy a boost generated for filling the gap. After the
that was always required. Even the World councils and testing patterns are taken into
Bank has stated in various statements that if practice, training on nearly 260 domains have
proper utilization of skills is done, the been given to students and other people so
country will upgrade to new heights with ease that they work in accordance to the skills they
(timesofindia-economictimes, 2012). possess. The testing patterns which are taken
into use is devised after having direct
While looking into the present working
conversation with the companies where
conditions in India, the case is not seen to be
various parameters such as agility to learn,
quite desired and good as there are only 1/3
adaptability and communication along with
candidates who actually match the
various other aspects are deemed to be
requirement and criteria of a job. Lack of
important for molding the right candidate for
skilled people is always the center point of
a job.
discussion because various new jobs are
created and there is lack of skilled workforce Change in the market scenario of India-
to take up these jobs. Nevertheless, seeing the The prediction
Seeing the growth of technology, if the
severity of the situation, Government of India
process of skill development goes on at this
has taken the initiative of Digital India for
pace, the job market of India will soon see
skill development and has given it a priority.
drastic changes. Insurance, banking, and
The 11th five year plan that has been
other financial services will see a rise of
generated also has a roadmap and a blueprint
nearly 25% in the job requirements. With
of the skill development plan that will help
high number of graduates passing out every
the job market on a whole. For taking the next
year, the companies will be enhancing their
step, various boards are created so that
job range so that more talented and skilled
strategies can be designed and implemented
workforce can be inculcated in their
(timesofindia-economictimes, 2012).
workflow as stability of economy along with
Various tests have been conducted for political force are working on a positive note
pooling the right talent for the right job. With (Jha, 2015).
use of the skill test, the gap that is in different
sectors and industries is known and analyzed
after which proper actions and steps are
I 57
Digital Education playing a major role in is able to have a clear picture of the products
the development of India and Skilled and services. These inputs are valuable for a
workforce
person as they are able to design new
Digital skills training in India is a best field
strategies for working and marketing a
for those who are creative and can think of
product. Digital India has created an
new ideas and methods to promote a product.
atmosphere for the customers where they are
With help of digital skills training, a person
able to understand what they have to get.
What will be the requisites? can join them with ease. However, while
While taking a closer look towards Digital working, it has been seen that there are some
India training in India, different backgrounds particular background, which helps a person
I 58
in a much better manner. If you were having automatically connect to the increased prices
a creative background, where you can think of internet and will result as a big challenge
and create new aspects, then marketing to the Digital India program.
would be a piece of cake for you. Getting
Open Democratization: As Internet is
proper education from Digital India skills
facilitating interactivity, it is even promoting
training for attaining the knowledge of
democracy and transparency. Even though all
marketing can be an added advantage for you.
the government officials are now active on
The Challenges of Digital India social media, it has been seen that major
Even though the 4.5 lakh crore project is issues which are being taken up on the social
stated to be a boon for the Indian economy, media is being ignored which in result is
there are several challenges that are standing bringing a clash amidst users. The critics are
in the way of success. Digital India is stating that the new government is addressing
connecting the people of India and is setting only those issues through Digital Media,
new parameters for the betterment of jobs, which are of their concern, and not those
but still there are several factors that should through which they are not attaining any form
not be left out. of profit.
The challenges that are standing in the way of Reduced amount of electronic
Digital India are as follows: manufacturing: In India, manufacturing has
Spectrum Crunch: As digital India will be always been considered one of the weakest
pushing the working process to mobile links leave apart electronic manufacturing,
commerce and mobile governance, increase which already has no firm base to stand. As
in the number of mobile users will give a there are very less companies, who are
crunch on the spectrum, which is already a actually into electronic manufacturing, duty
resource, which is very scarce. Even though anomalies has become a threat. Because of
there is a solution of getting tie-ups with this, even the global players are thinking of
foreign companies, it will not help pulling back their hand from the Digital India
completely as there will be issues of concept because the import changes are being
congestion in the connection due to heavy reduced which is a kind of loss to the foreign
internet traffic. In addition to this, there will contributors.
be a rise in the prices of spectrum, which will
I 59
Along with these above-mentioned points, variables change effortlessly, such as stock-
Digital India will face the issues of cyber exchange relevance, while different issues
security, E-Waste management, and even usually are almost constant, like the make of
incomplete implementation of e-governance someone. Researchers will often be seeking
plans. to gauge parameters.
The variable might be a number, a brand, or

anything the place that the value can certainly
Within research, a hypothesis could be a
transform.
suggested explanation associated with a
phenomenon. A null hypothesis could be a Certainly one of an changing is temp. The
hypothesis that the researcher tries that you temp varies as outlined by other variable as
should disprove. Generally, the null well as factors. You could potentially
speculation represents the present measure various temperature inside of and
view/explanation of some the world that the external. If it can be a sunny day time, odds
researcher wants that you should challenge. are which the temperature are going to be
higher than be it cloudy. Another thing that
Research methodology will involve the
will always make the temp change is usually
analyst providing another solution
whether something could possibly be done to
hypothesis, a new analysis speculation, as
adjust the temp, like light a fire inside
another solution way to go into detail the
chimney.
sensation.
Within analysis, you typically define
This analyst tests the hypothesis to disprove
variables as outlined by what you might be
the null speculation, not because he/she loves
calculating. The self-sufficient variable could
the examination hypothesis, but as it would
be the variable that the researcher wish to
imply coming nearer to locating an reply to a
measure (the cause), as the actual dependent
certain difficulty. The study hypothesis is
variable could be the effect (or believed
usually based with findings in which evoke
effect), dependent in the independent
suspicion that the null hypothesis is just not
changing. These variables will often be stated
always right.
in learning from mistakes research, from the
A changing is a thing that changes. It changes hypothesis.
as outlined by different factors. A couple of
I 60
In this research paper, researcher has used In an industry exploration context, secondary
secondary research method due to non exploration is adopted include this re-use
availability of permission to interview the using second party associated with any
government officials involved in Digital information collected using first get together
India program. Secondary research or celebrations.
methodology (also known as desk research)
In archaeology as well as landscape record,
demands the synopsis, collation and/or
cubical exploration is contrasted using
performance of current research instead of
fieldwork.
primary exploration, wherever information is
compiled from, intended for case, exploration Sometimes second research is required in the
subjects or perhaps experiments. main stages regarding research to view what
is considered already and precisely what new
Care ought to be taken to understand
data is required, or to tell research design and
secondary research via primary research that
style. On other times, it usually may be the
may uses organic extra information sources.
only evaluation technique employed.
The key associated together with distinction
is if thez second source used had been A critical performance area inside second
recently analyzed as well as interpreted from research may be the full citation associated
the primary creators. with original places, usually like a complete
record or annotated record.
The explanation of is widely used in health
exploration, legitimate exploration, and in Secondary sources here incorporate previous
general market trends. The principal method evaluation reports, newspapers, journal as
within health second research may be the well as journal articles, and government as
systematic review, commonly using meta- well as NGO statistics.
analytic document techniques, while other
approaches of activity, like realist opinions Discussion/Analysis
and meta-narrative opinions, have been Digital India connects jointly many thoughts
recently developed lately. Such second and thoughts inside a sole detailed viewpoint.
research uses the main element research This imaginative and also prescient vision
regarding others typically like research will be centered on a number of key regions:
publications as well as reports. design of digital structure, liberation of
I 61
governance apart from services upon need, intended regarding providing following
and electronic empowerment linked with generation ways of citizens. Indians keenly
citizens. The concept involves the driven take notice of the arrival of the technology
method National Optic Fibres Network then when they recognise on-line, they abide
(NOFN), trying to bond India's 3. 5 lakh because of it with eagerness. Digital India
village panchayats on account of over 70, 000 was designed to empower Indians while
km connected with high velocity optic fibre using the power of scientific know-how.
about the following 36 a few months - Digital Asia buildings would compel enhance
thereby which allows over six hundred in governance surgical procedures for
million Indians for to exploit the main delivery linked with services. Along using
features of modern connection. NOFN have the necessity intended for faster in addition to
to be implemented using this active timely method shipping, it is crucial in
partnership linked with state health purchase that great things about development
programs. Recently 1st high velocity rural attain just about every homeowner of
broadband technique in Idukki section of America in the exact same calculate. It is
Kerala has been inaugurated. If nine hundred believed that broadband entry to any or all
million cellphone devices and 3 hundred or will open a fresh world of cost-effective
so trillion world-wide-web on-line could opportunities for outlying Indians in fields as
sprout within India without having active an example e-business, outsourcing apart
centralized government benefaction, imagine from back office buildings, advertising of
this type of far accomplishing end result any agricultural product and typical handicrafts,
government insured programme probably and things like that. Internally, India
have if implemented within a mission consumes close to hundred billion dollars in
functionality. A noteworthy attribute of electronics annually, most of that happen to
Digital Asia is it truly is envisaged because be imported, together with products like cell-
nationalized non-discriminatory phone devices, computers, SIM credit cards,
communications offered to many agencies smart charge credit cards, set best cardboard
intended regarding wholesale bandwidth boxes, WELL GUIDED signals, video
(Jha, 2015). ISPs, Telcos, virtual community cameras, tv set packages, medical electronics
operators and satellite tv providers could plus the massive automated section in
nearly all select into this specific network defence generating. There is usually a
I 62
requirement of manufacturing gadgets in Conclusion

India to the growing American Indian As per the points that have been generated, it
industry. Authorities has declared the Create can be seen that India has the potential of
within Asia system, which complements growth and development. As new sentiments
Electronic digital India by telling community of developing economy are pertaining in
and hazardous makers to manufacture in India, there is a rise in the employability of
India - to the conjugal market apart from for Digital India in the society. As growth can be
exports. Overseas organizations ought not seen in both supply and demand of growth, a
really restrict themselves to help rear office positive picture can be drawn.
operations but rather look for you to Floodgates of chances can open to the self-
producing their high-end item in Asia. Make employed besides small in addition to
in American Indian offers conveyed to channel companies. We have been in the
companies this specific plan is concerning procedure of finalising an insurance policy
green slogan - this is sometimes a on establishing upwards BPOs in smaller in
commitment. Authorities will be assisting the addition to mofussil towns that can leverage
Create in Asia idea having financial digital camera online on-line and
advantage deals. Catering to the inevitability photographic camera literacy for you to
of broadening the talent pool inside places encourage employment apart from foster
professionals and Cabinet has approved entrepreneurship. Authorized citizens
establishing upwards the Electronics probably have the power regarding producing
Enhancement Fund to really encourage choices, avoiding wasting time, reduce their
invention, research besides startups. Backing own costs, add handiness on their days in
upward this innovation will be the addition to strengthen their wellbeing. The
government's process DISHA, which is prospective payoffs on account of this
actually targeted about the critical area innovation can certainly usually be examined
connected with digital literacy to ensure even in quantities connected with prints - contacts,
your poorest American Indian can play a role units, customers, downloads and you will
and advertise this photographic camera find others - even so the enhancement in the
enlargement (Jha, 2015). merchandise life of any Indian will be the real
change our authorities wishes to produce.
This method will be colossal; problems
I 63
usually are onerous still we all shall conquer, commit-to-digital-india/article7694877.ece

[Accessed 14 Jan. 2016].
as India just after 2014 is often a different
nation. timesofindia-economictimes, (2012). Industry hails
'Digital India' move, top CEOs commit to invest Rs 4.5
trillion. [online] Available at:
References http://articles.economictimes.indiatimes.com/2015-
Digitalindia.gov.in, (2016). Opening The Floodgates | 07-02/news/64038968_1_lakh-crore-tata-
consultancy-services-cyrus-mistry [Accessed 14 Jan.
Digital India Programme. [online] Available 2016].
at:
http://www.digitalindia.gov.in/content/opening
-floodgates [Accessed 14 Jan. 2016].
Jha, R. (2015). Digital India: Broadband Fibre Laid

in 68,000 Village Panchayats - Satyameva
Jayate. [online] Satyameva Jayate. Available
at: http://satyavijayi.com/digital-india-
broadband-fibre-laid-in-68000-village-
panchayats/ [Accessed 14 Jan. 2016].
Moneycontrol.com, (2016). Digital India to propel

economy to its best era: Oracle. [online]
Available at:
http://www.moneycontrol.com/news/business/d
igital-india-to-propel-economy-to-its-best-era-
oracle-_3498821.html [Accessed 14 Jan. 2016].
Najar, N. (2015). Indiaâ€™s Leader Maps Out a

More Robust Digital Future. [online]
Nytimes.com. Available at:
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nternational/indias-leader-maps-out-a-more-
robust-digital-future.html?_r=0 [Accessed 14
Jan. 2016].
Thomas, T. (2015). Modi effect: Silicon Valley giants

commit to Digital India. [online] The Hindu
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tech/modi-in-silicon-valley-tech-giants-
I 64
Discussion Paper on the Proposed Capital City Of Andhra Pradesh:

Amaravati
Lt Col Anil Raj TA*, Gonella Sundar Ganesh**, Dr A Lakshman Rao***
*Student of Management in Infrastructure, University of Petroleum and Energy Studies
** Student of Management in Infrastructure, University of Petroleum and Energy Studies
***Assistant Professor, Department of Power and Infrastructure, University of Petroleum and Energy Studies
Abstract Vijayawada and Thullur along the banks of

The state of Andhra Pradesh was bifurcated
the River Krishna. It has already become
into Andhra and Telangana on 02 June 2014.
India’s largest experimentin a process known
As per the Andhra Pradesh Reorganization
as land pooling, which is being tried as an
Act 2014, passed on 01 March 2014,
alternative to land acquisition.
Hyderabadwill be the capital of Telangana
and the city was also toremain the capital of Keywords
residual state ofAndhra Pradesh for not more Amaravati, land pooling, land acquisition
than ten years. An expert committee was
Introduction
appointed on 28 March 2014 to recommend a
The state of Andhra Pradesh was bifurcated
suitable location for the capital, as per
into Andhra and Telangana on 02 June 2014.
Section 6 of the said Act. The Chief Minister
As per the Andhra Pradesh Reorganization
of Andhra Pradesh, Chandrababu Naidu got
Act 2014, passed on 01 March 2014,
the Andhra Pradesh Capital
Hyderabad will be the capital of Telangana
RegionDevelopment Act, 2014 passed on 30
while the city would also remain the capital
December 2014, but failed to obtain the
of residual state of Andhra Pradesh for not
President’s assent. The new government
more than ten years. Section 6 of the said Act
nevertheless selected Vijayawada-Guntur-
asks the Union government to constitute an
Tenali-Mangalagiri (VGTM) as the capital
expert committee to selecta capital for the
region, an area found unsuitable by the GoI
new State. The committee was appointed on
appointed Expert Committee as per its report
28 March 2014. Disregarding the Act of
submitted on 27 August 2014. The capital
Parliament and terms of reference stipulated
city is named as Amaravati, the core of which
by the Union government, Chandrababu
will be built on 33,000 acres of land owned
Naidu, the Chief Minister of Andhra Pradesh,
by individual farmers between
on 30 December 2014, got the Andhra
I 65
Pradesh Capital Region Development Act, class People’s Capital, the Government of
2014, passed and in spite of the fact that the Andhra Pradeshentered into a Memorandum
President did not give his assent to the Act, of Understanding (MoU) with the
selected Vijayawada-Guntur-Tenali- Government of Singapore in December2014.
Mangaleri (VGTM) as capital region, an area The total area has been divided into the
found unsuitable by the GoI appointed Expert capital region and the capital city and for the
Committee as per its report submitted on 27 initialinvestment, a seed capital area has been
August 2014. As per the plan, the capital city prepared.
was to be located in highly fertile, multi-
Literature review
cropped land in an area spread over 25
Andhra Pradesh is primarily a rural state and
villages1 and four hamlets in Tullur,
the bulk of the state population lives in more
Tadepally and Mangalagirimandals in
than 9000 villages2. Even though there has
Guntur District which falls on the right bank
been a slow change in the economic structure
of the Krishna river.
of the state with increased manufacturing and
Named after an ancient Buddhist city, the services related activities in the last two
Capital City of Amaravati, is located between decades, the employment structure is still
the citiesof Vijayawada and Guntur. The core agrarian, with a strong cultural tie to the land.
of Amaravati will be built on approximately Population is more densely populated in the
33,000 acres of land owned by individual agriculturally prosperous Godavari and
farmers between Vijayawada and Thullur Krishna districts and Visakhapatnam which
along the banks of the Krishna River. It will is industrially active3. Comparing the states
be India’s first plannedcapital city to come up of Telangana and Andhra Pradesh, the latter
from scratch in decades. It has already has got a comparative advantage in being
become India’s largest experimentin a largely agrarian with fertile land in the delta
process known as land pooling, which is areas and extensive irrigation.
being seen as an alternative to land Section 6 of the AP Reorganization Act
acquisition.To make the Capital City a world- mandated that an expert committee be
1 2
Where Andhra’s master plan for new capital falters Andhra Pradesh development profile and capital
– (http://www.ndtv.com/opinion/where-andhras- zone shortlisting – Report by Sivaramakrishnan
masterplan-for-new-capital-falters-1223859 ) committee,
Indian Institute of Human settlements
3
ibid
I 66
constituted to selecta capital for the new The Capital Region Master Plan6 stage
State. The committee came into being on 28 envisages development of an area of about
March 2014. Its terms of reference4included 7,420 sq km. This plan provides
least dislocation of existing agriculture forDevelopment Corridors that connects the
systems, preservation of local ecology and regional centres to the capital city centre and
promoting environmentally sustainable providesfor avenues for development of the
growth, minimum resettlement of people corridors as linear developments. The
andtheir habitations, assessment of upcoming nationalprojects like the Dedicated
vulnerability from natural disasters like Freight Corridor along the East Coast
floods, cyclones andearthquakes, and Economic Corridor, High speedrail and
minimizing the cost of construction and Waterway 4 are integrated in this plan.The
acquisition of land. Capital City Master Plan7 is for an area of
Amaravati is slated to be located in the about 217 sq.km. This plan is till horizon year
Vijayawada-Guntur-Tenali-Mangalagiri 2050and will form the basis of development
(VGTM) region as a single large capital city of the city area till then. Amaravati, as per the
on the lines of the existing capital city of plandocument will be built on land pooled
Hyderabad where all the various offices of from the farmers in the region. In return, the
the legislature, executive and judiciary are farmers willget a part of the developed land
close by. The city will be developed on a land as plots of commercial and residential land
area of about 7,420sq km as the Capital and share the fruits ofdevelopment for years
Region Master Plan over the next 10 years, to come. The Seed Capital Area Master
and is envisaged to be 10 times5 bigger than Plan8envisages development of an area of
Singapore, which is providing the necessary about 16.9 sq.km. It is being planned for
expertise in helping the state government about300,000 residents and would mainly
construct it. consist of the CBD, residential townships,
governmentinstitutions, parks and open
4 5
Report of the expert committee appointed by the Is new India state capital Amaravati more bane than
Ministry of Home Affairs, Union of India to study the boon? (http://www.bbc.com/news/world-asia-india-
alternatives for a new capital for the State of Andhra 34612799 accessed on 21 Jan 2016
6
Pradesh Three stage backgrounder on Amaravati Capital
(http://www.cprindia.org/sites/default/files/policy- Master Plan by Kosta life
7
briefs/ExpertCommittee_CapitalAP_Final.pdf) ibid
8
accessed on 23 Jan 2016 ibid
I 67
bodies, recreational spaces with extensive sounded the alarm bells expressing concern
walkways. The concept ofa smart city would that the state government did not complete a
fully be utilized here to promote walk-to- mandatory environmental assessment before
work environment and usage of non- deciding on the location of the city. Apart
motorizedtransport to give meaning to the from the agricultural areas which are being
sustainability aspect. procured, the state has also asked the central
The VGTM region may be an apt location for government to release over 20,000 ha
a capital city in that it is geographically (49,240 acres) of additional reserved forests
central and well-connected but if some of the around the capital region11.
well administered states like Maharashtra, In its reply, the Government of AP is alleged
Kerala and Tamil nadu are considered, then it to have denied the fact that the new capital
may be not so important to have a centrally city is being developed in a manner
located capital city to administer affectively. encroaching upon the river floodplains,
But there have been other concerns like the wetlands and that thousands of acres of fertile
districts of Krishna, Guntur and West agricultural lands in the region would be lost
Godavari comprises some of the most fertile forever. It is anybody’s guess that this will
agricultural lands in the country contributing lead to a huge loss to the environment and
to more than 1%9 of the country’s rice ecology. It is but inevitable that this will also
production and is often referred to as the rice lead to the loss of livelihood of thousands of
bowl of the country. Multiple crops10 farmers whose fertile lands are being
including rice and cotton, and a widevariety acquired in the name of development.
of horticultural crops like carrot are grown in As per the City Land Use Planning Map
this region. But it is not just the farmers and annexed to the Draft City Master Plan Report
others who live off farming like tenant published in July 2015, the ‘Seed
farmers and farm labourers who are affected. Development area’ which is the first area to
The National Green Tribunal (NGT) has also be developed in the Master Plan is planned to
9 10
Report of the expert committee appointed by the All you need to know about Andhra Pradesh’s
Ministry of Home Affairs, Union of India to study the capital city Amaravati – Deccan Chronicle April 6,
alternatives for a new capital for the State of Andhra 2015
11
Pradesh Is new India state capital Amaravati more bane
(http://www.cprindia.org/sites/default/files/policy- than boon? (http://www.bbc.com/news/world-asia-
briefs/ExpertCommittee_CapitalAP_Final.pdf) india-34612799 accessed on 21 Jan 2016
accessed on 23 Jan 2016
I 68
be developed on flood plains adjacent to the revisiting the capital location was the fact that
main stream of river Krishna. Some portion the water table in this region is very high14.
of this area also falls on islands within the The other geological and climatic concerns
river Krishna.The Master Plan has also drawn are the proximity of four neo-tectonic faults
up a proposal to realign the existing within a range of about 150 km from
embankment along Krishna River closer to it Vijayawada and the high probability of
so that the additional area saved can be used cyclonic storms15.
for development. The core area is prone to The Capital Region Plan and Report of
floods, particularly the area surrounding the March 2015 prepared by theconsultants also
Kondaveeti Vaagu reservoir. According to mentions that 81 percent16 of the proposed
the Draft Master Plan, 81%12 of the area capital area is agricultural land.The Draft
demarcated for the capital region is prone to Capital City Master Plan Report Part 2 of July
floods: 7% of the said area being “highly 2015 prepared by the consultant also puts the
prone”, 31% “prone” to flooding and 43% current economic activity17 within the
being “moderately prone” to floods. The identified 391 sq km of Amaravati Capital
level of the land (approximately 10,000 city area as “primarily agricultural (viz.
acres) is also proposed to be raised by about production
2 metres13, which according to news reports and harvesting of crops including
will cost the AP government an estimated Rs rice, sugar-cane, pulses, spices, etc.)
1500 crore. Whether any feasibility study for with hardly any activity observed in the
the same, apart from an effective cost benefit industrial and manufacturing sectors.” This is
analysis, has been conducted is still unclear. to be seen in the light of fact that 52%18 of the
Apart from this, another concern voiced by total population of the new state is dependent
the expert committee when it suggested on agriculture and allied activities.
12 16
ibid ibid
13 17
Why Amaravati may not be people’s capital after ibid
18
all by Sam Rajappa, Consulting Editor – Weekend Report of the expert committee appointed by the
leader, Ministry of Home Affairs, Union of India to study the
October 21, 2015 alternatives for a new capital for the State of Andhra
14
Editorial lead: Eye on capital, loss in vision by KC Pradesh
Sivaramakrishnan – (www.thehindu.com) accessed (http://www.cprindia.org/sites/default/files/policy-
on 22 Jan 2016 briefs/ExpertCommittee_CapitalAP_Final.pdf)
15
Is Amravati really a 'capital' choice? By Debaadityo accessed on 23 Jan 2016
Sinha (http://indiatogether.org/amravati-as-the-
capital-of-andhra-states) accessed on 21 Jan 2016
I 69
In spite of all the issues raised by various futuristic city can go awry and face flak from
forums and agencies, the state government is social activists and environmentalists. It
keen to go ahead in its plans to develop the seeks to drive home the point that all
seed capital area at the earliest with least alternatives need to be thoroughly studied
impediments from any sources. It even before taking such an important decision as
acquired the mandatory “environmental to the location of a capital city when
clearance” after much hue and cry by various stakeholders are many and any decision may
sources vide applications submitted by it only affect the lives and livelihood of people
as late as 05 and 25 September 2015. The especially the poor and the less fortunate for
State Level Environment Impact Assessment generations to come.
Authority (SEIAA) accorded the clearance19
on 09 October 2015 with more than 9020 Research Methodology
conditions to be fulfilled.The National Green The paper is based on secondary data
Tribunal has issued notices to the Union of available in the online electronic media in the
India and other respondents to reply before form of expert committee report on the
04 February 2016 on objections raised by various alternatives for the location of the
former bureaucrat and social activist E.A.S. capital city, newspaper reports during the last
Sarma on establishment of capital in the one year, articles on the issue of the land
Amaravati area. acquisition in the instant case and relevant
journal papers.
Objective
The objective of this discussion paper is to
analyze the issues in dealing with large scale
infrastructure project as in the case of a
Greenfield capital city “Amaravati” being
built from scratch. The paper also discusses
how a hastily prepared plan to locate such a
19 20
AP capital masterplan: Amaravati gets green 90 environmental conditions for CRDA – 27
clearance – 15 October 2015, Deccan Chronicle October 2015, Deccan chronicle
(http://www.deccanchronicle.com/151015/nation- (http://www.deccanchronicle.com/151027/nation-
current-affairs/article/amaravati-gets-green- current-affairs/article/90-environmental-clearance-
clearance ) accessed on 25 Jan 2016 conditions-crda) accessed on 23 Jan 2016
I 70
Discussions down the cost of land acquisition. But as per

The development of the capital city region latest reports in the media, around 2500
envisages land requirement of around acres23 of land is beingrefused to be parted by
18,33,482 acres of which the capital city the landowners. It is being speculated that the
itself is being planned to be built on government will invoke theprovisions of the
approximately 53,620 acres. The cost of law for forcible acquisitions. Towards this
construction is expected to touch Rs 300,000 end, the Guntur District Collector hasalready
Cr21. Multiple crops including rice and issued notification for acquiring 904 acres24
cotton, and a widevariety of horticultural of land in 29 villages.
crops like carrot are grown in thisregion. This Many farmers would turn to real estate
may cause a hurdle as regards Section 10 of brokers from farming as it is lucrative and
the Right to Fair Compensation also takesonly a fraction of time to bring in
andTransparency in Land Acquisition, the riches without the hard physical labour
Rehabilitation And Resettlement Act, 2013 involved in farmingand agricultural practices
(LARR Act) interms of providing alternate without the risks involved. From about Rs 3
agricultural areas for enhancing food lakh in 2011, the price peracre of farm land
security. What Chandrababu Naidu has done has shot up to Rs 1.60 Cr25 now. This is also
by resorting to land pooling is that he has leading to large number of richpeople from
tried to circumvent this article wherein 30- outside the state also converging in to this
40% of the land acquired from the farmers is region seeking to reap the benefits of the
returned back to them as developed land. speculation boom. There is also the
More than 33,000 acres22 of land has been possibility of coercive action on the part of
acquired using the land pooling mechanism such greedy people to acquire land. It has also
by activeparticipation of farmers. The been reported that politicians, bureaucratsand
government would possibly show this as its other high ranking officials are also making a
biggest achievement in that it has brought beeline to grab the spoils. Sportsmen are also
21 23
Why Amaravati may not be people’s capital after AP land acquisition for new capital hits a hurdle –
all by Sam Rajappa, Consulting editor – Weekened Business Line August 18, 2015
24
Leader Oct Farmers protest land acquisition for new Andhra
21, 2015 Pradesh capital – Deccan Chronicle August 22, 2015
22 25
Farmers protest land acquisition for new Andhra Land prices zoom around AP’s new capital as
Pradesh capital – Deccan Chronicle August 22, 2015 farmers turn to real estate – The Hindu, August 17,
2015
I 71
not far behind26. In factfarmers are resorting use will seriously displace this work force
to the mechanism of land pooling themselves. rendering those unemployed, together with
As per a newspaper report,they are even loss of valuable agricultural land, and benefit
replanting paddy fields with grass and only land speculation and serge profit for the
constructing infrastructure like paved real estate operators.If the government thinks
roadsand selling them27. that the displaced workforce can be absorbed
The areas earmarked for the capital area in into job opportunities which the new capital
Krishna and Guntur districts being largely city would bring with it, then it is in for
consisting of very fertile paddy fields goes serious trouble as it will have to equip these
against the terms of reference within the people with the required skill set also. Much
constraints of which the expert committee of the skill development initiative by the
was mandated to select suitable sites. Modi government is still to see much changes
Moreover, it defies logic as to why the in those fronts. Especially so in case of
government should select “some of the best Andhra Pradesh where the literacy level is
agricultural lands in the country, contributing only 65% and urbanization only 29%28.
more than one percent to the country’s rice
The Sivaramakrishnan report is of the view
production, often referred as the rice bowl of
that instead of a single capital region of such
the country”. The population of Andhra
mammoth proportions, the government
Pradesh as per 2011 census is 49.38 million
should develop dispersed areas within the
and is expected to increase to 67 million by
geographical area of the entire state to
2051. Guntur and Krishna districts have
relocate more than 200 government offices in
workforce of 23.8 lakhs and 20.48 lakhs
Hyderabad. The current proposal of
consisting of cultivators and agricultural
centralized development will not auger well
laborers, which are around 65% and 56%
for the socio-economic development of
respectively of the total population in these
Andhra Pradesh as a whole like what
districts. Anyattempt to convert rich and
happened during the long tenure of
fertile agricultural landinto non-agricultural
26
Sachin bought 100 acres in Mangalagiri? – Great alternatives for a new capital for the State of Andhra
Andhra.com July 21, 2014 Pradesh
27
Redrawing a state in India drives land prices to the (http://www.cprindia.org/sites/default/files/policy-
sky – The New York times Aug 31, 2014 briefs/ExpertCommittee_CapitalAP_Final.pdf)
28
Report of the expert committee appointed by the accessed on 23 Jan 2016
Ministry of Home Affairs, Union of India to study the
I 72
Chandrababu Naidu when all growth efforts sluice gates.But when the reservoirs get filled
took place mostly in and around Hyderabad up during heavy rains and appear to be
leaving all other regions disgruntled. The breaching the embankments, the sluice gates
advantage with dispersed development is that are opened, releasing mammoth amounts of
so much fertile agricultural land is not lost water –many times higher than the carrying
and that the other regions in the state can also capacity of the canals and the river – resulting
share the economic pie as and when it in more intensified floods.
matures leading to inclusive growth. The
Interestingly, the consultants suggest those
government has parcels of land measuring
very measures which the City Disaster
10-25 acres within 10 km of various district
Management Plan (DMP) of Vijayawada
towns. These government land can be utilized
2011 identifies as reasons behind the increase
for various offices of the government. This
in floods. For example the DMP blames
would minimize the cost of acquisition of
official development on flood plains as one
land.
of the reasons. The embankments create a
Dispersed development would also mean that false sense of security among people due to
the flood plains of the Krishna River are not which they start living along the river bank
tampered with which may spell doom leading to unsustainable encroachments. This
ecologically in the long run. Any is exactly what happened in the recent floods
development should not be at the cost of the in the city of Chennai in which the Chennai
local ecology and against the tenets of International Airport got submerged as a
promotion of environmentally sustainable result of it being constructed on the flood
growth. The consultants in their Master Plan plains of the river?
have suggested several flood mitigation
measures like raising the level of the area by Challenges
about two metres, increasing the height of the “Land pooling will definitely work for
embankment along the river and shifting the Andhra Pradesh because it has worked in
embankment closer to the river. A network of Gujarat”may turn out to be a totally
canals and creation of several reservoirs to dissociated statement. Only time will tell.
work as flood cushion is also on the anvil, Whenever landacquisition issues have
which is designed to store excess water cropped up anywhere in the world, if the
during heavy rains and be controlled via original inhabitants have beenbenefitted due
I 73
to the various policies followed for the which requireshuge amount of initial
acquisition process itself, the investment. The pace of development may
developmentwould have been sustaining and not be conducive due to therequirement of the
inclusive. Unfortunately that does not land owners in possession of developed land
happen. In between comelot of other players to sell off their land to recover theapparent
who want to make a quick buck by following increase in its value. They may have to wait
“beg, borrow, steal policy”, whichhas been for a longer period. The counter
the norm rather than the exception. It is for argumentcould be that if their land had been
the government machinery in the state acquired, they would have been paid the
toprotect the affected people and ensure that compensationimmediately. The danger here
they are being adequately and timely is that the land may take inordinately longer
compensated andthat land sharks do not to be developed intothe city which is being
impinge on their rights on the property from dreamt of or some patches may not be
which they have been evicted.But the developed at all due to reasons ofnot having
challenge becomes more difficult when the enough money or due to change in guard at
protector becomes the predator. When the state headquarters or due to change
thecapital city of Andhra Pradesh was inpolicy itself.
announced, the mighty and powerful land Equally daunting is the task of keeping
mafia along with thesupport and connivance corruption at bay. The Gujarat model of land
of politicians and the bureaucracy, bought pooling doesnot require the development
large tracts of fertile land andpaid only agency to pay any compensation as the
pittance to the people who were the rightful enhancement of land value isoften many
owners. Illegal encroachments on lands times more than the compensation to be paid
ofaged land owners by using bogus title for the land not returned. Consideringthe fact
deeds are on the rise. An estimate puts such that ‘pensioners’ of the land pooling
deals worth Rs200 Cr in Pedakakanimandal mechanism have to be paid an annuity at the
and Mangalagiri29. rate of Rs 30,000 to 50,000 for 10 years, it is
The other challenge is that Amaravati is the duty of the government to allay any fears
being developed as a greenfield project that the generalpublic may have about the
29
Land grab on rise in Andhra Pradesh – Times of
India, august 15, 2015
I 74
annuity payment. Reports in some the culprits, what is the recourse available for
newspapers are already rife withinstances of the common man?
government making tall claims and that
farmers were not receiving any compensation References
at all30. [1] Andhra Pradesh development profile and
capital zone shortlisting – Report by
But the task cut out for the present
Sivaramakrishnan committee, Indian
government is anything but herculean. Apart
Institute of Human settlements
from therequirement of funds for its own [2] Where Andhra’s master plan for new capital
survival, it has to now to take care of the falters –
survival and sustenanceof large number of (http://www.ndtv.com/opinion/where-
andhras-masterplan-for-new-capital-falters)
farmers who would as a result of the land
[3] Report of the expert committee appointed by
acquisition would be forced to lookfor other
the Ministry of Home Affairs, Union of India
occupations. Other than the land owners to study the alternatives for a new capital for
themselves, no one really is bothered about the State of Andhra Pradesh
thecountless other poor farm labors who have (http://www.cprindia.org/sites/default/files/p
olicy-
no recourse from this land pooling or
briefs/ExpertCommittee_CapitalAP_Final.p
acquisitionwhich is promising to be a new
df) accessed on 23 Jan 2016
beginning for the state of Andhra Pradesh. [4] Is new India state capital Amaravati more
That is the irony of itall. A new capital city of bane than boon?
Andhra Pradesh should not become a curse (http://www.bbc.com/news/world-asia-india-
34612799) accessed on 21 Jan 2016
for all the people who havetoiled hard in the
[5] Three stage backgrounder on Amaravati
past to increase the agricultural output of the
Capital Master Plan by Kosta life
state. [6] All you need to know about Andhra
More important is the question of converting Pradesh’s capital city Amaravati – Deccan
vast tracts of prime and extremely fertile Chronicle April 6, 2015
[7] Is Amravati really a 'capital' choice?
agriculturalland for such projects, this in spite
(http://indiatogether.org/amravati-as-the-
of separate provisions in the LARR Act,
capital-of-andhra-states) accessed on 21 Jan
2013. When the makersof law themselves are 2016
30
Amaravati villagers to fight till withdrawal of land
acquisition notice – The Hindu, August 30, 2015
I 75
[8] Why Amaravati may not be people’s capital

after all by Sam Rajappa, Consulting Editor
– Weekend leader,October 21, 2015
[9] Editorial lead: Eye on capital, loss in vision
by KC Sivaramakrishnan –
(www.thehindu.com) accessed on 22 Jan
2016
[10] AP capital masterplan: Amaravati gets green
clearance – 15 October 2015, Deccan
Chronicle
(http://www.deccanchronicle.com/151015/n
ation-current-affairs/article/amaravati-gets-
green-clearance) accessed on 25 Jan 2016
[11] 90 environmental conditions for CRDA – 27
October 2015, Deccan chronicle
(http://www.deccanchronicle.com/151027/n
ation-current-affairs/article/90-
environmental-clearance-conditions-crda)
accessed on 23 Jan 2016
[12] Farmers protest land acquisition for new
Andhra Pradesh capital – Deccan Chronicle
August 22, 2015
[13] AP land acquisition for new capital hits a
hurdle – Business Line August 18, 2015
[14] Land prices zoom around AP’s new capital
as farmers turn to real estate – The Hindu,
August 17, 2015
[15] Sachin bought 100 acres in Mangalagiri? –
Great Andhra.com July 21, 2014
[16] Redrawing a state in India drives land prices
to the sky – The New York times Aug 31, 2014
[17] Land grab on rise in Andhra Pradesh – Times
of India, august 15, 2015
[18] Amaravati villagers to fight till withdrawal of
land acquisition notice – The Hindu, August
30, 2015
I 76
Environment concerns and Spiritual Leadership related with

sustainability ideas in imaginative projects of Mexican architecture
and civil engineering students
Reig, E*.; Quintana-Kawage, B**.; Calvet, R. ***.; Jauli, I.****.; Aiza-Engel, S.*****.; Vidali,
M.******
*Reig Enrique. Adjunct Professor, Researcher, IESDE Mexico, E Mail: ereig@faculty.ie.edu

** Bernardo Quintana Kawage. President of Bernardo Quintana Institute México,
E Mail: bernardo.quintana@ibq.institute
*** Roberto Calvet, associate researcher IBQ Mexico, E Mail: Roberto.calvet@ibq.institute
****Jauli, I., researcher, TS Adyar, E Mail: Isaac.jauli@reigyasociados.com
***** Sharon Aiza-Engel. Researcher IBQ institute Mexico, E Mail: sharon.aiza@ibq.institute
******Marco Vidali. Associate researcher IBQ institute, E Mail: Marco.vidali@ibq.institute
Abstract compelling attractiveness or charm that can

In the current research article, free election inspire loyalty in others (Conger, J.;
was correlated in an projective way of Kanungo, R.; Menon, S. 2000). Inspiration,
sustainability ideas in architecture and civil which consists in trust, enthusiasm and
engineering students with spiritual leadership realistic optimism (Reig, 2004). Motivation
and also, environmental concerns. The which consists in offering rational and
variables shown in the results show strong emotional motives to follow the goals
correlations. Young students take into previously proposed in the vision (Reig,
consideration the environment and consider 2004) and productive orientation (Reig, Jauli
sustainability as part of their infrastructure and Quintana-kawage, 2016). It is important
and constructive models. In this discussion, to know how leaders are performing their
the political and commercial pressure was duties, but it is also important to think about
analyzed when students arrive to the working the potential they have in their leadership
life and most of them change priorities. skills, this has been described by McCall
Key Words: Sustainability, Spiritual (1994).
Leadership, Environmental Care
Spiritual leadership is a specific kind of
Introduction leadership that focuses in moral values,
“Leading” is the human process executed by a correct discernment and intuition (Reig, E and
leader with the ability to influence followers Jauli, I. 2012). With this combination of
through various characteristics, some of them factors, spiritual leaders are able to lead
are: Charisma, which can be defined as taking into consideration the environment,
I 77
each persons well-being and carefully uses indicate important changes like the case of the
natural resources in order to share it with the indian concern program probably developed
next generations, in other words, spiritual by better leaders called: Mahatma Gandhi
leaders normally have sustainable concerns National Rural Employment Generation Act
increasing the trust of their followers and also (MGNREGA).
with the person who commands them.
Leaders with high levels of consciousness are
Trust is essentially a balance and sense of needed, but it is also important to investigate
equity. There are important values to manage other factors related with bad leadership. For
difficult situations. Emotions are very example, the size of firms. Gomes, C.,
important to develop trust in a leader’s Kneipp, J., Kruglianskas, I., Rosa, L. and
followers, according to Raccanello, et Al Bichueti, R. (2015) mentioned that the
(2011). There exists heuristic and rational number of associations between the
motives to perform with people in order to management practices for sustainability and
correctly achieve goals. It is also mentioned business performance is higher in larger
how interesting relations between one’s companies; business performance differs
perception of family members’ suffering and according to the size of companies at least in
trying to recover their balance and equity, the mining sector.
some people compense their pain with money,
in other words, they look to replace their grief What is the solution to bad leadership and
with material objects (Reig, 2006 and 2011). insufficient programs to take care of the
The lack of balance, equity, consideration, environment? Giacomoni, M., and Berglund,
and good leadership will cause terrible E. (2015) provide an approach to evaluate not
problems such as: climate change, pollution one, but a combination of multiple strategies
and environment degradation, these are to effectively manage the increasing stresses
consequences that are provoked by low caused by, for example urbanization,
profile leaders with conscienceless minds. population growth, and climate change. Is this
Many of them emerged from famous possible? According to the same authors, it is
institutions but insufficiently prepared to demonstrated that adaptive demand
manage environment combined with management strategies can respond to water
productivity and competitiveness. shortages resulting in long-term per capita
Chakraborty, B. And Das, S. (2014) demanding reductions.
mentioned that, rural sustainability has
historically received inadequate attention in Leaders also need modern tools to design
many developing countries, but they also infrastructure. Koziolek, H., Domis, D.,
I 78
Goldschmidt, T. and Vorst, P. (2013) environmental care and concern. In the first
commented that it is difficult to express scouting with general private university
software architecture sustainability in a single students (both gender, ages between 20 to 32),
metric; many aspects influence economic in a sample of N=100 participants, we asked
sustainability, including the design of (using the method of social representation)
decisions facilitating evolutionary changes, the following: When you listen to the phrase:
adherence to good modularization practices, ways to learn about environmental care and
and technology choices. Armstrong, R., concern, select the two immediate concepts
(2010) commented that systems of that you associate in your head:
architecture offer new perspectives on the a__________________________
organization of the construction environment b________________________
that enable architects to consider architecture There were 200 responses (two options with
as a series of interconnected networks with 100 participants). As a result of this exercise,
embedded links into natural systems. In the the sample associated to the concepts in the
near future, it will be necessary to lead general question. We took the most frequent
projects into energy conservation, Al-Hosany, responses (more than 35):
N. and Elkadi, H. (2002) commented the need
to apply social factors as well as technical Table 1: Answers associated to the question
aspects of energy conservation to achieve of concern
sustainable architecture in specific buildings.
The purposes of the current research were: 1.-

Determine in students of civil engineering
and architecture the ways to learn about
environmental care and concern. 2.- Build a
questionnaire to measure the main factors After this, the following questionnaire was
associated with environmental care. 3.- developed:
determine the relations between environment Please answer the following questions
concern, sustainability ideas applied to marking the option that you consider that
infrastructure projects and spiritual matches with your personal opinion:
leadership.
1.- It is necessary to care about nature.

Material, method and procedure Totally agree agree not agree Totally
1.- Determine in students of civil engineering disagree
and architecture the ways to learn about
I 79
2.- It is necessary to teach children the Please design a private food factory located in
wonders of nature. a rural site of Mexico, this factory uses milk
Totally agree agree not agree Totally and will be close to a cow farm which
disagree produces more than they need, this new firm
3.- It is necessary learn how to eat in a more needs to process milk, they will have 100
natural way. employees (85 workers and 15 administrative)
Totally agree agree not agree Totally and they need space for machinery and
disagree administrative offices. Please explain the
4.- It is necessary to learn how to enjoy justification and functions for the next 15
nature. years of each part of the project. Also, the
Totally agree agree not agree Totally goals of the owners, goals of the directive
disagree team, and goals of the employees. It was
5.- It is necessary to learn how to interact in a measured if the participants consider or not
healthy way with natural environments. the design and/or policies and goals of the
Totally agree agree not agree Totally sustainability concept. Grades of
disagree sustainability are mentioned in the following
agendas
The questionnaire was applied in a sample of Table 2: Grades of sustainability
architecture and civil engineering students of Agendas in the design Sustainable concepts
a university in Mexico (N= 128, 72 inside the essay yes (1) or
(architecture) 56 (civil engineering). no (0)
Justification of the
company for the next
On the other hand, the same sample was
15 years
tested and answered the spiritual leadership
Functions of each part
questionnaire. This questionnaire was of the new company
published in the book called Scales to Goals and/or policies

of owners
measure human behavior at work, (Escalas de
Goals and/or policies of
medición del comportamiento humano en el
executives
trabajo in Spanish) Romanya Valls
Goals and/or policies of
Barcelona. Jauli, Cervantes and Reig (2006) general employees
chapter 3, Syncretic scale of inner
Total
development.
If participants describe sustainability in the

Finally, an assessment question was applied:
long term planning, and organizational
I 80
functions, owners, directors and employees, is interesting that young students reacted
the grade was 5, if they mentioned positively to the consideration of
sustainability only 4 times, the grade was 4 environmental care. They also projected
and so on. One mention was 1 and non sustainability ideas on their essays.
mentions equal to zero. Something happened after their thirties,
probably due to commercial pressures but
Results also due to a certain degree of weakness in
The descriptive statistics were: spiritual their positive values. During the first years of
leadership ( =6.0 from 1 to 7, σ =1.34) labor work, it is recommended to take care of
environmental concern ( = 3.1 from 1 to 4, the young and idealistic inner positions.
σ= 1.45) and sustainable mentions ( =3.6
from 1 to 5, σ= 2.23) It is necessary to compare civil engineers and
architecture professionals with students in
Table 3: Reliability of the questionnaires order to demonstrate the possible deviation
Variable Cronbach's alpha after their thirties and offer them logical
options for environmental care. Guya, S. And
Spiritual leadership α.872
Farmera, G. (2001) identified six alternative
Environment concerns α.819
Sustainability mentions α.705 logics of ecological design which have their
roots in competing conceptions of
environmentalism, and explores the ways in
Table 4: Correlation between scales of
which each logic prefigures technological
spiritual leadership, environment concern and
strategies and alternative visions of
sustainable ideas
sustainable places.
Variable 1 2 3
Sustainability Enriching the curriculums with sustainable

mentions - - -
Environment
ideas should be necessary. Wright, J. (2003)
concerns .716** - - while reviewing the priorities in architecture
Spiritual
leadership .665** .499** - curriculums in USA commented: The task of
* Significant at .05 level, ** significant at .01
integrating sustainability is not to be
level
understated, but architectural education and
Discussion
practice needs to focus beyond state and
There were significant correlated variables.
national levels. Global responsibility will
The main hypothesis was accepted, however
need to be assumed.
this is an exploratory research, further
research is recommended with the same
variables but with a representative sample. It
I 81
It is also necessary to work with politicians Environment using Nanotechnology,

Biotechnology, Information Technology, and
and regulators, with appropriate laws who
Cognitive Science with Living Technology.
take care of the environment and laws who
Artificial Life. 16 (1), p73-87.
defend ethical positions about responsibility 3. Conger, J.; Kanungo, R.; Menon, S.(2000)
for next generations. Also, work with ethical Charismatic leadership and follower effects.
commitment in government employees needs Journal of Organizational Behavior 21 (7)
747-767
to be applied to certain laws.
4. Chakraborty, B. And Das, S. (2014)
MGNREGA and Water Management:
The clean intentions of young students about Sustainability Issues of Built Forms. Journal
care environment needs to be stimulated to of Construction in Developing Countries. 19
benefit future generations. In this sense, the (2), p33-50.
5. Giacomoni, M., and Berglund, E. (2015)
inner consciousness conditions in leaders
Complex Adaptive Modeling Framework for
(and followers) will permit feelings of
Evaluating Adaptive Demand Management
fulfilment, which means that society could be for Urban Water Resources Sustainability.
regulated independently of the laws and Jornal of water resources planning and
regulators. This is a huge challenge and needs management. 141 (11) pp 1 to 12.
6. Gomes, C., Kneipp, J., Kruglianskas, I., Rosa,
hard work to develop inner consciousness in
L. and Bichueti, R. (2015) Management for
university professors to change the model of
sustainability: An analysis of the kay
success in civil engineers and architects practices according to the business size.
giving privileges like social care, Ecological Indicators. 5 (52), pp 116 to 127
responsibility and sustainable solutions other 7. Guya, S. And Farmera, G. (2001)
Reinterpreting Sustainable Architecture: The
than blind profits or projects. Leadership
Place of Technology. Journal of Architectural
skills will be necessary for engineers and
Education. 54 (3) pp 140-148
architects to convince clients to be 8. Jauli, I. And Reig, E. (2000) People learning
responsible with the physical, animal and at organizations. Mexico: CECSA editors.
human environment. 9. Koziolek, H., Domis, D., Goldschmidt, T. and
Vorst, P. (2013) Measuring Architecture
Sustainability. IEEE software. 30 (6) pp 54 to
62.
10. McCall, M (1994) Identifying leadership
References: potential in future international executives:
1. Al-Hosany, N. and Elkadi, H. (2002) Developing a concept. Consulting
Sustainability approaches for incarceration Psychology Journal: Practice & Research.
architecture. Renewable & Sustainable 46(1) 49-63
Energy Reviews. 6 (5) pp 457 to 471. 11. Raccanello, K., Reig, E.. Anand, J. and
2. Armstrong, R., (2010) Systems Architecture: Mantilla, A. (2011) Rational Vs. Heuristic
A New Model for Sustainability and the Built motives. What matters when redeeming the
I 82
pladge? in Advances in behavioral finance

and economics journal of the academy of
behavioral finance and economics. 1 (2) 17 to
42.
12. Reig, E. (2004) Lider y el desafio del cambio
(Leader and change challenge) Mexico:
CECSA editors.
13. Reig, E. (2004) Liderazgo emocionalmente
inteligente (Emotional intelligent leadership)
México: McGraw Hill
14. Reig, E. and Jauli, I. (2012) Sembrando la
semilla de lo infinito en el corazon del
hombre (the eternal sit in the human heart)
Barcelona: Teosophical spanish publishing
house
15. Reig, E. Jauli, I. And Quintana-Kawage, B.
(2016) Beyond traditional leadership.
Chennai: Vijay Nicole editors.
16. Reig, E., Grebe, C., Raccanello, K.,
Anand, J., Jauli, I., Cervantes, C. and
Soler, C. (2006) Victimization related to
amounts of money sent and American
product preferences in families of
Mexicans in USA. Abstract. Journal of
Comparative International Management.
9(2) 87.
17. Reig, E. Raccanello, K. Grebe, C., Anand, J.,
Cervantes, C., Jauli, I. and Soler, C. (2011)
Victimization Remittances, and American
Product Preferences in Mexican Families.
International Journal of Research in
Management, Sciences and Technology. 1 (1)
19-23
18. Wright, J. (2003) Introducing sustainability
into the architecture curriculum in the United
States, International Journal of Sustainability
in Higher Education, 4 (2), pp.100 – 105
I 83
Ergonomics: The key to manage aging workforce
Kiran Thakur*, Dr. Jagdeep Singh**

* Assistant Professor, Department of Management, Lovely Professional University, Jalandhar, Research Scholar,
Punjab Technical University, Contact No. 076960033069, Email Id: kiran.verma.0840@gmail.com
** Dr. Jagdeep Singh, Director, IET, Bhaddal, Contact No. +9198148 22603, Email: leojagdeep@gmail.com
Abstract prompt and productive. Absenteeism is

Workers with mature judgment, long tenure significantly lower than younger workers.
and a unique combination of skills are more Outside of increased reliability, their industry
difficult to replace and replicate than young knowledge and customer focus are an
workforce. In addition their education, invaluable contribution to the organization. To
knowledge, loyalty, dedication and accommodate this instrumental segment,
commitment to doing quality work are employers should reevaluate workplace
invaluable. designs.
Ageism – is not a disease, in fact older
Keywords
workers have greater fear of discrimination
Ergonomics, wiser workforce,
than of change. All they need is training and
musculoskeletal disorder
motivation to keep performing at their best
Introduction
just as much as younger ones. To cope with
Ergonomics: The term "ergonomics" is
these companies need to devise special
derived from two Greek words: "ergon,"
policies to address the particular needs of
meaning work, and "nomoi," meaning natural
older workers which are different from those
laws. Ergonomists study human capabilities in
of Generations X and Y. One such area to
relationship to work demands.
explore is ergonomics intervention, which will
In recent years, ergonomists have attempted to
lead to a comfortable work environment
define postures which minimize unnecessary
leading to more productive workforce.
static work and reduce the forces acting on the
Although older employees may experience a
body. All of us could significantly reduce our
loss of strength and flexibility, it is important
risk of injury if we could adhere to the
for the organization to call attention to the
following ergonomic principles:
value the aging workforce brings with its
expertise. Older workers tend to be more
I 84
 All work activities should permit the way to remember the optimal location
worker to adopt several different, but to perform work.
equally healthy and safe postures.  Provide good lighting: A common issue
 Where muscular force has to be with older workers is lighting. Visual
exerted it should be done by the largest acuity deteriorates with age, so make
appropriate muscle groups available. sure work areas are properly lit.
 Work activities should be performed  Have a good grip: Providing “power
with the joints at about mid-point of grips” instead of pinch grips for jobs
their range of movement. This applies and tasks is another ergonomics “low
particularly to the head, trunk, and hanging fruit” to help accommodate
upper limbs. aging workers.
Characteristics of Aging Workforce

Basic Ergonomic Principles Following are the changes that are observable
Follow these basic ergonomic principles to as a person grows old.
accommodate the “chronologically gifted” Brain: In adults’ age, many worry that they are
workforce: becoming more forgetful.
Bones and joints: The weight-bearing bones
 Work in neutral postures. Working with
and the movable joints take much wear and
the body in a neutral position reduces
tear as the body ages.
stress and strain on your
Eyes and Ears: Around the age of 40, eyesight
musculoskeletal system.
weakens, and at around 60, cataracts and
 Allow for posture changes: Working in
macular degeneration may develop. Hearing
the same posture or sitting for
also declines with age.
prolonged periods of time is bad for
Digestive and metabolic: As we grow older,
you. Your body’s musculoskeletal (or
the prevalence of gastrointestinal problems
movement) system is designed to move.
increases.
Arrange workstations and tasks to allow
for changing postures.
 Work from the “power zone”: The
power zone is also referred to as the
“hand shake zone” — this is an easy
I 85
Ergonomics and the Aging Workforce shoulders and neck. To help in

By 2020, 25% of the workforce will be 55 and reducing the possibility of strain, store
older and 17% will be 65 and older. items between knee and shoulder
Workforce demographics are changing. As the height to reduce bending and reaching.
workforce begins to show signs of increased Equip workspaces with additional
obesity and aging, amongst other changes, it is desktop organizers that bring
important to consider minimizing the repetitively accessed files and items
possibility of physical strain with simple closer to the individual. Mobile filing
workspace design. “One-size fits all” is losing is also a great way to keep active files
its validity within the workplace as an within reach without having to leave
increased need for designs focused around the your seat.
individual’s needs continues to grow. 2. Increase lighting: Visual acuteness
Employers are changing policies and finding and the ability to retain focus on
ways to help older employees continue to feel distant objects can also diminish over
valued. It becomes important to reevaluate time. Increase lighting to help reduce
workplace surroundings to better visual strain and bring documents
accommodate those individuals. Typically closer to the eye with document and
with age, comes a decrease in muscular copyholders placed next to the
strength, joint mobility and sometimes slower monitor.
reaction and movement. This presents an 3. Reduced muscle strain: As we grow
opportunity for employers to focus on ways to older, our reaction time starts
reduce fatigue or discomfort. decreasing and grip strength becomes
Ergonomics measures to accommodate more difficult. Many of the common
aging in wiser workforce workplace tools can cause additional
1. Motion and posture: The aging stress on the hands and joints.
workforce faces several challenges Electronic staplers and ergonomic grip
such as a decline in range of motion design can minimize manual dexterity.
and ability to retain posture, which can 4. Sitting Posture: Your position at your
be aided with simple ergonomic workstation is equally important. Your
enhancements. Reaching farther than work surface should stand elbow-high
18 inches can cause strain on the back, and your legs should be slightly
I 86
extended past the chair with your feet best within the semiconductor business. For
resting firmly on the floor or footrest. 2001, the ergonomics recordable rate was 0.10
5. Regular movement: It’s also important and the lost day case rate was 0.03.
to remember that movement is a key.
4. Sun Microsystems, Inc. (California):
Change in positions on a regular basis
From 1992 to 2002 the number, severity, and
(every 20 minutes or so) and stretch
price of workers’ compensation claims for the
whenever possible. Prolonged static
so-called “repetitive motion injuries”
positioning can weaken the elasticity
dropped, despite important will increase
in muscles and tendons, especially in
within the total range of staff. Such claims
the back.
went from a high of nearly three hundred in
Some success stories of implementing
ergonomics 1993 to but fifty within the 1st nine months of
1. Hensel Phelps Construction Company 2002, and a complete value exceeding $1.5
(California): The institution of a job-specific million in 1992 to a total value of less than
and employee-specific customized stretching $100,000 within the 1st nine months of 2002.
and strengthening program resulted in The common value to shut a work-related,
104,000 labor hours with no reported work- system disorder incapacity claim born from
related musculoskeletal disorders (MSDs). quite $12,000 in 1992 to $2,500 in 2002.
2. Siemens VDO Automotive

(Mischigan): Following the introduction of Conclusion
the workplace ergonomics program, The growth in the number of older staff could
geographic point strain injuries reduced from result in changes in age norms, significantly
43 % to zero. Workplace productivity within the later career stages. Career stages
additionally improved. and also the thought of retirement are in
transition, as rising life expectancies can place
3. Intel Corporation (California): Within
life roles into a new context. Eventually
the early 1990s, the agency recordable rate for
employers can see the benefits to hiring older
ergonomics injuries (musculoskeletal disorder
staff. They are mature, reliable, adaptable,
cases and a few sprain/strain cases) was over
veteran, loyal, and have a want to figure.
2.0, and also the lost day case rate was over
Redesigning the work and also the workplace
0.50. Within the 10 years since, Intel has
to accommodate for the aging employee's is
developed an ergonomics program among the
I 87
crucial. Workplace modifications, job/task Abbott, D. (n.d.). Retrieved Dec 2015, 2015, from
http://www.enricosmog.com/sites/default/files/Older%
redesigns and job/duties accommodations can
20workers.pdf
all be necessities in the future. The stakes are
Burton, J. (n.d.). WHO Healthy Workplace
high, for employers as well as staff. Framework and Model. Retrieved Dec 2015, 10, from
Ultimately, such improvements can be the sole http://www.who.int/occupational_health/healthy_work
approach of securing the supply of labor. By place_framework.pdf
Ergonomics and the Aging Workforce. (n.d.).
applying such science, the workplace may be
Retrieved dec 5, 2015, from
designed and redesigned in order that older
http://www.grainger.com/content/supplylink-
staff have the ability and desire to adapt. ergonomics-and-workforce
Employers will need to realize ways that to Ergonomics and the Aging Workforce . (n.d.).
keep their aging staff healthier and dealing Retrieved dec 5, 2015, from
http://www.workriteergo.com/documentation/brochure
longer.
/ergonomics%20and%20Aging%20Workforce.pdf
The skills and knowledge of the older Kuldeep Kaur, Kiran Verma. (2011). managing wiser
workforce. Review of management , 1 (2), 116-126.
personnel are way too important to disregard
Middlesworth, M. (n.d.). Ergonomics and the Aging
their ever-changing wants. It’s wise to create
Workforce — Designing a Safe and Productive
some little changes as these staff could tend to Workplace. Retrieved dec 13, 2015, from http://ergo-
be more vulnerable to bodily strains. And plus.com/ergonomics-aging-workforce-design/
you’ll realize that a well-designed workspace Nogan, K. (n.d.). Capitalizing on an Aging Workforce.
Retrieved Dec 5, 2015, from
will benefit everybody, in spite of age.
http://www.pmacompanies.com/pdf/MarketingMateria
Bibliography l/PMAAgingWorkforceWhitePaper.pdf
Perry, L. S. (n.d.). Designing the Workplace for the
(n.d.). Retrieved dec 3, 2015, from Aging Workforce . Retrieved Dec 5, 2015, from
http://www.ergonomics.org/ https://www.zurichna.com/NR/rdonlyres/AEFC0FF5-
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https://www.osha.gov/SLTC/ergonomics/success_stori F640D99E1412/0/Designingtheworkplacefortheaging
es.html workforce.pdf
I 88
Factors Leading to Losses and Wastage in the Supply Chain of

Fruits and Vegetables Sector in India
Saurav Negi*, Neeraj Anand**

*
Doctoral Research Fellow, CoMES, UPES, Dehradun
**
Professor and Head-LSCM & Operation, CoMES, UPES, Dehradun
Abstract Knowledge of Farmer’s, Storage and

The entire supply chain of perishable food Handling.
produce is fraught with the issue of post-
harvest losses and wastages. Around 30-40 % Keywords
of total production gets waste at various Wastage and losses, Cold Chain,
levels of the supply chain which amounts to Infrastructure, Supply Chain Management,
a loss of Rs. 2 Lakh crore per annum. Apart Fruits and Vegetables.
from the loss of revenue to the farmers, it
leads to increased additional costs in the Introduction
supply chain which ultimately enforces the Supply chain management (SCM) may be
final consumers to pay high charges from his defined as a set of approaches utilized to
pocket. The present study undertakes a efficiently integrate suppliers, manufacturers,
detailed and extensive review of basic and warehouses, and stores, so that merchandise
contemporary literature available and tries to is produced and distributed at the right
explain the present situation as well as the quantities, to the right locations, and at the
post-harvest losses and wastage problems right time, in order to minimize system-wide
encountered in the supply chain of costs while satisfying service level
agricultural products, especially fruits and requirements (Simchi-Levi et al., 2008).
vegetables and also identifies the major Over the years, the definitions have changed
factors leading to losses and wastages in the and broadened the scope of supply chain
logistics and supply chain of Fruits and management, but in Indian context, these
Vegetables sector , classified into categories definitions are still limited to manufactured
namely Infrastructure, Intermediaries, products and services with very little
Harvesting, Transportation, Information, attention being paid to agriculture and allied
I 89
sector. Agricultural produce constitutes a Owing to the very short shelf life and
major part of the world economy and is the perishable in nature, these items require
raw material for many foods processing proper transportation, handling and storage
industry. Among the agricultural produce, facilities in order to reach in fresh state to a
fresh perishable produce like Fruits and customer. Here, supply chain plays a very
Vegetables have got the least attention. This vital role in fulfilling the demand of the
area becomes even more important in customer.
agriculture sector because of perishability
The entire supply chain of Fruits and
nature and very short shelf life of goods.
Vegetables is ladenwith the issue of
Supply Chain Management not only helps to
inefficiency resulting to huge amount of post-
cut costs, but also adds to maintain and
harvest losses and wastages and isone of the
improve the quality of fresh produce
major impediments in the path of speedy
delivered, which are perishable in nature.
growth of Fruits and Vegetables sector.Apart
The Supply chain management of Fruits and from the loss of revenue to the farmers, it also
Vegetables constitutes the processes from leads to increased additional costs in the
production of agri-fresh produce to delivery supply chain which ultimately enforces the
of the produce, i.e. from the farm gate to the final consumers to unnecessarily pay high
customer. It plays a very vital role in reaching charges from their pocket.
these produce to the ultimate consumer and
Fruits and Vegetables Sector Scenario
manages the relationship between businesses
India is the second largest producer of fresh
responsible for the efficient production and
agro food i.e. Fruits and Vegetables in the
supply of fresh produce, to reliably meet the
world after China with the total production of
requirements of the customer in terms of
88.97million metric tonnes of fruits and
quality, quantity, and price. To meet the
162.89 million metric tonnes of vegetables
requirements and needs of the customers,
till the year end 2014 (NHB,2015).The total
several players are involved in the supply
production of Fruits and Vegetables has been
chain management of Fruits and Vegetables
shown in Figure 1 from the year 2001-
like farmers, local traders and intermediaries,
2014.The share has increased from 43.00
transporters, processors, wholesalers and
million metric tonnes to 88.97 million metric
retailers.
tonnes in fruits and 88.62 million metric
I 90
tonnes to 162.89 million metric tonnes in in the supply chain which ultimately enforces
vegetables from the year 2001-2014. the final consumers to pay high charges from
his pocket.
From various studies on post-harvest losses

in India, it is evident that the amount of food
wasted in a year in India is equivalent to
annual food consumption in the UK (Rathore
et al.,2010). As per the recent survey by
ASSOCHAM (2013) India, the producers
have to forgo every year Rs. 2.13 lakh crore
due to losses in the supply chain of Fruits and
Vegetables. The losses among major
Figure1. Fruits and Vegetables Production in
India producing states in India have been shown in
Table1.
(Source: National Horticulture Board, Govt.
of India)
Table1: Fruits and Vegetables Losses among
Inspite of being the world’s second largest the major producing state
producer of Fruits and Vegetables, the Rank State Total Loss

(Rs. Crore)
customers are not getting proper quality, at a 1 Maharashtra 10100
right time and at a right cost due to losses and 2 Andhra Pradesh 5633
3 Tamil Nadu 8170
wastage in the supply chain of Fruits and 4 Gujarat 11398
Vegetables sector. A huge share of 5 Karnataka 7415
6 Uttar Pradesh 10312
production turns into waste which made India 7 Bihar 10744
8 Madhya Pradesh 5332
as one of the biggest wasters in the world
9 West Bengal 13657
(ASSOCHAM, 2013). Negi & Anand (2014) All India 212552
also discusses that supply chain of Fruits and Source: ASSOCHAM Report, May 2013
Vegetables in India is highly inefficient The present paper is an attempt to provide a

which is leading to huge losses and wastage snapshot of factors which are contributing to
sand less income to the stakeholders in losses and wastage in the supply chain of
return. Apart from the loss of revenue to the Fruits and Vegetables sector in India through
farmers, it leads to increased additional costs detailed and extensive review of basic and
I 91
contemporary literature available, including stages of supply chain for Fruits as well as
trends, research avenues and measures to Vegetables. Further an investigation has been
improve the supply chain effectiveness. attempted to identify various factors leading
to the wastages at the different stages such as
Objectives
Supply chain of Fruits and Vegetables sector harvesting, storage, handling, transportation
in India is at a very nascent stage and facing and at trade level of perishable food supply
a major issue of losses and wastage. Hence chain.
the present study has been conducted with the Authors have collected Literature, including
following objectives: research papers from peer-reviewed journals,
 To identify the factors leading to losses conference proceedings, white papers and
and wastage in the supply chain of Fruits presentations from the industry. Research
and Vegetables sector in India. databases such as Emerald
 To suggest measures for improving (www.emeraldinsight.com), EBSCO
Supply Chain and its effectiveness with (Search.ebscohost.com), Wiley
context to Fruits and Vegetables sector. (www.wiley.com), Springer
(www.springerlink.com) and Elsevier
(www.sciencedirect.com) were searched for
Descriptive research has been used for this
related papers.
study. The problem of post-harvest losses &
wastage in the supply chain of fresh food Result and Discussion
produce has been investigated and attempt The study identifies the major factors leading
has been made towards the identifying to losses and wastages in the logistics and
factors leading to this phenomenon. The supply chain management of Fruits and
present study undertakes a thorough review Vegetables sector classified into categories
of basic and contemporary literature namely Poor Infrastructure, Intermediaries,
available and tries to explain the post-harvest Harvesting, Transportation, Information,
losses and wastage problems encountered in Knowledge of Farmer’s, Storage and
the supply chain of agricultural products, Handling. The main causes of losses in these
especially Fruits and Vegetables. particular factor’s categories and their impact
The literature has been divided into various on the supply chain have been discussed in
themes according to the wastage at different detail on the basis of literature. Some of the
I 92
major findings or the main causes of losses adequate infrastructure for processing, cold
under the classified factor’s categories have storage and transportation in developing
been clubbed into the diagram (Figure 2). countries such as India. In developing
countries the poor infrastructure and lack of
Poor Infrastructure marketing facilities resulted in losses of fresh
Infrastructure plays a very vital role and is the vegetables ranged from 20 to 50 % (Verma &
backbone for the supply chain of any Singh, 2004).
industry. In perishable fresh produce supply Supply chain of perishable food requires
chain it constitute cold chain, transportation proper temperature to maintain and sustain
infrastructure, road connectivity and the quality and increase the shelf life of the
network, port infrastructure, marketing produce but there have been staggering losses
facilities, processing facilities etc. In India, in the food sector due to the weak and ill
the Infrastructure for perishable food supply equipped cold chain infrastructure (Rathore
chain is very weak and is one of the main et al., 2010) and improper marketing systems
reasons for losses and wastage of food. and facilities (Gauraha & Thakur, 2008;
Singh, et al.(2009) found in his study that Singh et al., 2008) of the country ensuing
inadequate infrastructural support to losses and wastages in the supply chain of
government regulated supply chain leading to perishable food produce. Kader (2005) found
high losses as high as 40 percent of fruits and inadequate storage facilities as a cause
vegetables. The post-harvest losses at various therefore produce exposed to direct heat of
stages of the supply chain are incurred due to sun that may accelerates metabolism leading
gaps in cold chain such as poor infrastructure, to higher levels of damage and decrease the
insufficient cold storage capacity, shelf life of the produce. Around 95 % of the
unavailability of cold storages in close cold storages are in private hands and
proximity to farms, poor transportation because of high charges, an average Indian
infrastructure, etc. The losses and wastages in farmer is not able to avail the facilities of cold
the food produce decreases the returns of storage (Dharni & Sharma, 2008). Negi &
fruits and vegetables and occur mainly Anand (2015) in his study on cold chain also
because of lack of infrastructure. showed that the cold chain in India has
Viswanadham (2007) mentioned in his study emerged as one of the weakest link in the
that the reason for the waste is the lack of
I 93
supply chain of fruits and vegetables sector in state (Hilly region) are not well connected
India resulting to losses. and the farmers had to somehow bring their
harvests to the nearby road for transportation,
According to Maheshwar & Chanakwa
which increased the wastage of their produce.
(2006) about 30 % of the fruits and
On its way to market, a lack of proper
vegetables grown in India which is 40 million
infrastructural facilities results in greater
tones amounting to $13 billion get wasted
wastage of the fresh produce. Negi and
annually due to gaps in cold chain such as
Anand (2015) also discusses the issues and
poor infrastructure, unavailability of cold
challenges pertaining to supply chain of fruits
storage in close proximity to farms,
and vegetables agribusiness in Uttarakhand,
insufficient cold storage capacity, poor
India and highlighted losses and wastage as
transportation infrastructure etc. There is a
one of the major problem in Uttarakhand agro
lack of ownership within the chain. All the
fresh produce sector.
players are concerned with their own revenue
maximization with limited attention towards Transportation
the overall profit of the chain. This lack of a This section discusses the transportation
holistic view of a supply chain is leading to related causes of the losses and wastage in the
the post-harvest waste (Shukla & Jharkharia, logistics and supply chain of perishable fresh
2013). The magnitude of losses is also food produce. It has been observed that,
depends on the road connectivity and losses in transportation are one of the highest
network (Kader & Rolle, 2004). In India most and major operational causes of wastage in
of the northern and eastern region is covered Perishable food supply chain(Murthy et al.,
with hilly terrain areas and are the major 2009)followed by inventory management
sources of fruits and vegetables. The road (Shukla & Jharkharia, 2013). Rehman et
connectivity and network infrastructure in al.(2007) found in his study that the losses
such areas are very poor which takes a long mainly occurred during the transportation of
time to take the fresh fruits and vegetables the fresh produce to the market. Poor and
product to the market and deteriorate the inadequate transportation facilities contribute
quality and condition of the produce which more to this problem (Gauraha & Thakur,
results in wastage. Modi et al. (2009) also 2008; Sharma & Singh, 2011; Kader, 2005).
highlighted in his study that the villages, Singh et al. (2008) attempts to assess the
farms and the markets in the Uttarakhand extent and magnitude of post-harvest losses
I 94
in Uttar Pradesh. The study found that facilities like controlled temperature
transportation and distribution of agricultural transportation and unavailability of such is
commodities as the factor responsible for the reason for the marketing loss (Ozcan,
such losses. Author found transit loss 2007). Produce are handled roughly and
contributing around 24 % of the total loss.In transported in open trucks. It takes twenty
transportation, time being a critical factor to four hours or more to the fresh produce to
deliver the fresh produce in a timely manner arrives at the retailer, typically an open-
and in a proper quality. At farm level also market vendor or a pushcart after harvesting.
there are various losses due to the ignorance As it is piled into large cane baskets or on to
of time factor. truck beds without cushioning or packaging,
Verma & Singh (2004) found delays in that leaves it exposed to the sun in
moving the harvested fresh produce to the temperature and deteriorates the quality of
market as the reason of losses at the farm the fresh produce (Jain, 2007).
level. There are inherent difficulty of
Faulty system of transport and delayed
collecting and transporting small quantities
delivery of fresh produce causes wastage in
of fresh produce from the numerous small
the retail market (CEAGESP, 2002). It
farms results to high post-harvest losses.
reaches the store shelf too late and with a
Rehman et al. (2007) observed during the
short remaining shelf life which causes
survey that most of the farmer picked their
wastage in the perishable food supply chain
crops in the morning, packed in wooden
at the retailer level (Mena et al., 2011)and
crates and using pickup/truck as a mode of
additionally results to the penalty (Shukla &
transportation to transport their produce to
Jharkharia, 2013). The bulkiness in the
the outside market. Loss at Market level is
transportation of the fresh produce makes the
mainly due to the transportation practices
handling and transportation a difficult task,
followed in marketing channels (Verma &
leading to huge wastage of around Rs. 23,000
Singh, 2004).Mathi (2007) studied the
core or nearly 35 percent of the total
Supply chain management of Guava in
production (CII, 1997). Transportation
Allahabad Uttar Pradesh and found ordinary
related challenges are very high in the India
transportation, irresponsible driving and
because of unavailability of well
rough roads as one of the reasons for post-
transportation mode, high cost of
harvest losses. Some crops required special
transportation, lack of temperature controlled
I 95
vehicle for the movement of goods etc. (Negi Thakur, 2008). Verma & Singh (2004)
& Anand, 2015). analyzes the losses in fresh vegetables and
found that the losses at wholesale level
Adoption of improved transportation method,
depend on the number of participants in the
which strengthen the need for specialized
marketing channel and length of the channel.
transportation vehicles like reefer trucks for
The horticulture supply chain of India is
perishable commodities which can maintain
fragmented because a majority of the farmers
the quality of fresh produce and enhance the
are small and marginal with very limited
shelf life and will also results in reducing the
landholdings. Because of the limited
transit losses (Murthy et al., 2007) .
landholdings the produce from these farmers
Large number of Intermediaries is very low that poses problems in
The supply chain of perishable fresh produce transportation so resulting in greater reliance
is highly inefficient with large number of of the farmers in intermediaries to market
intermediaries and fragmented chain. their produce. The intermediaries generally
Traditional supply chain in India for do not care about the losseswhich the farmer
perishable fresh produce is very long and incurs and not willing to spend on better
fragmented where they collect a sizeable facilities of cold storage and other facilities.
share from the price paid by the customers for This results in losses in the quality and
the produce (Singh et al., 2009). There are quantity of the produce, giving rise to 40
large number of intermediaries in the supply percent value loss in the Supply Chain of
chain of fresh produce i.e. Farmers, Agents, fruits and vegetables (Narula, 2011).
Pre harvest Contractors, Wholesaler, Companies are coming with various models
Commission Agents at whole sale level, in which they are procuring the fresh produce
Auctioneers, Retailers and the customers. directly from the grower. Contract farming is
From a farm gate to a consumer, a also a new concept which has eliminated the
horticulture product passed through six- layer of intermediaries and reduces the
seven different distribution channels. A large dependency of farmers on the intermediaries.
number of intermediaries adds to the waste
Information of Market Demand
and increase the per unit consumption price
Flow of Information is very vital in the
(Boer & Pandey, 1997). Several losses occur
supply chain to run the smooth flow of
because of market intermediaries (Gauraha &
functions. It becomes even more important in
I 96
case of fresh produce supply chain due to Farmers Knowledge and Experience
short shelf life and perishable nature. This Knowledge of farmers regarding technology,
section classifies the causes of loss due to market information plays a very important
poor information regarding demand in supply role in the supply chain of perishable fresh
chain. Lack of information regarding demand food produce because they are the main
was considered as a major reason of waste by source and supplier of all the fresh produce
the researcher (Viswanadham, 2007). and his education, experience and knowledge
Buyukbay et al. (2011) also attributed lack of regarding the technology, market information
demand information as one of the main and new equipments are the factors
reason for waste. Kader (2005) also found responsible for losses in the supply chain of
Lack of information as one of the perishable fresh produce. Majority of the
socioeconomic factor causing post-harvest farmers are small land holder and share
losses. Most of the time fresh food remains croppers and they have very little knowledge
unsold at retail stores and the expiry dates of regarding the technology, demand in the
that product have been passed which is the market, and financial incentives (Shukla &
most common reason of waste at the retail Jharkharia, 2013).Babalola et al.(2010) found
level. This occurs when there is no in his study that most of the farmers around
information regarding demand and retailer 82.95 % were illiterate which could be a
orders more than the real demand (Mena et contributory factor to high losses in
al., 2011).With the timely information of the production of tomato because they cannot
market demand farmers also need to plan and appreciate and use most post-harvest
take care of the planting and harvesting technology available and only farmers with
activities as lack of proper planning and post primary education can appreciate and
management practices is one of the reason for use it. Author also found that majority of the
losses in fresh produce supply chain (Shukla farmer 68.17 % had below the experience of
& Jharkharia, 2013). 16 years in tomato production in Imeko-
The next section covers the farmer’s Afon local government area of Ogun state
knowledge and experience as the cause of and this could have an effect on losses in the
post-harvest losses in fresh produce supply tomato production. Ozcan (2007) also listed
chain. lack of training and experience for workers as
one of the reasons for post-harvest losses.
I 97
Sharma & Singh (2011) also found in his harvest losses because harvesting more than
study on Economic analysis of post-harvest the actual demand at a wrong time may
losses in vegetable in Uttarakhand that the causes loss and wastage. Sharma & Singh
losses at grower level results from lack of (2011) also found harvesting at inappropriate
farmer’s knowledge about the post-harvest maturity, results in erratic ripening and poor
management. They also have the very less quality as one of the most important causes of
knowledge about appropriate maturity of Post-harvest losses. Buyukbay et al.(2011)
fresh produce and proper time of harvesting determined 5-12.97% and 18.44 % of losses
which results in losses. due to early and late harvest in tomato and
The next section covers the Poor harvesting fresh bean production in Tokat province of
as the factors for losses in supply chain of Turkey. Ozcan (2007) also listed Early or late
perishable fresh produce. harvest, Unsuitable method of harvest for
specific product, and Use of improper tools
Improper and Poor Harvesting
and machines by the farmers in harvesting
Harvesting of the fresh produce at a wrong
their farm fresh produce as the reasons for the
time or before their maturity age can leads to
marketing losses.
the wastages in the perishable fresh produce
Verma & Singh (2004) estimated post-
supply chain. Many researchers found poor
harvest losses in fresh vegetables at farm
harvesting as one of the reasons for post-
level and found that losses are mainly caused
harvest losses. Rehman et al.(2007) found
by inadequate means of harvesting. Singh et
that losses mainly occurred during picking of
al. (2008) identified faulty method of
the crop. Author found harvesting at
harvesting as the factor responsible for
improper stage and improper care at harvest,
losses. Harvesting is the first stage from
post-harvest problems as the primary factor
where the wastage occurs in the supply chain
responsible for post-harvest losses in tomato
of perishable fresh produce. So it is very
crop. Babalola et al. (2010) analyzed the
necessary to use of proper tools and machines
determinants of post-harvest losses among
and harvest the produce at their proper time
tomato producers in Imeko -Afon local
period to avoid the wastage.
government area of Ogun state and revealed
through regression analysis that the age of
fruits at harvest and the number of baskets
harvested as the major determinants of post-
I 98
Storage and Handling factor of loss due to improper handling and

Perishable fresh produce has a constraint of storage. Ozcan (2007) listed lack of specific
very short shelf life so they require proper conditions during the storage as one of the
storage and handling after post-harvest. reasons for marketing losses in the fresh
Proper storage helps to maintain the quality produce.
of the fresh produce and safeguard them to Poor packaging is also the reason causing
deteriorate from rough handling, bacteria, losses in fresh produce supply chain. Farmers
fungus, mildew, insects etc. Farmers piled use wooden crates and improper method of
their produce into large cane baskets or onto packaging which causes loss. Rehman et al.
trucks without proper measures and exposed (2007) found Packaging in bulk without
to the sun in temperature causing losses. Jain sorting and grading of produce are the factors
(2007) discussed rough handling of produce responsible for the losses. Adeoye et al.
as the main reason for post-harvest losses. (2009) also foundsuch reasons as the causes
There are several inefficiencies in storage of economic losses to tomato. Author also
and poor handling process which are the found that careless handling of fresh
operational cause of waste in the supply chain produces causes bruising, thereby resulting in
(Murthy et al., 2009; Prigojin et al., 2004). splitting and skin breaks in the fresh produce.
Over 25 percent of fruits and vegetable Rough handling causes damage during off-
production is spoiled due to improper loading of the produces resulting in high
handling and storage (Veena et al., 2011). percentage of losses in the fruits and
Farmers do not take proper care of fresh vegetables. Baskets are staked over the other
produce. They handle, grade and pack these in a poor manner while transporting the
produce in a poor manner which subjected produce from the farm gate to the market
fresh produce too extreme of temperatures, place. The bulkiness in the handling of the
atmospheric modification or contamination fresh produce makes handling a very difficult
and attack by parasites/diseases.Gajanana et task during the transportation. Most of the
al. (2006) found Pest and diseases at the field farmers use faulty method of cleaning, drying
level, pressing and crushing of fruits at the and storage (Verma & Singh, 2004).
market level and injury to fruits due to
pressing at the retail level as the major causal
I 99
Figure 2. Factors leading to Losses and Wastage in the Supply Chain of Fruits and Vegetables
Measures for Improving Supply Chain of There has to be structural changes at

Fruits and Vegetables and its Effectiveness different levels of the supply chain-
 Developing efficient and effective supply Farmers, Local Intermediaries,
chain has to be the concerted effort of the Wholesale, Retailers and consumers. The
entire stakeholder present in the supply government, private, public-private
chain of Fruits and Vegetables sector. partnership, cooperative societies,
I 100
technology providers, educational information as well as new technologies

institutions dealing in agricultural studies emerging in the sector.
and NGOs can play a very important role  Infrastructure for effective supply chain
in improving the supply chain situations. from farm to the consumer end requires
 Infrastructure pertaining to agriculture well running cold chain facilities and all
sector like cold chain, sorting grading and season roads to cater the needs of the
packaging facilities, collection centres, market. This infrastructure development
road connectivity from farm to collection requires huge amount of investment and
centres; Information and Communication government intervention as well as
Technology (ICT); Well established participation.
Transportation system; Agricultural fairs  Well Information system for better
and Training Programs are basic coordination among all the stake holders
requirements for success. from farmers to end consumers is the
 Proper demand forecasting is one of the need of the hour. In the emerging era of
important requirements that enable technology, Internet and mobile
effective supply chain to meet future communications can be used to enable
demand. Due to poor forecasting and information and financial transfer
knowledge regarding market demand, between the stakeholders.
there is imbalance between the actual  Private Player participation needs to be
demand and the surplus supply. Proper encouraged to develop facilities and
mechanism needs to be developed to provide services like washing, waxing,
forecast the demand. sorting, grading, packing, pre cooling and
 Proper coordination of farmers with processing facilities to add value in the
cooperatives, food processing industries supply chain of fruits and Vegetables
and retail chain would facilitate better sector.
delivery of good, reduce market risk,  There is an absolute lack of the concept
provide better opportunities and of packing house establishments in India.
infrastructure, attract public investment, Fruits and vegetables are generally
acquire better services and would help to packed in the field without any
create awareness regarding market pretreatment. Some are even transported
without any packaging. Farmer’s
I 101
cooperatives and other agencies should of evaporative cooling, can be developed

be encouraged to establish packing in response to this problem.
stations at nodal points to augment the  Considerable volumes of unmarketable
marketing of Fruits and Vegetables. and physically damaged fruits and
 Loading and unloading are very vegetables that are without infection can
important steps in the logistical handling be converted into value added products
of Fruits and Vegetables but are often by processing.
neglected. The individual handling of
Conclusion
packaged produce in India leads to
The Fruits and Vegetables sector is seen as an
mishandling and to high postharvest
emerging and fast growing business sector in
losses in India. With the introduction of
India. With the present food wastage, food
CFB boxes, serious consideration should
shortage, food security and safety are issues
be given to the introduction of
taking on growing prominence in India.
palletization and mechanical loading and
Considering the current levels of Fruits and
unloading of produce particularly with
Vegetables wasted, well designed supply
the use of fork-lift trucks, in order to
chain will play an important role in feeding
minimize produce mishandling.
the country populations and help to improve
 On farm storage is required in remote and
the revenues and livelihood of the farmers.
inaccessible areas of India, to reduce
The study and research conducted on the
losses in highly perishable fresh
supply chain of fruits and vegetables in India
horticultural produce. The high cost and
shows that that the supply chain of fresh agri
high energy requirements of
produce is at its nascent stage and huge
refrigeration, and the difficulty of
amount of losses and wastage has increased
installing and running refrigerated
the problem of India to serve the increasing
facilities in remote areas of India,
populations.
precludes the use of refrigerated storage
Poor Infrastructure, Large number of
in many parts of India. Low-cost, low-
Intermediaries, Improper and poor
energy, environmentally friendly cool
Harvesting, Poor Transportation, Lack of
chambers made from locally available
market Information, Lack of Knowledge and
materials, and which utilize the principles
Awareness of farmers and Poor Storage and
Handling are some of the major factors
I 102
contributing to losses and wastage in the ASSOCHAM. (2013). Horticulture Sector in India-
State level experience. New Delhi: The Associated
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Y. (2010). Determinants of post harvest losses in
Proper measures to improve the supply chain tomato production: a case study of Imeko – Afon local
government area of Ogun state. acta SATECH-
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http://www.cccindia.co/corecentre/Database/Docs/D
ocFiles/Can_India_be.pdf
I 105
Factors that affect project success in oil and gas construction

projects: Literature review
Preethi Thankappan Nair*, Dr. Rajesh Tripathi**, Dr. Geo Jos Fernandez***
*PhD scholar, College of Management and Economic studies, UPES

**Assistant Professor, College of Management and Economic studies, UPES
***Assistant Professor (Sr. Sc.), College of Management and Economic studies, UPES
There have been significant developments in With the advent of globalization, the
construction industry worldwide. However construction industry has become highly
project success has been elusive. Increasing competitive and one of the largest job
investment over the past two decades is an creating industries in developing countries
indication of the importance of oil and gas (Nguyen, Ogunlana, & Lan, 2004). The high
projects in the MENA countries. However, level of competition has also resulted in the
project delays have been a recurring issue in transition of construction industry into a
UAE. This paper provides a literature service industry (Karna, Junnonen, &
review of project success notions in Sorvala, 2009). The increasing demands of
construction and oil and gas projects the clients, requiring flexibility, need to
worldwide. This paper will help to identify adopt improved technologies have created
the current view on project success factors the need for competitive advantage.
and encourage further research on offshore However, the successful completion of large
structure construction projects in oil and gas and complex construction projects in
industry. developing countries has also becoming
increasingly difficult (Swan & Khalfan,
Keywords 2007). All this indicates towards the need
Success factors of Projects, Construion for increased studies focusing on improving
industry, Review Paper project success in the construction industry.
I 106
as promised.
Oil and gas projects (IEA, 2006) Oil & Gas - Oil and Gas
/ Global projects are
The last two decades has seen significant
subject to
capital investments done by the energy delay in the
industry of the MENA (Middle East and completion
North Africa) countries. These investments date. This
have been across the value chain, from delay ranges

from 5 to 20%
upstream oil and gas to downstream
of the project
refining, to petrochemicals and to duration.
power/renewable. The coming decade is (Merrow, Oil & Gas - 78% of
projected to see the MENA countries 2012) / Global worldwide
investing more than US$1.1 trillion into the upstream

megaprojects
energy industry through 2020 (Strategy &,
faced either
2012)
cost overruns
Delays are a common concern in almost all (33%) or
projects and the oil and gas industry is also delays (30%)
plagued with persistent records of delayed (Accenture, Oil and - Only 47%
2012) gas & have
schedules and missed targets. Historically,
Utility/Gl delivered
projects have been known to face delays and
obal projects
numerous past studies have identified delays according to
as a recurring concern in the oil and gas the approved
industry (Table 1). schedule

(Ernst & Oil & Gas - 73% of
Young , / Global worldwide
Table 1: Historical data on delay in oil and
2014) projects are
gas projects reporting
Author, Industry/ Challenges schedule
Year Location delays.
(Merrow, Oil & Gas Only 50% of
2003) / Global upstream
Despite recent developments in technology
mega projects
and project management techniques,
were executed
successfully construction projects continue to suffer from
I 107
delays. Of the 365 oil and gas projects studies on construction and oil and gas
studied worldwide (Ernst & Young , 2014), projects have been reported delays to be a
it can be seen that 78% percent of the recurring issue in the UAE (Table 3).
project schedules delays was reported in the
Upstream projects (Figure 1). Table 2: Region-wise Proportion of projects
facing schedule delays
Worldwide study on schedule delays in oil Region Proportion of
and gas projects conducted by Ernst & projects facing

schedule delays
Young (2014) reported the highest
Middle East 87%
proportion of delays in upstream projects in
Africa 82%
Middle East region (Figure 1 & Table2). Asia Pacific 80%
Arabian Oil and Gas Middle East (2013), in Europe 74%
their article on the Top five GCC oil and gas Latin America 71%
North America 55%
projects, identified Saudi Arabia, Qatar and
(Source: (Ernst & Young , 2014) pg. 4-5).
UAE as the primary driving force behind the
Offshore Oil projects in the GCC. Past
Figure 1: Proportion of projects facing schedule delays, cost overruns and average project
budget overruns (Source: (Ernst & Young , 2014) pg. 5.)
I 108
projects fail
Table 3: Project delays in UAE & Middle to complete

on time.
East
Author, Industry/ Challenges
(Gulf Construction - Infrastructur
Year Location
Business, /UAE e projects
(El- Construction/U - 50% of the
2015) not delayed
Sayegh & AE construction
by oil price
Faridi, projects in
“Private
2006) UAE
corporate
encounter
investors are
delays and
generally
are not
taking a
completed
more wait
on time.
and see
(Salama, Oil and - Nearly 62%
approach to
El Hamid, gas/UAE of the
projects
& Bill, projects
than
2008) surveyed
government
witnessed
s are.”
delays.
(Ren, Construction - Complex
Atout, & industry/UAE construction
The inherent complex nature of construction
Jones, environment projects can cause delays resulting from
2008) causing several reasons (Assaf & Al-Hejji, 2006).
delays in However, the impact of delays can be
projects
detrimental. Delays could result in cost
(Albogam Construction - Studies
overrun issues thereby adversely affecting
y, Scott, Industry/ Saudi conducted
Dawood, Arabia and in the the contractors, clients and other
& Bekr, Jordan Middle East stakeholders in different degrees (Kaming,
2013) region have Olomolaiye, Holt, & Harriss, 1997). (Table
reported that
4)
70% of all
public
sector
construction
I 109
Affects share
Table 4: Impact of delays in projects prices, cash

flow and
Author/Year Impact of delay
balance sheets
(Kaming, - cost overrun
- Investors: lost
Olomolaiye, Holt, issues could
revenue and
& Harriss, 1997). adversely
profits; unable
affect the
to service their
contractors,
debt and
clients and
investment;
other
Influence
stakeholders
Share price
in different
- Drilling
degree
Contractors:
(Assaf & Al-Hejji, - Owner: loss of
Loss of day
2006) revenue due
rate income ;
to deferral of
unable to
production
cover
- Contractor :
operational
higher cost to
costs; Affects
due to fixed
ability to pay
costs ;
back capital
Increasing
investments;
price of
Affects share
material and
price
other factors
- Field Operator
add to the
and their
inflation effect
partners:
(Court & Hughes, - cost overruns
Unable to
2013) of up to 20
proceed with
percent
timely field
(EPEUS, 2014) - Lower than
development;
forecasted
Unable to
revenues were
realize
announced as
revenues from
a result of
production;
project delays;
Unable to
I 110
validate assets
from
exploration
Objectives
and appraisal;
Affects Share
The objective of this paper is to review the
price and various success factors that contribute to the
reputation success of a project in the construction
industry, giving reference to oil and gas
Research problem: projects. This paper aims to
“Delays in oil and gas projects negatively comprehensively list the factors that
impacts project success in UAE.” contribute to project success identified
through a literature review of past studies.
Construction delay has been identified as Although the emphasis is on oil and gas
one of the critical problems faced by construction projects, the literature review is
construction industry in developing not limited to studies on that industry alone,
countries (Sweis, Abu-Hammad, & Shhboul, and will list the diversified views of past
2007). Past researchers have conducted researchers with regards to project success
numerous studies on construction projects in factors.
different countries. Studies conducted in
different countries have identified several Project Success
reasons for the delays in construction Construction projects are highly complex
projects. These studies indicate the need for because of their different project sites,
improved efforts towards identifying factors increasing technical complexity and high
that would positively impact the success of demands on reducing construction cost and
construction projects. However, it is still time. Therefore, there is no agreed definition
unclear what actions need to be taken to on construction project success. The term
improve project success. There seems to be project success is very vague (Lientz & Rea,
a dearth of studies conducted to identify 1995). With regards to the issue “what is
factors that would help improve the success project success” disagreement is the only
of construction projects in oil and gas agreement (Prabhakar, 2008). Review of
industry. past literature on project success show
differing views with no agreed definition of
I 111
project success. However, definition helps project success criteria and success factors
contribute towards better understanding of have turned out to be prerequisites to any
differences and is important for achieving study on project success.
agreement (Pryke & Smyth, 2006). McCoy
(1996) supports the view that it is necessary Table 5: Definitions of Success Factors
to determine the criteria upon which a Author, Success factor
project is evaluated as a success. Year definition

(Wai, Success factors are
Aminah, factors that influence,
According to Shenhar, et.al (1997) project Syuhaida, & constitute as well as
success is concerned with efficiency and Ng, 2012) determine the success
effectiveness, which can be either internal or of a project
external or short term or long term. (Rockart, Critical Success

1982) Factors are those few
However, Ika (2009) stated that the internal
key factors absolutely
efficiency of the project team resulted in
necessary to reach
project management success. Some goals
researchers are of the opinion that project (McCabe, CSFs are vital to
success refers to only perceived success and 2001) improve

organizations and to
that there is no absolute success in a project
indicate that progress
(Baker, Murphy, & Fisher, 1988) (Freeman
is being made in
& Beale, 1992). particular areas.
Project Success Factors Success Factors for Construction

The concept of project success factors was Projects: Literature Review
first introduced by Rubin & Seeling (1976). Past studies have identified a variety of
The terminology critical success factors factors that affect success of a project. Some
(CSFs) was first used by Rockart (1982). of the more recent studies conducted on
construction projects and project success are
Past studies on project success generally listed below:-
tended to either examine project success
criteria or try to identify project success The Association for Project Management
factors (Ika, 2009). However, study of both (February 2014), attempted to identify
I 112
factors that contribute to successful projects. and entertainment. The report of the 4th
APM conducted extensive review of past Global PPM survey also provided a
literature and identified eleven factors which summary of the results derived from the
contribute to successful projects. The APM previous surveys. The survey identified the
have identified project success factors as:- following factors affect project success:
1. Effective governance 1. Estimation in the planning stage
2. Capable sponsors 2. Following agreed contract without
3. Aligned supply chain change in scope mid-project
4. Proven methods and tools 3. Sufficient resources
5. Appropriate standards 4. Defined goals and objectives
6. Commitment to projects success 5. Environmental changes
7. Supportive organizations
8. Engaged users or operators PWC also identified that the following five
9. Competent project professionals factors that would further improve success:
10. Capable project teams 1. Portfolio optimization
11. Secure funding 2. Flexibility
3. Enabling people with proper training
Besides these success factors, three and tools
extraneous factors were also identified to 4. Close relationship between project
affect project success. They were: - execution team and upper
1. Having clear project objectives- management
vision and mission 5. Regular monitoring
2. Good planning and review processes
3. Portfolio, Programme and Project Damiebi and Nazatul (2011) studied success
management. factors for deepwater oil and gas projects in
Nigeria. The study focused on deepwater oil
PWC (2014) conducted a survey in 110 and gas development organizations in
countries and collected input from 3,025 Nigeria. The respondents consisted of
people. The survey covered financial Project Senior Engineers, Project Engineers
centres; government and public sectors; and Project Managers. The success factors
technology, information, communication included in the study were:-
I 113
1. Proper Contract Planning and 3. Competent Project Manager

Management 4. Availability of Resources
2. Good Project Formulation 5. Adequate funding through the
3. Project Management Capability project
4. Good Project Implementation 6. Comprehensive Contract
5. Realistic Project Duration documentation
6. Effective Risk Allocation 7. Competence
7. Understanding of Local Environment 8. Utilization of up-to-date technology
8. Resource Availability 9. Proper emphasis on past experience
9. Access to Secure Finance 10. Competent team
10. Fast Project Delivery 11. Awarding bids to the right
11. Communication designer/contractor
12. Innovative Technology 12. Commitment
13. Proper Estimation of Capital cost 13. Top management support
14. Commitment to the Project
The study further confirmed that project 15. Clear objectives and scope
success factors were impacted by 16. Political Support
1. Management /Portfolio strategy 17. Communication
2. Budget 18. Shared Project Vision
3. Project Delivery Schedule 19. Project Plans updated regularly
20. Purpose of planning
The critical success factors of the Durban 21. Nature of planning
construction industry were studied with the 22. Planning Process and Outcome
aim to assess the perceptions of project 23. Goal and Objective setting
managers and contractors (Thulani, 2010). 24. Developing objectives
The sample consisted of 95 project 25. Frequent Project Meetings
managers and 61 active grade four 26. Community involvement
contractors in Durban. The researcher 27. Handover Procedures
considered the success factors in his study:-
1. Comfort A study was conducted on the delays in the
2. Involvement of Stakeholders FEED and EPC phase of oil and gas projects
I 114
in Abu Dhabi (Salama, El Hamid, & Bill, 14. Effective ‘delay penalties’ or
2008). The study aimed to identify the ‘incentives for early delivery’
causes of delays in EPC phase and whether 15. Availability of experienced and
delays in the FEED phase could forewarn of competent contractors and suppliers
delays in the EPC phase. The sample 16. Lack of rework/ errors by contractor
consisted of 100 practitioners employed in or sub-contractor
oil and gas projects in Abu Dhabi. 17. No Increase in cost due to inflation
According to the study, the following factors during project
affect project success in oil and gas projects 18. Proper inspection and testing of
in Abu dhabi: equipment and material at supplier
1. Timely start of purchasing long-lead site
items 19. Quick approval and decision making
2. Correct choice of contractor or by shareholder and Client
project management consultant representatives
3. Timely material and equipment 20. No errors in design
delivery 21. Proper selection of subcontractor or
4. Sufficient data collection and supplier
surveys before design 22. Governmental and political related
5. Experience and knowledge of support
contractor and technical staff 23. Adequate coordination among
6. Availability of material in Market designers from different disciplines
7. Proper project management by 24. Availability of specialized
contractor construction equipment
8. Proper contract management 25. Involvement of operations and
9. Availability of experienced and maintenance staff in the design phase
qualified engineers 26. Quick dispute negotiations
10. Clear and complete definition of 27. Quick response and decision making
Client requirements 28. Adequate study of market
11. Good project management by PMC requirements
12. Right choice of contract type 29. Staff involvement in decision
13. Availability of skilled labor making and problem solving
I 115
30. Timely contractor payment to sub- 4. Availability of materials on site

contractors and suppliers 5. Availability of materials on time
31. No Change orders during EPC by 6. Availability of equipment
Client 7. Working condition of equipment
32. IT use in communication and 8. Quality of work
information management 9. Construction method
33. communication among different 10. Perfection of Construction work
parties involved 11. Supervision and site management
34. Adequate application of safety rules 12. Adequate contractor’s experience
and regulations by contractor 13. Timely delivery of subcontractor’s
35. Short time for tendering and award work
14. No variations in job scope
El-Sayegh and Faridi (2006) studied the 15. Control of site resource allocation
delays in construction industry in UAE. The 16. Suitable leadership style of
perspective of contractors and consultants construction/project manager
was studied. A variety of factors were 17. Timely delivery of special
identified that affect project success in UAE manufactured imported materials
construction industry and a total of 93 18. Preparation and approval of
construction personnel were involved in the drawings
study. The study identified the top 10 19. Short Waiting time for
common factors that affect projects. The sample/materials approval
study further identified the top 10 factors for 20. Short Waiting time for site
delays based on contractor’s perspective and inspection and approval of quality
top 10 factors based n consultant’s control tests/results
perspective. Comparative analysis of the 21. No Changes in drawings
identified factors was further conducted. The 22. No Changes in specifications
list of factors that affect construction 23. Complete detailed
projects in UAE are listed below: - drawings/specifications/documents
1. Availability of manpower 24. No Design error due to unfamiliarity
2. Skill of manpower with the local conditions,
3. Productivity of manpower environment, and the materials
I 116
25. No Change order construction (contractor–

26. Speed of the owner’s decision- subcontractor–consultant–owner)
making process 42. Contract adherence
27. No Materials type and specification 43. Government regulations
change during the construction 44. Obtaining permit/approval from the
28. No bureaucracy municipality/different government
29. Cooperative owner authorities.
30. Realistic contract duration imposed 45. Transportation permit
by the client 46. Subsurface soil condition (geological
31. Financing by contractor during /water table related, etc.)
construction 47. Weather conditions (mainly high
32. Timely contractor’s progress temperature)
payment (of completed work) by
owner Besides the above mentioned studies,
33. Timely payment to subcontractor by several success factors have been commonly
the main contractor listed by past researchers in their studies.
34. Planning and scheduling
35. Adequate early planning of the Table 6:List of commonly studied project
project success factors in past studies
36. Availability of data in estimating the Author, Year Project Success
activity duration and resources Factors

(Chileshe & Haupt, Strategic project
37. Correct estimation of the
2005). control,
productivity Technical factors,
38. Adequate progress review commercial factors,
39. Availability of the Organization
construction/project management people

(Nguyen, comprehensive
group for the project
Ogunlana, & Lan, comfort
40. Contractual relationship
2004) competence,
41. Communication and coordination (Toor & Ogunlana, commitment,
between the parties involved in 2008) communication
(Shen & Liu, 2003) Value management
I 117
(Bryde, 2008) Project (Morris, Project management

sponsorship Reconstructing using Enterprise-
(Jing, Shen, Drew, stakeholder project Wide Project
& Ho, 2010) management; management, 2013) Management
(Swan & Khalfan, stakeholder (EWPM)
2007) relationship (Pinto & Slevin, Top Management
(Assudani & management; 1989) (Johnson, Support
Kloppenborg, Effective Scholes, &
2010) communication Whittington, 2006)
(Rowlinson & between project (Deloitte, 2013) Governance-direction
Cheung, 2008); stakeholders’ and oversight of
(Alexandrova & projects
Ivanova, 2012) (Morris, Capable sponsors
(Lu & Yuan, 2010) Waste Reconstructing
management project
(Sanvido, Grobler, Comprehensive management, 2013)
Parfitt, Guvenis, & facility team, (Browne, 2013)
Coyle, 1992) Teamwork boosting (Alexandrova &
policy, Experience in Ivanova, 2012)
handling (Steinfort &
various aspects Walker, 2007)
of facilities, (PriceWaterCooper,
Information 2014)
optimisation in (National Audit
the planning and Office, 2010)
design stage. (PriceWaterCooper, Aligned supply chain
(PriceWaterCooper, Effective governance 2014),
2014) (National Audit
Office, 2010)
(Martin, 1976) Organize and (Morris,
delegate Reconstructing
authority project
(Lock, 1984) Project authority management, 2013)
from the top (Mir & Pinnington, Proven PM methods
(Sayles & Control systems 2014) PMI (4); and tools
Chandler, 1971) and (Jugdev & Miller,
responsibilities 2005)
I 118
(Baker, Murphy, & (Pinto & Slevin, Engagement of

Fisher, 1988) 1989) customers, users or
(Shehu & (Abdullah, operators
Akintoye, 2009) Rahman, Harun,
(Cooke-Davies, Alashwal, &
2002) Beksin, 2010)
(Alexandrova & (Jugdev & Miller,
Ivanova, 2012) 2005)
(Steinfort & (Browne, 2013) Competent project
Walker, 2007) (PriceWaterCooper, team & professionals
(Deloitte, 2013); 2014)
(Morris, (National Audit
Reconstructing Office, 2010)
project (Alexandrova &
management, 2013) Ivanova, 2012)
(Anantatmula, Competency of (Baker, Murphy, &
2010) Project Manager Fisher, 1983)
(Corona, 2010) (Steinfort &
(Clarke, 2010) Walker, 2007)
(Malach-Pines, (Sayles &
Dvir, & Sadech, Chandler, 1971)
2009); (Pinto & Slevin, monitoring and
(Yousefi, Hipel, & 1989) feedback;
Hegazy, 2010); troubleshooting
(Wideman, 2010) (Steinfort & Project planning
(Jugdev & Miller, External Walker, 2007)
2005) (Morris & environment- social, (Deloitte, 2013)
Hough, 1987) political, economical (Browne, 2013) an ongoing and
(Steinfort & . rigorous review
Walker, 2007) process
(Deloitte, 2013) Stakeholder
; (PriceWaterCooper, Clear project
(Morris, Relationship 2014) objectives, mission
Reconstructing management (Browne, 2013) and vision
project (Pinto & Slevin,
management, 2013) 1989);
(Jugdev & Miller, (Steinfort &
2005) Walker, 2007)
I 119
(Alexandrova & factors that affect success of construction

Ivanova, 2012) projects, were deduced to vary from one
(PriceWaterCooper, Adequate and secure
country to another, and are different among
2014) resources
various groups: owners, contractors, and
(Browne, 2013)
(Martin, 1976) consultants group. (Salama, El, & Keogh,
(Baker, Murphy, & 2008).Literature review brought up past
Fisher, 1983); studies on oil and gas industry which
(Steinfort &
focused on the emirate of Abu Dhabi in the
Walker, 2007)
(Pugh, 1985)
UAE. There was a clear gap in available
(Kerzner, 2006) Comprehensive literature addressing oil and gas projects in
Contract any other emirate of UAE (Salama, El, &
documentation Keogh, 2008). The review of past studies on
(Yang, 2007) Technological
oil and gas projects failed to show any past
(Kerzner, 2006) competence
studies focusing on engineering projects for
(Pathirage, Previous experience
Amaratunga, & of Project Manager offshore oil and gas structures in UAE
Haigh, 2007) (Salama, El, & Keogh, 2008).
(Chan, Wong, & This literature review covers past studies
Lam, 2006)
conducted on construction projects
(Samuelson & Selection of the right
worldwide. Since different cities have a
Marks, 2006); designer/contractor
(Philips, Martin, varying mix of industry players
Dainty, & Price, (Consultants/ shipyards/clients) the literature
2008) states a variety of different perceptions on
factors of project success. Past study on
Knowledge gap & Limitations: delays in UAE oil and gas projects has failed
It has been identified that there are to simultaneously investigate the perspective
similarities between construction projects of all the various groups: owners,
and oil and gas projects (Mohammad & contractors and consultant group (Salama,
Price, 2005). Hence, literature related with El, & Keogh, 2008)
delays in construction projects was also
reviewed with literature on Oil and Gas The Literature review identified a number of
projects for the purpose of this study. The success factors for construction projects.
I 120
However, these success factors cannot be in this paper is comprehensive enough to (1)
generalized to any particular geographical identify past research (2) encourage future
location for offshore structure construction research efforts.
projects in oil and gas industry. Hence there
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Gujarat Ports as a Critical Infrastructure for Energy Trade for

India and Gujarat
Vinay Kumar Saini*
*Integrated Research and Action for Development (IRADe), C-80, Shivalik, Malviya Nagar, New Delhi -
110017, India.
Abstract km length of the coastline. Gujarat’s

Gujarat is the leader among all the states in strategic location on the west coast of India
India in terms of handling cargo traffic in has favoured port development and Gujarat
India. Ports in Gujarat are critical energy acts as a gateway for seaborne trade for
infrastructure not only for Gujarat but also hinterland states of India- Rajasthan,
for India as they handle significant volumes Haryana, Uttar Pradesh, Himachal Pradesh,
of seaborne trade for India related to POL Jammu & Kashmir, and parts of Madhya
and products, coal and LNG. The strong Pradesh.
position of Gujarat in handling energy Gujarat has focussed on its ports
commodities is due to the close proximity development and Gujarat’s port sector has
with the global energy markets and good been a leader in taking some of the key
connectivity with the hinterland states of initiatives such as:
India. Within ports, the non-major ports are
 Gujarat was the first state in India to
becoming more important for Gujarat as
invite private sector participation
their share in energy trade has increased
through competitive bidding in port
substantially over the years.
sector
 Gujarat was the first state in India to
Keywords
have a dedicated Chemical
Energy Commodities, Energy Trade,
Terminal
Gujarat Ports, Kandla Port, Non-major
 The Pipavav port in Gujarat was the
ports, Coal, and POL and Products.
first private port of India,
 Dahej LNG terminal in Gujarat was
Introduction
the first LNG terminal in India
India is endowed with a coastline of 7,516.6
(operational since February 2004)
km length and Gujarat alone shares 1,251
I 127
The Gujarat Maritime Board (GMB) is the Classification of major and non-major ports
first autonomous maritime board of the is as mentioned below:
country to undertake development, Major Ports: Major ports come under the
administration and regulation of non-major purview of Central Government and Kandla
ports of Gujarat. Further, the Gujarat Build- port is the only major port in Gujarat.
Own-Operate-Transfer (BOOT) Policy of Non-Major Ports: Non-major ports come
1997 gave a push to private sector under the purview of the State Government.
participation in ports sectors resulted in first Non-major ports in Gujarat are owned
private port (Pipavav Port, Gujarat) in the either by GMB or by private developers
country. Other private ports such as (known as private ports under BOOT).
Mundra, Dahej and Hazira came up Non-major ports in Gujarat are broadly
immediately after the BOOT Policy in classified into (i) GMB Ports, (ii) Private
Gujarat was implemented. Adequate and Joint Sector Ports (iii) non-commercial
expansion of maritime capabilities has ports such as fisheries and (iv) ship
made Gujarat the leading state with the recycling / shipbuilding and repair yards.
best-developed maritime state in India Table 1 shows the major and non-major
(Gujarat Maritime Board 2012). ports of Gujarat. From the total 41 non-
Gujarat has 42 ports along its coastline and major ports, 17 ports are handling cargo
from the total ports one is a major port and traffic while the rest are primarily used for
rest are non-major ports (Update on Indian fishing activities. Figure 1 shows the
Port Sector 2015). location of key ports on the Gujarat
coastline.
Table 1: Major and Non-Major Ports of Gujarat
Major Port
Kandla
Non- Major Ports
Bedi Ghogha Kotda Maroli Pindhara Talaja
Beyt Hazira Koteshwar Mul-Dwarka Pipavav/GPPL Umarsadi
Bhagwa Jafarabad Madhwad Mundra/GAPL Porbandar Umergaon
Bharuch Jakhau Magdalla Navabandar Rajpara Valsad
Bhavnagar Jodia Mahuva Navlakhi Rupen Vansi-Borsi
Billimora Khambhat Mandvi Okha Salaya Veraval
Dahej Kolak Mangrol Onjal Sikka
(Source: Basic Port Statistics of India 2013-14, Ministry of Road Transport & Highways)
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Over the years, Gujarat has emerged as one capital region, Gujarat, Rajasthan, Haryana,
of the key states in handling seaborne cargo Punjab and western Uttar Pradesh. Further,
traffic in India. In FY14, Gujarat emerged Gujarat ports are supported by strong rail-
as the leader in handling seaborne cargo road connectivity and pipeline connectivity
traffic and accounted for 40 percent of the (Gujarat Maritime Board 2012). Liberal
total cargo handled at Indian ports followed policies in Gujarat has enabled private
by Maharashtra, Andhra Pradesh and Tamil investment in Gujarat’s port sector and as
Nadu with respective shares of 15 percent, per GMB’s Port Sector Outline Report the
12 percent and 11 percent respectively private investments in port sector grew at
(Basic Port Statistics of India 2013). Figure CAGR of 10.23 % from 2003-04 to 2013-
2 highlights the share of Gujarat in total 14.
cargo traffic handled at Indian ports in Significance of Gujarat in India’s Energy
FY14. Gujarat was also leader in handling Trade (Coal, Crude, LNG)
cargo traffic at non-major ports with a share Table 2 highlights the share of Gujarat in
of 74 percent in the total cargo traffic India’s energy imports of petroleum crude,
handled by non-major ports in India. LNG and coal through sea route. In FY14,
Geographic advantage of Gujarat Ports Gujarat through its major and non-major
One of the key reasons, behind Gujarat ports handled 67 percent of India’s
ports’ increased share in cargo traffic is its Petroleum, Oil and Lubricants (POL) and
strategic location that provides a nearest its products imports. In FY11, Gujarat
maritime outlet to Middle East, Africa and handled almost all the LNG imports in
Europe (refer Figure 3). Within India, India; however, its share decreased in later
Gujarat acts as a gateway for the vast years with the commissioning of Kochi and
hinterland states such as Delhi national Dabhol LNG terminals in the year 2011
Table 2: Share of Gujarat in India’s Energy Imports*

Commodity Year Imports Exports
All India Gujarat Share of Gujarat All India Gujarat (in Share of Gujarat (in
(in MT) (in MT) (in %) (in MT) MT) %)
POL & Products1 2013-14 223 150 67% 67 52 78%

Coal1 2013-14 181 68 38% 1 1 99%
2
LNG 2010-11 9.9 9.7 98% - - -
*Considering imports through sea route.
(Source: Basic Port Statistics of India 2013-14; 2Indian Petroleum and Natural Gas Statistics
1
2013-14; Gujarat Maritime Board)
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Gujarat is expected to be a key state for Energy Trade through Gujarat Ports-
Trends
trade of POL and its products in India due
a) Major Port- Kandla
to the presence of large crude oil refining
Kandla port is the only major port in
capacities. Further, LNG imports through
Gujarat. During 2013-14, Kandla port
Gujarat in future are also expected to
handled 21 percent of the total overseas
remain significant as by 2030 Gujarat LNG
cargo traffic in Gujarat, whereas the rest of
Terminals capacities are expected to be
the cargo traffic was handled by the non-
around 42 percent of the total India’s LNG
major ports in Gujarat having a share of
re-gasification capacity (“Vision 2030”
about 79 percent (Basic Port Statistics of
Natural Gas Infrastructure in India
India 2014). Trends in overseas commodity
2013).The planned Western Dedicated
imports and exports from Kandla port is
Freight Corridor passing through Gujarat
illustrated in Figure 4. Seaborne
will also support future ports based trade
commodity imports and exports from
from Gujarat.
Gujarat increased at a CAGR of 12 percent
and 14 percent respectively during the
period FY09 to FY14. However, the
imports and exports from Kandla port
increased at a CAGR of 3 percent and 6
percent respectively during the same
period. From the total imports of 58 MT at
Kandla port in FY14 about 36 MT was POL
and products having a share of 62 percent
in total imports and 6 MT was coal with a
share of 11 percent in total imports. Figure
5 shows the trend in Coal and POL trade
Figure 1: Location of Key Ports on Gujarat from Kandla port in Gujarat.
Coastline
(Source: Update on Indian Port Sector
b) Non-Major Ports
(2015), Ministry of Road Transport &
Non-major ports in Gujarat are crucial for
Highway)
overseas commodity trade as they handled
about 79 percent of the total cargo traffic in
Gujarat in FY14.Figure 6shows the trends
I 130
in Coal and POL trade from non-major gateway for coal imports by hinterland
ports of Gujarat. states such as Rajasthan, Madhya Pradesh,
For analysing energy commodities trade Haryana, Punjab, Uttar Pradesh, etc. Shares
from Gujarat’s non-major ports, Coal and of POL and Coal imports and exports from
POL and products are clubbed together as Gujarat’s non-major portare highlighted in
major energy commodities/products Figure8.
(excluding LNG1). The Figure 7clearly
depicts the increasing share of non-major Capacity Utilization
ports in both energy commodities exports In 2014-15, Gujarat Non-major ports were
and imports over the years. also ahead of the Kandla port (major port)
Within the energy commodity trade from in terms of capacity utilization with
major and non-major ports of Gujarat, POL utilization of 79.6 percent (Update on
exports and imports is the highest. High Indian Port Sector 2015). During the same
trade of POL and its products is supported period, capacity utilization of Kandla Port
by the fact that about 43 percent2 of India’s was only 76.2 percent, which was about 12
crude oil refining capacities are located percent higher than the average capacity
within Gujarat. The second most commonly utilization of all major ports of India.
imported energy commodity in Gujarat is Higher capacity utilization is an indicator of
coal. Gujarat imports coal for its own higher volume of trade flows from non-
internal consumption as well as it acts as a major ports in Gujarat.
1 2
LNG is imported through specialized LNG As on 31 March 2013, Source: Energy Statistics
terminals. In Gujarat LNG is imported at Dahej and 2014, Ministry of Statistics and Programme
Hazira ports (as on December 2013). Implementation
I 131
Figure 2 State-wise Cargo Traffic Handled at Indian Ports in FY14

(Source: Basic Port Statistics of India 2013-14 (2014), Ministry of Road Transport &
Highways)
I 132
Figure 3 Gujarat's Strategic Location and Pipeline Connectivity within India

(Source: Port Sector Outline: Glimpse of Gujarat (2014), Gujarat Maritime Board, Gujarat)
300 265
244
250 214
187 194
200
Million Ton
150
150
88 95
100 75 80
49 55
50 21 19
51
14 58 12 57 15 56 16 59 58
0
FY09 FY10 FY11 FY12 FY13 FY14
Imports on Major Port-Kandla Exports from Major Port- Kandla

Total Imports in Gujarat Total Exports in Gujarat
Figure 4Trend in Overseas Commodity Imports and Exports from Gujarat and Kandla Port*
*The balance of Total and Kandla port trade was undertaken by Non-Major Ports in Gujarat
Highways)
I 133
40 35 37 36
33 34 34
35
30
Million Ton
25
20
15
10 6 8
5 5 6 6 6
3 3 4 4
5 2
0 0 0 0 0 0
0
Coal- Import Coal- Export POL-Import POL-Export
Figure 5: Trends in Coal and POL* Trade from Kandla Port

*POL includes POL and product
Highways)
120 114
102
100 90
79 82
80
Million Ton
62
56
60 51
41 43 44
39 37
40 34
28
24 21
20 16
1 1 1 1 1 1
0
Coal- Import Coal- Export POL-Import POL-Export
Figure 6: Trends in Coal and POL* Trade from Non-Major Ports in Gujarat
*POL includes POL and product
Highways)
I 134
Figure 7Trends in Gujarat’s Port-wise Share of Energy Commodities* Imports & Exports
*Energy commodities represent Coal, and POL and products, whereas it excludes LNG
Highways)
Figure 8: Energy Commodities* Imports& Exports Trends on Non-Major Ports of Gujarat

*Energy commodities represent Coal, and POL and products, whereas it excludes LNG
Highways)
Conclusion Government policies has also created the

Strategic location of Gujarat for meeting environment for increased investments in
domestic demand of hinterland states as the Port Sector of Gujarat. From the
well as proximity to the key global energy perspective of energy trade, Gujarat ports
markets of Africa, Europe and Middle East has been in the forefront in handling POL
has favoured port development in Gujarat. & products, coal and LNG for India, which
In addition, investment friendly highlights the importance of Gujarat ports.
I 135
Within ports, the non-major ports of Basic Port Statistics of India 2013-14 (2014),
March 26, 2015, Transport Research Wing,
Gujarat are handling the major share of
Ministry of Road Transport & Highways,
energy trade and their share in energy trade
Government of India
has been increasing significantly over the
Gujarat Maritime Board (2012) 30th Administrative
years. In future also, the role of Gujarat and
Report 2011-12, Gujarat
its non-major ports will be critical in India’s
Indian Petroleum and Natural Gas Statistics 2013-
energy trade as Gujarat is having large
14 (2014), Economics and Statistics Division,
crude oil refining capacities, present and
Ministry of Petroleum & Natural Gas, Government
expected new LNG capacities and passing of India
of planned Western Dedicated Freight
Port Sector Outline: Glimpse of Gujarat (2014),
corridors through Gujarat will also support Gujarat Maritime Board, Gujarat
energy trade from the ports of Gujarat in
Update on Indian Port Sector (2015), March 31,
future also. 2015, Transport Research Wing, Ministry of Road
Transport & Highways, Government of India
References “Vision 2030” Natural Gas Infrastructure in India

(2013), May 2013, Report by Industry Group for
Basic Port Statistics of India 2012-13 (2013), April
Petroleum & Natural Gas Regulatory Board
2014, Transport Research Wing, Ministry of Road
Transport & Highways, Government of India
I 136
Leanness of English Language: The cause for Untapped Potential in

the Management Students in Central India
Dr. Ravi Chatterjee*

Assistant Professor, Army Institute of Management, Kolkata
Abstract Through an extensive research regarding the

India is one of the youngest Nations in terms vacuum that is getting created, it has been
of average age. The fact that more than 50% found that the problems lies at the grass root
of the population is between the ages of 18- level, i.e. English language. Various elements
35 years adds to it. China, one of India’s most have been identified which testify to the fact
potent neighbors has become a threat to the aforementioned. This research paper aims at
intellectual capital of our country. The story bringing awareness which would help in
lies hidden in the fact that China has moved taking on researches to find the possible
on to foster its education base. In India the remedial solution.
situation looks gloomy and the very strength
This would enumerate the various issues
of the country, our education structure is in a
which would help the institutions/researchers
decline phase.
in chalking out strategies which would help
Pursuing management education seems to be
the students in imbibing the required skill
a much coveted desire for every student.
sets.
What lure them are the hefty pay packages
and the chimera of luxury and glamour. In a Keywords
city like Bhopal, where management Personality development, soft skills, outreach
institutes have mushroomed, procuring to opportunity, effective communication, job
admission has become easy. What lies ahead market demand.
is the teething reality after entering into such
courses. An individual faces many critical Introduction
situations which forces him/her to go beyond It is known fact that progress and
his/her extremes. At that very crucial development in a developing country like
moment, the true picture of self comes out. ours has happened due to the western
influence. English language has been
instrumental in many ways for this; firstly as
I 137
it has helped in information exchange and With the growing number of English medium
higher education connect. India could build schools the students are channelized to learn
strong links with the West as the people to this language. But this creates a challenge for
people link developed with many of the the student to grasp and learn the content if
Indian English speaking community finding he or she is not able to pick up the language
jobs in the west. Political scenario also at an early age of his/ her life. This weak
changed after the liberalization, all credit to foundation may also hamper his/ her future
be given to English Language. So basically studies, profession and his / her life.
we can say that for a young Indian knowing
English creates opportunities. Despite all the aping, the Indian Society is
Being proficient in one language doesn't still in its nescient stages in emulating the
necessarily mean that the other is any less western culture and in absorbing the
important. The fact is that multilingualism is paradigm shift. We see the western culture as
very much possible as we see in Europe. In a superior, progressive, modern having great
India however this problem exists because of standard of living. This creates the complex
a complicated inferiority complex and the in us that pushes us to copy the superficial
fact that the Indian society itself is extremely and superfluous things. This obstructs to see
hierarchical in nature, where people the true picture and make progress in real
constantly want to promote their social sense. Again, it’s not the English per se is
standing on the basis of caste, skin color, responsible for this; rather it is the stagnation
language, Western lifestyle or whatever else of the Indian society and the abysmal
comes handy. This however has nothing to do standard of living which has people running
with the English language itself. The second away.
thing to remember is that English is the
common language for science and The advantages of knowing the English
technology which makes it inherently language bears a great weightage in one’s
progressive thereby attracting the youth from overall personality development. This not
less progressive cultures, but here, again only helps in overall growth but also helps in
parental guidance comes into play which can creating a niche for ourselves. The Indian
help bring about a balance. should feel proud and confident of who we
I 138
are and help in bringing up multi lingual students that are associated with the tendency
attitude from childhood. to regulate learning, as well as with better
performance. Research has also shown that
This considers what strategies students use
learning is more likely to be effective where
during learning. Also of interest is how these
a student plays a proactive role in the learning
strategies relate to motivational factors and
process – for example drawing on strong
students’ self-related beliefs as well as to
motivation and clear goals to select an
students’ performance in language skills. To
appropriate learning strategy
measure directly whether students actually
Although there have been varying definitions
adopt certain approaches to learning, one
of self-regulated learning, it is generally
would need to examine their actions in
understood to involve students being
specific situations. This requires in-depth
motivated to learn, selecting appropriate
interview and observation methods of a type
learning goals to guide the learning process
that cannot be applied in a large-scale survey
using appropriate knowledge and skills to
like PISA (Artelt, 2000; Boekaerts, 1999;
direct learning and consciously selecting
Lehtinen, 1992)
learning strategies appropriate to the task at
While PISA collects information on the hand.
extent to which students generally adopt
various learning strategies that have been The learning process is not only based on the
shown to be important for successful learning existence of a repertoire of cognitive and
outcomes, such necessary preconditions for meta cognitive information-processing
successful learning do not guarantee. Good abilities but also on the readiness of
performance and attitudes towards learning individuals to define their own goals, to be
are mutually reinforcing. Alternatively, it proactive, to interpret success and failure
could be that students with higher natural appropriately, to translate wishes into
ability both perform well and use particular intentions and plans and to shield learning
learning strategies. Other factors, such as from competing intentions. A repertoire of
home background or differences in the strategies combined with other attributes that
schooling environment, may also play a part. foster learning develops gradually through
However, research has identified some the practices of teachers who model learning
measurable learning characteristics of behaviour, through activities aimed at
I 139
building a scaffolding structure of learning insufficiently inclusive socially and

for the student and through analysis of the linguistically, the current status of English
reasons for academic success and failure. stems from its overwhelming presence on the
world stage and the reflection of this in the
The need for feedback and guidance becomes national arena (Graddol 1997). The fact that
paramount for a student while being in the this language is open to various
process becoming effective and self- interpretations (most of it turns out to be
regulated learner. This is required not only on ambiguous though) has led to losing its sheen
the results of their learning, but also on the and charm. This problem can be traced back
learning process itself. In fact, the weakest of to the grass root level when English teaching
the students having poor approaches to began back in the primitive stages. Until last
learning requires professional assistance to 5-6 years students were not able to receive a
become effective and self-regulated learners. conducive atmosphere where they would get
an exposure of the language. So those
Objective students who have groomed themselves into
This research paper is aimed at bringing forth adults now have adapted to such techniques
the components which are creating the wherein they are highly ensconced to being
interruption between the job market and the in their shell. The earlier concept of “pass
management students. This elucidates how without English” has added further miseries
the lack of basic know how of English to the students (Teaching of English, NCERT
language is working as a barricade between by P. Raja Kumar). The foremost facet of
the employable youth and the job market. learning a language is the attitude one carries.
The students feel that they are the best in the
Literature Review
crowd, which has made them believe that
English language in India today is a symbol
they are completely aware about the world
of people’s aspiration for quality in education
around them which is actually little or scanty
and a fuller participation in national and
knowledge about the subject and lack of basic
international life. Its colonial origins have
know-how of carrying oneself while in
now been forgotten or irrelevant, its initial
situations which demand their physical
role in independent India, tailored to higher
presence makes their weaknesses speak
education (as a “library language”, a
louder than their self.
“window on the world”), now felt to be
I 140
understanding, accompanied by a low

According to Mr. M. Murali four language affective filter. This runs counter to the
skills contribute to proficiency as follows: traditional view that conscious learning is
1. Reading - the ability to comprehend and necessary for developing second language
interpret text at the age and grade appropriate linguistic competence. In fact, conscious
level. learning will help learners edit the output of
2. Listening - the ability to understand the the acquired system. The Skill-Building
language of the teacher and instruction, Hypothesis- claims that we first learn
comprehend and extract information, and consciously the language skills such as
follow the instructional discourse through grammar rules, vocabulary, syntax, and
which teachers provide information. spelling and later applying them in real
3. Writing - the ability to produce written text situations by laborious drills and exercises.
with content and format fulfilling classroom The hypothesis assumes that linguistic
assignments at the age and grade-appropriate competence comes from conscious learning
level and the consciously learned knowledge will
4. Speaking - the ability to use oral language help us comprehend a text. Claim is
appropriately and effectively in learning examined with 21 ESL students who attended
activities form-focused classes for twelve years.
[MJAL, vol: 1:1 February 2009 1:1 Teaching Moreover, they believed that grammar and
English as a second in India –a review skill-building were the paths to second
Murali.M] language competence.
However, in language learning grammar
plays a very important role and is the Consciously Learned Knowledge: an
backbone of the language as without overview
grammar language ceases to exist. There are Studies attempted to demonstrate the efficacy
various hypotheses involved in learning of grammar instruction showed only
grammar for language. peripheral effect. The modest gains show that
The Comprehension Hypothesis, (Krashen, more direct instruction in grammar means a
2002, 2003) claims that we acquire language bit more consciously learned competence.
when we receive comprehensible input Furthermore, the conditions for monitor use
slightly ahead of the current level of were met in these studies (Krashen, 2003).
I 141
The Monitor Hypothesis, (Krashen, 1982) Importance of Grammar in Language

which is related to the Comprehension Despite the limitations of using consciously
Hypothesis, clearly states that the following learned rules of grammar, learning grammar
three conditions must be met, in order to use is not a forbidden one. Learning grammar
rules successfully: The acquirer must know through direct instruction can be used to edit
the rule. This is a formidable constraint the output of the acquired language. (Krashen
because rules are very complex to be taught 1981, p.2) claims “utterances are initiated by
and learned, and are often misstated in the acquired system. Our fluency in
grammar books (Murphy & Hastings, 2006). production is based on what we have ‘picked
Moreover, grammar textbook writers do not up’ through active communication. Our
present all the rules; teachers do not teach all ‘formal’ knowledge of the second language,
the rules given in the textbooks; students do our conscious learning may be used to alter
not learn all the taught rules and they do not the output of the acquired system, sometimes
remember all the learned rules. The acquirer before and sometimes after the utterance is
must be focused on form. Generally, students produced”. The monitor hypothesis claims
appeal to conscious knowledge less when that conscious knowledge can be used only as
reading and writing and engage more with a monitor and it does not turn into
rules only when doing grammar exercises acquisition. It is, of course, ‘knowing about’
(Ponniah, 2007). Moreover, students who language.
experienced a rich diet of comprehensible
input engage very less with consciously Grammar Study: A Vital Activity
learned grammar rules even when they are It is believed traditionally that direct
taking a grammar test. In fact, they depend instruction in grammar is a necessary step in
more on subconsciously acquired developing second and-foreign language
grammatical competence (Ponniah, linguistic competence. Teaching grammar is
2009).The acquirer must have time to apply an entrenched habit accepted by both the
the rules. Performers may not have time to student and the teacher and the natural
use rules in real situations. If they overuse approach to language teaching with little or
rules when speaking, fluency will be no grammar is a suspect (Murphy &
seriously hampered. Hastings, 2006). Another reason for forcing
the learners to study grammar is the fact that
I 142
it is assumed that they can acquire language background of the candidates. Secondary
in a short span of time by learning and data has been also referred to cross check the
practicing grammar. Researchers find validity of the identified factors. Purposive
grammar study more fascinating and, sampling and observation method has been
therefore, they have the determination to find used in the study.
a major role for grammar despite the fact that
the skill-building (learning grammar and Data Analysis and Findings
other skills) is a delayed gratification In general the dearth was found wherein the
approach to language education (Krashen, students interviewed had a lot of potential but
2004). The presence of form-focused tests they fell short in expressing themselves. The
encourages curriculum designers to include main reason was found to be the language
more grammar study. In fact, direct barrier. The components being considered
instruction in grammar has resulted in modest are, Attitude, Body Language, Confidence,
gains even on test like performance and, Dressing Sense, Knowledge - about the
moreover, consciously learned knowledge subject, about self, Clarity of thought,
will fade away after a period of time Command Over Language.
(Krashen, 2003). The subjects who
experienced comprehensible input easily According to the HR panel, they found out
outperformed traditionally taught students on that if these factors are taken care off then
form-based tests (Elley, 1991; Lee, Krashen potential of the students could be fully
and Gribbons, 1996). explored.
2000
Frequency
A total of 5000 usable responses were 1500

1000
collected through questionnaire from various 500
HR persons/ Placement officers, from 0
different regions of Madhya Pradesh.

Attributes have been analyzed on the basis of
Performance Scale
suggestions from HR panel and personal
analysis of various job interviews conducted Figure 1: Students' Attitude rating
at varied levels as per the educational
I 143
Attitude is the approach that a student takes Confidence is the positive energy that drives
to any given task. This aspect is found to be an individual to present himself/ herself
really low as more than 70% of the better. Sadly the students in Madhya Pradesh
respondent students were found to be below performed very poorly in this aspect as only
average. 10% of them could figure above average.
2000 2500
Frequency
Frequency
1500 2000
1000 1500
1000
500 500
0 0
Performance Scale Performance Scale
Figure 2: Students' Body Language rating Figure 4: Students' Dressing Sense rating
Body language includes facial expression, For the Figure 4 it is visible that the students
hand movements, posture and gesture. Body have done well as far as their dressing is
language is a clear sign of an individual's concerned. Majority of them are figuring in
state of mind. The students need to improve average to good category. But there is lot of
this aspect as only 20% of them could get scope for improvement.
rating above average.
2000
Frequency
1500
2000
Frequency
1000
1500 500
1000 0
500
0
Performance Scale
Performance Scale
Figure 5: Students' Knowledge - about the
Figure 3: Students' Confidence rating subject rating
I 144
This is a very sad picture as this is the area

the students should have scored better. This Clarity of thought is the processing of
shows that the mushrooming of Management thoughts that helps in forming a logical
institutions has serious deteriorated the sequence. This aspect is linked very closely
education standard in the State. with knowledge and communication skills.
More than 50% students figured below
2500
Frequency
2000 average.
1500
1000
500 2500
Frequency
0 2000
1500
1000
500
0
Performance Scale
Figure 6: Students' Knowledge - about self Performance Scale

rating
Figure 8: Students' Command over
Awareness of self is very important in Language rating
choosing the right path to success. Figure 6

shows that the students of Madhya Pradesh English Language is the official language in
are very poorly informed about themselves. Management and is like a lifeline for the
This challenges their very decision of doing a students. If this not good not only the students
Post Graduation in Management. will lack in expressing themselves but also

will find difficulty in understanding the
subjects and study material. Only 5% of the
2500 respondent students figured above average
Frequency
2000
1500 mark.
1000
500
0
Performance Scale
Figure 7: Students' Clarity of thought rating
I 145
Discussion
The various parameters listed above are
discussed in detail here. A close analysis of
the same has been followed. Attitude-
students feel that they whatever little or
scarce knowledge they have is enough for
them to survive in this competitive era. It is
said that half knowledge is lethal and many
of the cases were found to have a half or
Figure 9: Students' rating over different
uncooked knowledge about the environment
parameters
around them. Body Language- the nonverbal
language that a person speaks through their
It was found that majority of the cases
demeanor conveys a lot about oneself.
identified were facing problems with their
soft skills. Most of them had these skills in
Eye Contact- the eye contact in most of the
the rudimentary phases and it needed to be
students was missing. It was found that either
sharpened. From Figure 9 it can be deduced
the candidate was gazing into the sky or
that the students of Madhya Pradesh have to
looking down so as to avoid any further
improve in almost all of the parameters. The
questions through nonverbal signals. Even
parameters listed in the left side of the half
the simplest of questions could not be
needs critical attention as the figures are very
answered due to this. Facial Expression- the
poor. Many factors which contributed to
faces were seen to be blank in most of the
such a state of these subjects may be
cases. It appeared as if the interview being
attributed to their socio economical
conducted is something that is being imposed
background, environment they witnessed all
upon them. Body Posture- this clearly
through, peers and reluctance to explore other
showed that they are unwilling to participate
options, etc. The basic human tendency to
in the process. Lack of energy and
slacken up a bit at times may have resulted in
enthusiasm in their postures confirmed the
such situation. Lack of exposure can also be
same.
one such incidence which has created such a
scenario.
I 146
Confidence- it is seen usually seen that because of their less exposure, disinterest,
confidence comes after gaining experience. surrounding, society that they belong to, etc.
Many of the candidates interviewed showed
lack of confidence. The major reason can be Command over language- the most important
that these people had their first time facing an and crucial point which matters the most at
interview. Giddiness, stammering, using the time of any interview is the language
fillers this was something which was very skills. The biggest challenge in front of the
evident of the fact that they do not have candidate is to summarize his complete bio-
confidence. Dressing Sense- the way we data in few words. A candidate is having only
dress up shows what kind of persona we few minutes to prove himself or herself in
have. The candidates did not have the precise front of the interviewer, which requires him
dressing sense required for the occasion. It is to be well versed with English language
observed that a person who is well spoken because it is the official language. Present
and well-read is always conscious of his/her Scenario- Students are unaware of the world
appearance as they are likely to be confronted they are living in and they are naïve about
by people, whereas on the flip side people themselves, knowledge about the need of the
who try to evade such situations do not bother Market and their position in the Market is
about their looks. keeping them aloof of the facts around.
Knowledge- this does not only revolve

Conclusion
around the academic knowledge but also
Students of Madhya Pradesh at large were
about self and their clarity of thoughts. A
found to have those skills but in an
major chunk of the subjects failed to
unpolished state. A proper grooming and
understand even the nitty gritty of the
training will serve the purpose and will bring
academics and it appeared that knowledge is
out the best in these individuals. The
acquired only to achieve a short term goal.
language constraints that these people are
Majority of the students have never been
facing will no more be a hindrance in tapping
pointed out about their plus and minus points
their potential. Adequate exposure is the need
and further to that they themselves have
of the hour. If candidates are given an
never analyzed about the same. This may be
opportunity to explore their talents then there
would be no two ways about them
I 147
performing better in their respective area. Baird, J. R. (1988), Quality: what should make higher
education higher?, Higher Education Research
This research paper aims at understanding the
and Development, Vol 22, pp 141-152.
gap between the actual job market and the
Burnett, P. & Dart, B. (2000), The study process
employable youth in the state. This can give questionnaire: a construct validation study,
way in understanding other issues like Assessment and Evaluation in Higher
problems faced by students in post graduate Education, Vol 22, pp 93-99.
David Crystal (2003), English as a Global Language,
levels due to lack of English know how, how
Retrieved 27 January from
the admission is made available to such
http://www.sprachshop.com/sixcms/media.php
students even though they seem to /811/English_as_a_grobal_lang_sample_ch.p
underperform or it can also help in df
researching about the psychology students Entwistle, N. (1991), Approaches to learning and
perceptions of the learning environment,
have towards developing English language.
Higher Education, Vol 22, pp 201-204.
Gibbs, G. (1992), Improving the quality of student
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I 149
The impact of growth of resorts on the sustainability of hill stations;

with reference to Nainital Lake region, Uttarakhand
Mahendra Singh Negi*, Swati Mahara**, Tripti Singh***
*Asst. Professor, Amrapali Institute Of Hotel Management, Lamachaur, Haldwani – 263139, Nainital, Uttarakhand
**Asst. Professor, Amrapali Institute Of Hotel Management, Lamachaur, Haldwani –263139, Nainital, Uttarakhand
***Lecturer, Amrapali Institute Of Hotel Management, Lamachaur, Haldwani – 263139, Nainital, Uttarakhand
Abstract has adversely affected the biodiversity and

The rising tourism industry lured the land ecology of the area, resulted in deforestation
sharks in the Nainital lake region and they as well as exhausted the water resources.
erected resorts/ hotels, flouting all The lack of proper drainage and waste
environmental norms. Hundreds of such management system has added to the woe of
resorts and hotels have mushroomed in this the local community. Increase in human
eco-sensitive zone in the last few years. The encroachment has severely damaged the
study shows how the Nainital lake region ecological system of the area. The intense
has been severely affected due to the and unplanned construction that has been
exponential growth of resorts and going on in its limited space has completely
urbanization. changed the face of the region. Hence it
A field based systematic survey was carried becomes crucial for the state government to
out on the basis of questionnaire to find out regulate tourism and bring down the illegal
the problems and the data was calculated construction that has wreaked havoc on this
using factor analysis, discriminant analysis region.
for the logical interpretation and practical Keywords
inference. It also provides suggestive Resorts, Urbanization, Ecology,
measures based on the findings for the Biodiversity, Sustainability
sustainability of ecology and biodiversity of
the Nainital lake region. Both primary and Introduction
secondary sources of data collection were Nainital, a popular hill resort of Kumaun
also being used. Findings revealed that the Himalaya, is developed around a 1.4 km
growth in resorts during the last few years long and 0.45 to 0.25 km wide lake and
I 150
having a maximum depth of about 27m. The the lack of well managed waste disposal and
lake is situated at an elevation of 1935 m at drainage system that negatively impacts the
the prominent Naina Peak towards north of Naini Lake which forms the very basis of
the lake. Nainital has temperate summers tourism in this area. The paper focuses on
(maximum temperature 27°C, or 80°F; the positive and negative impact of growth
minimum temperature 10°C, or 50°F) during of resorts with increasing tourist inflow in
which its population increases more than Nainital. The growth of resorts has to be
fivefold with an annual influx of tourists compatible with the maintenance and
predominantly from the plains of Northern enhancement of ecological balance,
India. Nainital is situated in the Shiwalik biological resources and their diversity so
range of the Himalayas and by the virtue of that the capacity of the environment to
its geographical settings it is vulnerable to regenerate itself is not impaired.
ecological changes and is prone to disasters.
Even a minor change in the ecosystem due Study Area
to the incessant construction of resorts may Nainital which is popularly known as the
trigger a disaster that may result in great loss Lake District holds an important place in the
of life and property. Nainital has very poor map of Uttarakhand. It located on the outer
soil stability, hence construction of resorts margin of central Himalayas, is 34 Kms
results in landslides during monsoons. from Kathgodam, and 304 Kms from the
Growth in resorts is a result of increased New Delhi. Nainital is the headquarter of
tourist inflow in the region. Given the tourist Nainital District and is also the divisional
importance of Uttarakhand and issues headquarter of Kumaon Division of
related to threats to its ecosystem, there is Uttarakhand. Nainital has a varied
not sufficient information available in this topography. According to the District
area. The paper focuses on the impact of the Gazetteer, Nainital is situated at 29 degree
growth of resorts on the sustainability of 24' north latitude and 79 degree 28' east
Nainital lake region as well as attempts to longitude in a valley of the Gagar range
establish a subtle relationship between running east and west, which is bound on
construction of resorts and its various the north by Cheena Peak (8.568 feet),
implications on the host community in continued by Alma Peak (presently known
Nainital. It further takes into consideration as Snow-View) and the Sher-Ka-Danda to
I 151
the eastern extremity, where the ridge after honeymoon destinations in the country
descends almost to the level of the lake. On for its splendid locales and panoramic view
the west, the rugged hill of Deopatha rises to of the lake and Himalayas. Nainital’s
a height of 7,987 feet, and on the south unending expense of scenic beauty is
Ayarpatha attains an elevation of 7,461 feet nothing short of a romance with awe-
diminishing gradually towards the east. The inspiring and pristine Mother Nature but
most prominent lake of Nainital is Naini now Nainital is a prime example of Lake
Lake surrounded by hills. Tourists flock Township that has been severely impacted
from all parts of the country to visit Nainital by incessant mushrooming of resorts and
all year round to bask in its natural beauty. hotels owing to growth in tourism.
The best time to visit Nainital is from April
to October. It is also one of the most sought
Figure 1. Map of Nainital Lake Region

Source: Municipal Corporation,Nainital
I 152
Literature Review have studied the landslide problem of the

The Kumaun Hills came under British rule town time and again. R.D. Oldham (1880)
after the Anglo-Nepalese War (1814-16), was the first to investigate into the causes of
but the hill station town of Naini Tal was failure of the slopes in the Nainital valley.
founded only in 1841, with the construction The area around lake is occupied by the
of the first European house (Pilgrim Lodge) rocks of Krol formation. The Lower Krol
by P. Barron. In his memoir, he wrote: "It is formation is represented by thinly bedded,
by far the best site I have witnessed in the sheared, variegated slates/shales, marls with
course of a 1,500 miles trek in the subordinate bands and lenses of limestone
Himalayas." In 1846, when a Captain which are mainly exposed in the eastern and
Madden of the Bengal Artillery visited northeastern parts of the lake basin. The
Nainital, he recorded that "houses were western, southwestern and southern portions
rapidly springing up in most parts of the of the area are occupied by
settlement: some towards the crest of the limestone/dolomite and red shales of Middle
limitary ranges were nearly 7,500 feet above Krol and Upper Krol members and slates
sea level: the rugged and woody Ayarpatta and phyllite of Tal formation. The
was being gradually planted and that the prominent faults in the lake area are; Lake
favourite sites were on the undulating tract fault (NW-SE) and Sherwood fault (WNW-
of forest land which stretched back from the ESE). A number of other faults and fractures
head of the lake to the base of China and trending NE-SW, NNE-SSW, E-W, WNE-
Deopatta (Camel's Hump). The Church, St. WNW have been demarcated in the area on
John in the Wilderness, had been built ...” the basis of break in slopes, topographic
Soon, the town became a health resort scarpments and swing in the strike
favored both by British soldiers and by directions.Hill slopes around Nainital lake
colonial officials and their families trying to basin have undergone the process of mass-
escape the heat of the plains. Later, the town wasting from time immemorial. The area
also became the summer residence of the also falls within the zone IV (High damage
Governor of the United Provinces. risk zone) of the Seismic Zoning Map of
India prepared by Bureau of Indian
In view of the importance of the town as a Standard, New Delhi. Very large landslides
popular hill resort, several earth scientists have taken place in and around Nainital
I 153
especially during the years 1867, 1880 and and, instead of it, just spread it over
1924. The landslide of 17 August 1898 hillsides. There are few persons who dump
(Middlemiss, 1898) occurred following 102 the cut soil in nearby streams. Theses
cm rainfall for 8 days bringing down the streams carry the cut soil to the lake.
upper part of Kailakhan spur where Infra Different types of slope movement threaten
Krol slates are exposed. It has been reported the urban development in different areas.
that the debris avalanche that surged across ‘Safe’ and ‘dangerous’ areas for the
the valley buried the Birbhattiarea and construction of buildings were demarcated
wiped out old cart road. Naina Peak area by Nautiyal (1949). Subsequent work by
and Snow view-Fairy Hall area on Sher-ka- Hukku and Jaitely (1965-66), Srivastava
danda slope have been continuously ravaged (1967-68), Ashraf (1978), Jaitley (1979-80).
by the landslides of varying proportions. Pant and Kandpal (1988-89) evaluated the
The extent of landslide hazards is thus stability conditions around the lake.
expanding progressively. Old landslide
scarps could be observed on the higher The delicate ecology of Nainital lake region
slopes all around the area. All these has taken millenia to develop and it will take
evidences of slope instability seem to be the only a few years to completely destroy it.
results of mismanaged construction The soil of the region is young and thin and
activities which have crossed the ultimate the poor soil stability makes it especially
limit of carrying capacity of the town vulnerable to sudden environmental
ecosystem. Construction activity in hill areas changes. The incessant construction of
involves a lot of surface cutting , which resorts and other tourist-related development
disturbs the angle of repose of an old have had a severe impact on the fragile
unstable surface which again ecology of the region. It has severely
reactivates. Further, removal of the cut soil affected the flora and fauna of the region. In
from the site to certain approved dumping clearing the hills for construction, the resort
ground involves high transportation costs. developers destroyed nearly 60% of the
But over the recent years people have found forest area. Nainital lake region is home to
an easy solution to this problem through various species of birds and other wildlife as
their ingenuity. They even do not bother to well as vegetation that exist in very few
remove the cut soil to the approved places places. Some rare migrating bird species
I 154
which used this region as their resting Rawat in his book "One Hundred and Fifty
station are fast disappearing. Resorts also years of Nainital", says that the throwing of
rely upon water and soil resources that are plastic bags and dumping of other materials
vital to the sustenance of the community. have added to the woes of the Naini lake.
Political battles erupt over users' rights as The growth in number of resorts and a big
developers and locals compete for common influx of tourists has contributed much to
resources. The developers have moved the environmental degradation. This raises a
truckloads of topsoil from higher elevations critical question concerning how people are
and this practice has ravaged flora and fauna affected when their natural resources are
as well as the potentially valuable threatened or depleted. There are already
agricultural land. residual signs that this process has been set
in motion. Resorts tend to change the
A large part of the Nainital area is occupied complexion of a community as outsiders
by the debris/overburden material of recent flock the region in search of work. Growth
to sub-recent age. The debris is derived in population can be observed in any of the
mainly due to recurring landslides and slope popular resort areas found in the hills. If the
wash all along the hill slopes. Number of construction of resorts is not curbed there
landslides scars (palaeo scarps and active will be continual rise in population of the
scarps) is found in the area. The region is area as a result other parallel development
also fed by hundreds of underground fresh concerns will need to be addressed. For
water springs that are believed to have example, transportation becomes an issue
healing powers. These springs are with more people or tourists commuting to
disappearing as a result of construction in and from the region. Consequently, the face
the region. Another matter of concern is the of the community and the lifestyle are
lack of proper disposal and drainage system. dramatically altered. Wealthy investors and
The resort owners do not resort to green land speculators think in terms of good
tourism and do not have a proper system of investments and the more picturesque the
disposing waste. There is no proper drainage location the more likely it is to draw tourists.
system and all the waste and dirt is usually Over the years, the growing resorts in the
dumped in the lake which is the main source region have deprived the local community of
of water for the local population. Dr. Ajay their previous access to natural resources.
I 155
Objective
The paper aims at studying how the growth Analysis And Findings
in the number of resorts affects the ecology, The data collected and qualified were put
biodiversity and environment of the Nainital through various rigorous tools for analysis.
lake region. In order to identify the major factors among
the many, factor analysis was conducted.
Research Methodology Table 2 explains that eight factors have been
In order to assess the impact of growth of identified in factor analysis which have a
resorts in Nainital lake region, a field based significant influence on the issue of
systematic survey was carried out. development of resorts in the area. Among
Information has been collected on the basis the Identified Variables which are grouped
of questionnaire and interview method from based on significance (major variables)
tourists, local community, tourist officials ‘need of control on resort development’
and workers engaged in tourism industry. explains 25.91% impact of resorts on local
Reports published by Ministry Of Tourism resources’ contributes to 16.82%. ‘Clean
(Uttarakhand Government), Kumaon environment decides tourist arrivals’ explain
Mandal Vikas Nigam (K.M.V.N) and media 13.45%. In order to get a deeper insight in to
reports were also taken into consideration to the influence of individual identified factors,
complete the study. Questionnaire collected further analysis was conducted using
were quantified and analyzed using SPSS discriminant analysis as shown below in
19.0.Some of the tools used for data analysis Table 3 that explains the ‘need of control
include factor analysis, discriminant analysis on resorts has a canonical correlation of
etc. Compound Annual Growth Rate 0.926, which means 86 % of the variance in
(CAGR) has also been calculated to know the dependent variable is explained by the
the growth rate in tourist inflow at Nainital Model. Similarly ‘tourism and pollution’
The discussion part of the study has been group has a canonical correlation 0.954,
prepared by combining the quantitative which indicates 91% of the variance is
results and subjective expressions of the explained by the dependent variables by the
respondents, along with a comparison of model. ‘Impact of resorts on local resources’
ongoing trends in growth of resorts in group has a canonical correlation of 0.980
Nainital. which indicates 96% of the variance is
I 156
explained by the model. ‘Issues of waste and corresponding issues’, ‘restricting

management’ group represent a canonical tourist activities’, ‘clean environment
correlation of 0.984, which indicates 97% of decides tourist arrivals’, ‘resorts and
the variance is explained by the dependent pollution’, ‘issues of waste management’,
variables by the model. The findings of the ‘awareness on waste management’,
factor analysis could be grouped into eight ‘awareness on preserving underground fresh
major factors. These are ‘Impact of resorts water springs.
on local resources’, ‘need of control on
development of resorts’, ‘growth of resorts
Table 1: Total Variance Explained

Component Initial Eigen Value Extraction Sums of Squared Loadings
Total % of Cumulative Total % of Cumulative

Variance % Variance
1 12.697 25.913 25.913 12.697 25.913 25.913
2 9.121 18.614 44.527 9.121 18.614 44.527
3 8.245 16.827 61.354 8.245 16.827 61.354
4 6.591 13.450 74.804 6.591 13.450 74.804
5 4.525 9.235 84.039 4.525 9.235 84.039
6 3.063 6.251 90.290 3.063 6.251 90.290
7 2.571 5.246 95.537 2.571 5.246 95.537
8 2.187 4.463 100.000 2.187 4.463 100.000
Table 2: Common factors Identified from factor analysis

Sl. No Factor Valid % Cumulative
%
1 Need of Control on Development of Resorts 25.91 25.91
2 Growth of Resorts and Corresponding Issues 18.61 44.25
3 Impact of Resorts on Local resources 16.82 61.35
4 Clean Environment Decides Tourist Arrivals 13.45 74.80
5 Restricting Tourist Activities 9.24 84.04
6 Resorts and Pollution 6.25 90.29
I 157
7 Issues of Waste Management 5.25 95.54

8 Awareness on Preserving Fresh Water Springs 4.46 100.00
Table 3: Discriminant Analysis

Factors Eigen Canonical % of Wilks Chi Sig. Level
Value Correlation Variance Lamda Square (at 95 %)
Need of Control On 6.000 0.926 100.0 0.143 59.350 0.000

Development of Resorts
Impact of Resorts on Local 24.667 0.980 100.0 0.039 98.978 0.000
Resources
Resorts and Pollution 10.111 0.954 100.0 0.090 73.442 0.000
Issue Of Waste Management 30.111 0.984 100.0 0.032 104.846 0.000
Activities such as boating and rafting, when
Impact of growth of resorts on carried out without any regulation, pose a
biodiversity and ecology threat to fragile lake environment, hence
Nainital lake region is rich in biodiversity, it water quality of Naini lakes is adversely
is blessed with a variety and abundance of affected. This can prove to be fatal to many
flora and fauna. Rapid increase in the aquatic animals and plant species. Noise
number resorts has impacted the ecology pollution and wave action of the boats can
and environment of Nainital lake region harm banks and over time can cause
negatively. Pollution and sedimentation pose irreparable damage to their micro ecology.
the greatest threat to the aquatic biodiversity Large number of tourists visiting Nainital
of the lakes. Siltation from overexploitation every year put a lot of stress on local
of reeds and fish, water pollution pose a resources. This means demand for the
significant threat to the surrounding flora construction of resorts/ hotels and other
and fauna. These problems largely arise relative infrastructure, which adversely
from the cumulative impacts of human affects the ecology and also becomes a
activities taking place within lake basins. source of price rise of land in the region.
Lack of proper waste management system Table No. 4 and 5 shows that there has been
and poor drainage system adds to water a drastic increase in the number of hotels,
pollution. Most of the dirty water and waste shops, residences and bungalows converting
from the resorts is dumped into the lake. Nainital from a beautiful hill station into a
I 158
concrete jungle. It has also increased the 250

price of products of daily requirement like 200
grocery and food items. The growth of 150

100
resorts as a result of influx of tourists has
50
resulted in the local community competing 0
for electricity and water. There has been a 2010 2011 2012 2013 2014 2015
serious shortage of water for the locals in the Figure 2: Growth in Resorts
past few years. Different forms of Sedimentation and soil erosion as a result
anthropogenic pressure on the Nainital lake of construction:
region have also been observed such as: Naini Lake is a fragile ecosystems
threatened due to increased construction.
Table 4: Anthropogenic pressure in Nainital Growth in the number of resorts (due to
S. Indicators Information Information increase in tourism activity) which is more
No. as on 2010 as on 2015
than the carrying capacity here has altered
1 Permanent 39630 42,333
the ecosystem processes and resulted in
population
2 Number of 165 198 several threats to lakes including loss of
Resorts/ biodiversity, over-fishing, eutrophication,
Hotels proliferation of invasive weeds, siltation,
3 Number of 1166 1300
toxic contamination and over extraction of
shops
water. Lakes are closed ecosystems, hence
Source: Municipal Board, Nainital
pollution tends to accumulate there. High
Table 5: Growth in Resorts from 2010-2015
rate of water pollution and silting of the lake
Year Resorts/ CAGR
are causes of very serious concern. Naini
Hotels
2010 165 00 Lake has been very adversely affected by
2011 172 4.24 increased turbidity of water and presence of
2012 180 4.65 waste material and garbage on the surface.
2013 185 2.78
Owing to continued silting, it has reduced its
2014 191 3.24
capacity to hold water and their mean depth.
2015 198 3.66
The problem of sedimentation leads to water
Total CAGR 3.71%
Source: Municipal Board, Nainital shortage and non utilization of reservoirs
and depletion of resource base of the
I 159
country. Carbonate rock litho logy, which is which results in scarcity of potable water in
more susceptible to weathering, high and around city as Nainital lake is also a
precipitation and frequent landslides source of potable water supply in the region.
accounts for a higher sedimentation rate in Many recharges and sources of spring water
Nainital lake (0.69cm/year) (EERC Report, of Naini lake have been severely affected by
2002). Besides these natural factors heavy the construction of resorts and mass tourism
anthropogenic pressure like increased as shown in Table No 6 and Table No 7.
construction and construction based Rapidly developing travel and tourism
activities further increased it. Between 1895 pattern of the modern period led to the large
and 1979 the mean depth of Naini Lake has scale commercial exploitation of natural
reduced from 21.43 to 18.55 m. During resources and environment. It has caused
summers lake gets dry to a great extent considerable stress on environment.
Table 6: Condition of Spring Water

S.No Location of Spring Altitude (ft) Status in 1936 Current Status
1 Spring Field 6675 Perennial Perennial
2 ChunaDhara 6550 Perennial Dry in summer
3 Spring Field Cottage 6550 Perennial Perennial
4 Rajpura 6525 Perennial Low discharge
5 Near Lake View 6730 Perennial Low discharge
6 Near Mount Rose 6575 Perennial Dry in summer
7 Near Bhabar Hall 6375 Perennial Little water, still alive
8 PardaDhara 6100 Perennial Perennial
3 Sleepy 10872 Area reduced by 35%
Table 7: Recharge Areas of Nainital Lake Hollow

4 Near 4597 Area reduced by 15%
Region
Dalhausi
S. Recharge Total Current Status
Villa
no Areas Area m2
5 Sherwood 4790 Area reduced by
1 Sukhatal 33369 A major car parking
50%, due to car
and settlement
parking
reduced the area by
25%
2 Oakpark 13220 Area reduced by 35%
I 160
Human encroachment and its adverse bottles, disposable glasses, plastic bags),
impact wildlife accidents with tourist vehicles,
The current human population of the lake noise pollution, crimes, fight among locals
town is 42,333 (as per census 2015) it has and tourist are the matter are also commonly
seen a compound annual growth rate of observed imposing threat in sustainability of
mere 0.68% from the last census held in the the lake region. Naini Lake is subject to
year 2010 where the population was 39,630. rapid population growth, urbanization,
Increase in human encroachment has industrialization and mining development,
severely damaged the ecological system of growth of irrigated agriculture in the
the area. There are growing concerns over surrounding region and impact of climate
the impact of sewage discharges and waste change. The situation is further aggravated
disposal system from resorts and hotels in due to severe energy and water crisis.
the lake which has imposed a great threat to Further, there has been a notable change in
aquatic life. Poorly designed resorts/ hotels, climate over the years due to persistent
badly planned layout of facilities, inadequate environmental degradation brought about by
landscape, use of large and ugly advertising increased construction and tourism
hotels and restaurant designs is sometimes activities.
not in harmony with the environment. The Waste Management System
beauty of the landscape gets spoiled and the The Municipal Solid Waste collection in
skyline undergoes abrupt and ugly. Nainital is not well organized due to lack of
Deforestation due to cutting of trees for infrastructural facilities as well as awareness
construction of resorts, roads and better among the citizens and availability of
infrastructure has resulted in landslides that trained manpower. The practice of littering
are now commonly seen in the area. Damage and burning waste is very common. Table
to historic sites due to overuse and misuse shows the various sources and quantity of
by tourists, non biodegradable litter (plastic waste generated.
I 161
Table 8: Sources and Quantity of Waste Generated

Description Population/ Per Capita Unit Total waste
Shops/Beds Waste (kg/day)
Generation Rate
Permanent Residential 50,417 0.25 kg/capita/day 12604.15
Population
Hotel Waste (No. of 9,653 1 kg/room 9652.50
Rooms)
Restaurant waste 165 5 kg/restaurant/day 825
Institutional Waste 6,760 0.1 kg/capita/day 676
Waste generated by 25,138 0.05 kg/capita/day 1256.9
Tourists and day time
tourists
Source: Tourism Department, Nainital
Table 9: CAGR of Tourist Arrivals in
Nainital from 2010-2015 Table 10: Foreign Tourist inflow in Nainital
Number
CAGR
since 2010
Year of
in %
Visitors Foreign
CAGR
2010 749556 0 Year Tourist
in %
Arrivals
2011 786541 4.93
2010 7891 0
2012 834117 6.05
2011 7122 -9.75
2013 886033 6.22
2012 9410 32.13
2014 924530 4.34
2013 8256 -12.26
2015 992654 7.37
2014 8598 4.14
Total CAGR is 5.78%
2015 9276 7.89
Total CAGR is 3.29 %
1500000
1000000
500000
0
2010 2011 2012 2013 2014 2014
Figure 3: Tourist Inflow in Nainital 2010-

2015
I 162
10000 NGOs and schools in the area. The major
8000 requirement is a collective effort on the part
6000 of local population which has been lacking
4000
in the region. Increase in Tourism has
2000
resulted in traffic problems, increase in
accidents, land encroachments, health
0
2010 2011 2012 2013 2014 2015 problems etc. The Ecosystem of the Nainital
Figure 4: Foreign Tourist Arrival in Nainital region is under danger due to increased
2010-2015 presence of change in landscape brought
Source: Tourism Department, Nainital about by large scale construction of Resorts/
Hotels. For the sustainable growth in
Suggestions Nainital, tourist activity has to be restricted
Rapid growth of resorts in Nainital lake for the preservation of local ecosystem and
region has degraded the ecological system the culture of the area since it is found that
and bio-diversity of the region. Uncontrolled development in tourism activities has led to
Tourist inflow has increased non- a change in lifestyle of people living in the
biodegradable waste. In addition to this, the locality. Forest areas should be conserved
hotels and resorts do not have proper recycle and properly managed. Afforestation should
mechanism. The local people are found to be be carried out in over exploited areas.
increasingly concerned about the growing Recharges and sources of water for the lake
level of pollution due to plastics and and small canals which brings rain water in
inefficient and ineffective waste the river should be cleaned and repaired and
management mechanism. Severe shortage any encroachment over them should be
and poor Quality of Supplied water is immediately removed. Strict regulation and
adding fuel to the burning issues of health monitoring should be done so that waste
and sanitation. Tourism industry in Nainital disposal, plastic bags, cigarettes and other
is also under threat due to unhygienic waste material should not be thrown in lake
conditions and not so clean environment by the tourists, hotels, resorts and the
prevailing in the region, even though pilgrims who visit Naina Devi temple during
government has been taking initiatives to Nanda Devi festival and on other religious
protect the environment, along with various occasions. However State Government had
I 163
banned the use of polythene bags in Nainital should have proper drainage system to
but it should be strictly implemented. The ensure that oil and other pollutants are
architectural design of resorts and hotels directed to sewer lines and these sewer lines
should confirm to the local landscapes. All are directed out of the watershed so that oil
designated motor vehicle parking places and other pollutants will not enter the lake.
Conclusion oxygen level in Naini lake has reduced
Nainital, a beautiful hill station is gradually leading threat to many fish species, however
turning uglier as a result of increased by the joint venture of Government and
urbanization, construction and tourist influx, N.G.O’s to increase the oxygen level of
though we cannot deny the fact that resorts Naini lake water treatment system has been
and hotels are the major sources of revenue planted in the lake. Water Supply here is not
and employment for the local community. regular and supplied water is not drinkable.
Taxes from the hotels, resorts and other Increased tourist traffic increased the
service providers etc. are a huge source of demand for pure drinking water. Domestic
revenue. The volume of tourism business waste, waste generated from towns, hotels
brought to the district is also quite huge. and other sources create unhygienic living
Lakeside resorts are mushrooming conditions. Water stagnation, lake pollution
increasingly. Tourism directly caused an and inland water channels act as breeding
increase in the land value in multiple levels. ground for infectious diseases.
Real estate business and investors in tourism Sedimentation, deforestation, landslides are
eyed Nainital which indicate the estimation the major threat found here.The sustainable
of business opportunities in the region. development of Nainital lake region is
Several issues have already been brought in possible only when there is combined effort
the notice of administrators and the public. of public sector and the local public where
The Lake Development Authorities have the service providers take the responsibility
been established by the State Government to of creating awareness about the environment
preserve and manage the lakes within their to the visitors hence curtailing the threats
jurisdiction. Pollution level has increased imposed by resorts and tourism. The
due to increase in pollutants released by Government has already banned further
hotels and resorts in Nainital. Excessive construction in Nainital lake region but there
level of pollution also affected aquatic life, is no control on the illegal construction that
I 164
is happening in the surrounding areas. pp. 135-55.In Pearce. D.g. and Butler,
R.w.(eds) Tourism Research: Critique and
Hence the government must take strict
Challenges, London: Routledge..
measures to ban construction in the
7. Butler, W.R. (1999). Sustainable Tourism, a
neighboring areas as well. Suitable state of the art review, Tourism geographies,
monitoring will ensure effective usage of 1 (1), 7-25
local resources, regulating the pollution 8. Clarke, J (1997) framework of Approaches
to sustainable development. Journal of
levels and managing the waste. Moreover it
Sustainable Tourism, 5 (3), 224-232
will also inspire the resort owners and the
9. Eagles, P. (1995): Understanding the
local public to actively participate in market for sustainable tourism. – In:
preserving and protecting the ecology and McCool, S. et al. (1995): Linking tourism,
natural resources. the environment and sustainability.
10. EERC report Integrated Management of
water resources of Lake Nainital and its
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I 166
Time Management in B.O.T. Road Project through Effective
Implementation of Project Management Process- A Case Study
Rajesh Kumar*
*Project Director, Indore-Dewas Tollways Ltd., Indore & Research Scholar,U.P.E.S.,Dehradun.

Email: rajesh.me.kumar@gmail.com
Abstract the case study of Six lane BOT Road

project, thus tries to represent major reason
Due to tremendous growth in the road traffic of time overrun on BOT Road project
and availability of limited public fund, BOT despite of effective implementation of
Road Project has become recent need of our Project Management. This case study will
nation. The BOT Road Project is a give the clue to minimize /avoid time
nonrecurring endeavor with definite start overrun in existing and future BOT Road
and definite finish date. Strict Time project.
Management and effective implementation
of Project Management process is playing a Key Words
vital role in the successful delivery of BOT Road Construction, Time Management,
Road project. Now a days many BOT Road BOT, Project Management Process
projects are facing time overrun. Frequent
delay in the BOT Road project has provoked Introduction
most of the concessionaires/operators to
escape away from the existing BOT Road Road Infrastructure in India
Project and they are also not showing much Road Infrastructure is the backbone of
interest in the bidding of the future project. Indian economy. An efficient transportation
The aim of this paper is to investigate the system is critical for sustaining economic
prevalence methodology of Time growth and the burgeoning demand for
Management (Time estimation, Resource passenger and freight movement. Easy
estimation and Scheduling) in BOT Road accessibility, flexibility of operations, door-
Project in India. This paper by presenting to-door service and reliability has earned
I 167
road transport an increasingly higher share Rs. 3000 crores for Road construction in
of both passenger and freight traffic with North East. In 2014-2015 Union Budget,
respect to other transport modes. There is an there is proposal to construct 8500 Km
immense need for good interconnected Road National Highway. In the Union Budget
network to cater the need for increasing 2015-2016 of India, there is annual outlay
traffic and for economic development of the plan of Rs 42912.65 crores for Road
country. A completed Road project is infrastructure and out of which Rs. 22920.92
booster for the burgeoning economy and it crores has been allocated for National
facilitates the transport movement across the Highway construction (Expenditure Budget
nation. Indian Road network is second Vol. 1, 2015-2016).
largest network in the world and it consists .
of total of 33.0 Lakh Build, Operate and Transfer (B.O.T.)
Kilometer(approximate) of Road network approach in Road Project
comprises 200 Km of Expressway, 96260.72
Km of National Highway,1,31,899 Km of With the growing traffic in our country, only
State Highway,4,67,763 Km of Major public investment is not adequate to
District Roads and 26,50,000 of Rural and construct required length of roads. Due to
other Roads. About 65% freight and 80% of insufficient availability of public funds in
the passenger traffic is carried out by Roads. our country, Build, Operate and Transfer
National Highway constitutes only 1.7% of (B.O.T.) approach is adopted to construct
Road network and carrying 40% of the total Roads to bridge the gap between demand
Road traffic (www.nhai.org). Transport and supply. Under this frame work, Private
sector accounts for share of 6.4% of Gross sector involved in this arrangement is having
Domestic Product of our nation, and Road the obligation to design, finance, builds,
transport is an dominant sector of Transport operates and maintain the Project Road for
sector with a share of 4.5% of India’s GDP the fixed concession period and at the end of
(Eleventh Five Year Plan). The Road sector which it is transferred to the
needs huge amount of investment. In the Government/Public Authority. Private
Union budget 2014-2015 of India, Rs. 37880 operator is responsible for all the costs and
crores has been proposed for National risks associated and enjoy the revenue as
Highway and State Highway which includes well. Under B.O.T. type of arrangement,
I 168
Government or Public authority grants a Private Sector- Service related
concession to Private firm to collect the Toll performance based contracts (BOT,
from Road users for the entire concession Annuity, O &M)
period excluding construction period.(for
development of four lane to six lane the Recent studies indicate that Asia, Europe
construction period is not excluded from and North and South America lead the world
concession period). B.O.T. type of contract today in using PPP for Road Projects with
in Road construction is one of the types of Private partners increasingly assuming
contract under Public Private Partnership higher risk, responsibility and rewards.
(PPP). The evolution of PPP in the Road Between 1985 and 2004, the number of
sector is best described through the tolled PPP Road Projects in the world is
following stages (Joshi, R.N., 2010). planned or completed exceeded 450 in
numbers with concession and BOT having a
Stage I: Public Sector- Client, Contractor predominant share of 367 out of 450(Joshi,
(Labor, Material and equipments) and R.N., 2010).
Engineers
Public Sector- All in all B.O.T. in Road infrastructure offers many
Stage II: Public Sector- Client, Engineer type of advantages (Joshi, R.N., 2010)
and supplier of Material and equipments  Since the project is wholly or
Private sector- Essentially labor substantially funded by Private
Provider capital, the Government is absolved
Stage III: Public Sector- Client and from levying new taxes to finance
Engineers the project.
Private Sector- Contractor (Labor,  Private firms are considered
Material and Equipments) efficient, economical and endowed
Stage IV: Public Sector- Only Client with better management style than
Private Sector- Contractor (Labor Public authorities.
Material and Equipments), Engineers  Since the project is given on a build,
Stage V: Public Sector- Only Client operate basis, it provides better
incentives to build a road that lasts
longer
I 169
 Once the Road Project is in in successful delivery of their
Parastatal mode people expect nil or obligations).
negligible charge for its use.  Concessionaire (Responsible for
Whereas if the same facility is with Design, Build, Finance (equity
private sector, which has financed it, +debt), Operation and Maintenance
cost based tolls are easier to justify of the Project).
to the public.  Project Management Consultant
 Under the concession approach only (Working on behalf of
a project that withstands the test as concessionaire and assist the
per economic laws of demand and concessionaire in successful delivery
supply will be acceptable to the of their obligation except direct
private party. These rules out the involvement in execution in the
probability of executing nonviable Project).
project due to political compulsion.  Lenders (Responsible for financing
 It is just equitable that those who the project in the form of debt).
benefits from the project in terms of  Lender Engineers (Working on
saving in time and cost must pay for behalf of Lenders, Responsible for
it. checking viability of the project and
certifying the Interim Payment
Major Stakeholders in the B.O.T. Road Certificate raised by the
Projects are concessionaire on periodical basis).
 Client (Responsible for Approval of  E.P.C. Contractor (Responsible for
design & Drawing, Contract Engineering, Procurement and
Management, Administration and construction in the Project).
Monitoring of the Project, assist the
concessionaire in obtaining the Time Management and Project
statutory permission and disbursing Management Process in BOT Road project
the payment for Land acquisition and Project Management is the application of
utility shifting). knowledge, skills, Tools and techniques to
 Independent Engineers (Working on the project activities to meet the Project
behalf of Client and assist the client requirement. Project Management is
I 170
accomplished through appropriate essentially involves the following process (
application and integration of 42 logically IS :15883 part2,2013).
grouped project management processes  Time Planning
comprising the five processes group are:  Time Monitoring
Initiating, Planning, Executing, Monitoring  Time Control
and control and Closing(POMBOK Guide-
Fourth Edition,2008).There are following 13 The procedure for above process involve the
nos. of Construction Project Management following steps for Road project
Knowledge area applicable to Road  Defining the Scope
construction Project (Construction  Activity duration estimation
Extension to PMBOK Guide-2000 Edition)  Activity sequencing with
 Project Integration Management interactivities dependencies
 Project Scope Management  Project Schedule development
 Project Time Management  Project Schedule Monitoring and
 Project Cost Management Control
 Project Quality Management
 Project Human Resource The entire Project schedule is dynamic and
Management requires periodic monitoring, control and
 Project Communication Management updating of the schedule ( IS : 15883
 Project Risk Management part2,2013). Project Scope of BOT Road
 Project Procurement Management project is defined from Concession
 Project Safety Management Agreement. Project scope is further divided
 Project Environmental Management into different component called Work
 Project Financial Management Breakdown Structure (WBS) as per the
 Project Claim Management approved Drawing and construction

methodology. WBS is further divided into
Project Time Management includes the different activities in hierarchic order as per
process required to manage timely the approved construction methodologies.
completion of the project (POMBOK Guide- Estimation of quantities of construction
Fourth Edition, 2008). Time Management material for each activity is done as per the
approved drawing. Dependencies of each
I 171
activity of the project on other activities complex exercise. Though the estimation
including lead and lag is determined. Time techniques have become better and
duration of each activities and Resources sophisticated in recent times, they are still
required to accomplish that activity is imperfect. As work on a project starts, its
calculated from Standard Data Book for future unfolds and the authorities along with
Analysis of Rates,2003(First Revision) the contractor become better informed about
published by Ministry of Road Transport & the specific technological and material
Highway. After estimation of time and requirements of the project works. For
resources of each activity of the project and example, during construction phase of a
Milestone defined in Concession agreement, road project, an unexpectedly poor quality
scheduling of the project is done in Project of soil may necessitate changes in the
Management software (M.S. engineering, the design and the quality of
project/Primavera). Critical activities and bitumen required, from what were initially
float of the activity is determined from the planned. Such changes may require extra
schedule calculated by software. Project time. In some cases the actual
progress of each activity is logged on daily circumstances, in contrast, may turn out to
basis in the Daily Progress Report (D.P.R.) be favorable and the parties may find that
and the same is updated in schedule through they had made excessive provisions time.
software. Critical activity is monitored Similarly, flood or any other event of force
keenly on daily basis and in case of any majeure may cause delay as well as destroy
major deviation, more resources is deployed the project assets. Alternatively, the natural
to accomplish the critical activity. Schedule conditions may turn out to be rather
of project is updated on periodical basis conducive, saving construction time and
(normally on monthly basis) observing costs. Therefore, due to imperfect estimation
progress of individual activity and Milestone and natural factors the actual project time
in the project. will generally be different from their
expected values (Singh, 2009).
Literature Review
Earned Value is a well-known project
The estimation of project time for management tool that uses information on
infrastructure projects is a characteristically cost, schedule and work performance to
I 172
establish the current status of the project. will be completed on time, it's important to
The method is based on a simplified model take the time to develop a schedule before
of a project, but proved to be useful in contracts are awarded to subcontractors. It is
practice of cost control. It is being often worth paying a bit extra to hire a
developed to account better for schedule and contractor, who has the manpower and
time aspects. The Earned Value method has resources to complete the project on time,
been developed as a tool facilitating project rather than simply hiring the lowest bidder
progress control. It is used for determining a and hoping for the best. During construction,
project’s status (is it behind or ahead of the project manager should stay abreast of
schedule? is it over or under budget?) and progress, and provide written notice of
the scale of current variances from the plan changes or additions to the time line
(Czarnigowska Agata, 2008). (Chawla,H.L., 2010).
Construction projects are hardly ever An accurate forecast of construction time

constructed as designed. Consequently, as and cost is crucial to contract administration
built plans and consistent updating of project as the predicted duration and cost forms a
schedules are the current procedures for basis for budgeting, planning, monitoring
modeling project change impacting both and even litigation purposes. In practice,
cost and time. The overall project budget there are two common methods for
and duration of the CPM schedule should be estimating construction time and cost: (1)
verified against historic performance of according to the client’s available budget
projects (Hammad, Ayman A. Abu et al., and time constraints, i.e. occupancy need, or
2008). (2) through a detailed analysis of work to be
. done and resources available, using
The various elements of a construction estimates of the time and cost requirements
project are interdependent on one another. for each specific activity. The detailed
This means that a simple delay by one trade estimation of construction activities usually
can cause the entire project schedule to get relies on the estimators’ experience and
off the track. This can lead to major cost judgment to correctly interpret project and
impacts, as well as lawsuits or unhappy site information and make the best possible
clients. To improve the odds that the project decisions (Skitmore et al., 2003).
I 173
Due this high level of uncertainties risk
Highway construction has distinctive role of associated with site delays are unpredictable
managing varied engineering discipline like, and requires specific attention by project
Hydrology, Mineralogy, Geotechnology, personnel. The conventional technique for
Concrete Technology for structures and combating time and cost overrun adopts
pavement, Asphaltic concrete, foundation & project monitoring using bar charts which
Bridge Engineering, Mechanical faculty of are prepared by other conventional
planning big plants/equipments, scheduling techniques which necessities
Environmental management, Safety crashing of entire train of activities which
measures, Accounting, Computerization of may or may not be affected by the delay.
design/drawing/reporting/billing/correspond Hence, innovative decision support tool
ence, Personnel and procurement (DST) can predict the duration overrun cost
management and so many other things. overrun and activities associated with any
Besides, spread of work on a longer length, specific delay in highway construction
Highway construction management has a projects. This tool uses simulation models
difficult job in organizing different activities as the knowledge base for generating the
compared to other construction project duration and cost overrun. The simulation
located at one place. At the planning stage, models for the duration and cost overrun of
idealistic assumptions are planted in the project is developed based on the nature
programming but during implementation it of delay activities associated with the delay
fades away giving way to pragmatism and stochastic nature of the duration and
(Sharma, 2004). cost overrun associated with the
activities(Arun,C. et al., 2007).
Highway construction is considered to be
one of the important infrastructure Objective of the Study
developments of any country. It involves lot
of uncertainties in its planning and execution Now a days most of the BOT Road project
stages. In addition to uncertainties in the in India incurs time overrun and cost
planning stage, which mainly deals with overrun. Due to frequent time overrun and
resources, time and technology uncertainties cost overrun, BOT operators/concessionaires
in execution stage is mostly site specific. are showing less interest in bidding for new
I 174
BOT road project. Though there are several  Client: National Highway Authority
national and international literatures of India (NHAI)
available on Project management, Time  Concessionaire: Indore Dewas
overrun and cost overrun in BOT Road Tollways Ltd.( A private company
Project but no one has categorically incorporated under the provision of
specified about the methodology being used Company act, 1956)
in Time estimation, Resource estimation  E.P.C. Contractor: Gayatri Projects
and scheduling in the BOT Road Project. In Limited, Hyderabad
this case study emphasis has been given on  Lead Lender: Union Bank of India
highlighting the method of time estimation,  Lender Independent Engineers:
resource estimation and scheduling being Halcrow consulting India Pvt. Ltd.
adopted in BOT Road project in India. Main  Independent Engineers: Lea
objective of this study is to focus on Associates South Asia Pvt.
drawbacks of traditional method of Time Ltd.(LASA)
management in BOT Road project and to  Project management Consultant:
explore the basic reason for time overrun in
Neel Construction Links Pvt. Ltd.
the BOT Road Project.
 Total capital Cost: INR 6000
Millions
Case Study of Six lane BOT Road Project
 Total EPC Cost: INR 4750 Millions
 Debt-Equity ratio: 4:1
Salient Features of the Project (Concession
 Date of concession agreement:
Agreement)
17.05.2010
 Name of the Project: Six laning of
 Financial Closure Date: 8.02.2011
Indore-Dewas Section of NH-3 from
 Appointed Date: 1.09.2011
Km 577.550 to Km 610.000 and Km
 Scheduled Completion as per C.A.:
0.000 to Km 12.600 (Approx, Length
28.02.2014
45.05 Km) in the state of Madhya
 Construction completion period: 912
Pradesh under NHDP Phase-V to be
days
executed as BOT (Toll) Project on
 Concession Period: 25 years
Design, Build, Finance, Operate and
Transfer “DBFOT” Pattern
I 175
 Concession fee/Premium: INR  Minor Junctions: 45 Nos.
241millions per annum  Construction of R.C.C. Drains:
 Rate of Increment in the premium: 18.851 Km both sides
5% per annum  Bus Bay / Bus Shelter: 24 Nos.
 Truck lay-Bye: 1 No.
Scope of the Project as per Schedule-B  Split Toll Plaza: 1 No.
(Concession Agreement)
 Flexible Pavement: 13.450 Km Quantities of Major Construction Material
 Rigid pavement : 31.600 Km estimated for the project
 Service Road on Each Side: 18.851 Earth work/Soil: 2500000 cum
Km Concrete: 300000 Cum
 Major Bridge:1 No. Cement: 100000 MT
 Minor Bridge: 8 Nos. Steel Reinforcement: 10000 MT
 Flyover: 4 Nos. Bitumen: 12000 MT
 Vehicular Underpass: 4 Nos. Sand: 210000 MT
 Pedestrian Underpass: 11 Nos. Crushed Aggregate: 1500000 MT
 Culverts Widening / New: 90 Nos. / R.E. wall: 100000 Sqm
3 Nos. Geogrids: 550000 Sqm
 New box culvert: 6 Nos.
Table1: Estimated Construction equipment (Standard Data Book, MORTH) vis a vis availability
in the project under case study
Sr. Name of the
Capacity Required Available
no. Machineries
1 End dumpers 12 m3 90 84
2 Excavators 80m3/hr 10 10
3 Backhoe loader 130m3/hr 6 6
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Vibratory soil
4 100m3/hr 9 9
compactor
5 Motor grader 100m3/hr 6 6
6 Chain dozer 200m3/hr 3 3
7 Wheel loader 60 m3/hr 6 6
Concrete batch 60m3/hr

8 2 2
mix plant &30m3/hr
9 Transit mixer 6m3 15 14
10 Kerb paver 15 m3 /hr 2 1
Wet mix
11 250m3/hr 1 1
macadam plant
12 Hot mix plant 120 MT/hr 1 1
Mechanical
13 200m3/hr 1 1
paver
14 Sensor paver 200MT/hr 1 1
15 Tandem roller 10 MT 4 4
Pneumatic
16 15 MT 2 2
tyred roller
Mini
17 walkbehind 1 MT 4 4
roller
Bitumen 1750
18 2 2
distributor sqm/hr
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Slip form
19 concrete Sensor 160m3/hr 1 1
paver
Mechanical
20 1250sqm/hr 1 1
broomer
Tractor
21 1250sqm/hr 1 1
compressor
22 Low bed mover 2 2
23 Hydra 25 MT 4 4
24 Diamond cutter 80m/hr 4 4
25 Concrete pump 50M3/hr 2 2
26 3- stage crusher 350MT/hr 1 1
27 Hydraulic crane 100 MT 2 2
28 Water Tanker 10KL 8 8
Texturing
29 80m3/hr 1 1
Machine
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Organization Chart of Major Stake Holders of the Project
Chairman
Memeber(P.P.P.)
Chief General Manager
Project Director
Manager (Technical)
Figure 1: Organisational chart of National Highway Authority of India (Client)
Chairman
Project Director
L.A. /Utility officers Safety Engineers
Figure 2: Organisational chart of Indore Dewas Tollways Ltd (Concessionaire)
I 179
Project Manager
Deputy Project Deputy Project

Material Engineer
Manager(Highway) Manager(Structure)
Managers Quality Control

Highway Managers
(structures) Engineers
Highway Engineers & Bridge Engineers &

Survey Engineers Survey Engineers
Figure 3: Organisational chart of Gayatri Projects Ltd. (E.P.C. Contractor)
The Engineer
Team Leader
Resident Bridge Senior Finance Contract Pavement

Engineer Engineer Quality Expert Specialist Specialist
Engineer
Assistant Assistant
Highway Bridge Assistant Quality
Engineers Engineers Engineers
& Survey
Engineer
Figure 4: Organisational chart of Lea Associates South Asia Pvt. Ltd. (Independent
Engineers)
I 180
Team Leader
Highway Bridge Material/Q.C. Survey Planning

Engineers Engineers Engineers Engineers Engineer
Figure 4: Organisational chart of Neel Construction Links Pvt. Ltd. (Project Management
Consultant)
Brief description on implementation of lenders) to NHAI by

Project Management Process in the project concessionaire.
 Signing of substitution
i) Project Initiation process agreement by Lenders, NHAI
 Invitation of RFQ. and Concessionaire.
 Selection of bidder in RFQ  Signing E.P.C. contract
based on technical and between Concessionaire and
financial eligibility. E.P.C. contractor.
 Invitation of RFP from  Obtaining regulatory
selected bidders. permission by the
 Award of contract based on concessionaire.
highest premium quote.  Start of additional land
 Sign on concession acquisition and encroachment
agreement after award of the removal.
contract.
 Opening of Escrow account. ii) Project Planning process
 Obtaining financial closure.  Finalization of design and
 Submission of financial drawing.
package (approved by  Estimation of quantities of
material in the project.
I 181
 Finalization of resource list. camp, mobilisation of
 Development of W.B.S., machineries.
Capex and cash flow plan.  Procuring the material.
 Development of initial  Construction of service road,
resource based construction main carriageway, PUP,
schedule. VUP, Flyovers, Bridges,
 Identification of source of Culverts, Toll plaza etc.
borrow earth, aggregate,  Installation of safety sign
sand cement, TMT board, crash barriers,
reinforcement, delineators etc for proper
Admixture, strands, bitumen, safety during construction.
emulsion, geogrids etc.
 Development of Quality iv) Project Monitoring and Control
assurance plan. process
 Development of procurement  Conducting quality control
plan. test in the laboratory as well
 Development of as in the field on daily basis
subcontracting plan. to check the conformity of
 Identification of risk factors. material and executed
 Development of construction activities with the set
safety plan and O&M plan. specification.

 Preparation and documenting
iii) Project Execution process all the test report and closed
 Obtaining appointment R.F.I. for quality assurance.
date/C.O.D. from NHAI.  Review of the construction
 Finalization of construction progress on every 15 days
schedule and cash flow based with respect to base M.S.P.
on appointment date. based construction schedule
 Acquisition of human and updating the progress in
resources, establishment of the M.S.P. based schedule.

Taking suitable action at site
I 182
in case of slippage to v) Project Closing process
expedite the progress.  Raising request for
 Checking the financial conducting final test on
progress with reference to completion for completed
base line S-curve on monthly items.
basis after certification of  Raising request for issuing
I.P.C. by L.I.E.. provisional completion
 Amendment in construction certificate after final test on
schedule on every three completion for the completed
months or less considering items.
the mile stone in the project.  Raising request for final test
 Taking corrective action for on completion for change of
nonconforming activities in scope items and delayed
the project. items.
 Raising request for change of  Raising request for issuing
scope in the project for completion certificate after
successful completion of the final test on completion.
project.
 Raising request for extension Brief description of Time Management in
of time for delayed items and the Project
change of scope items.
Table 2: Scheduling and Progress Monitoring of various activities in the projectUnder Case
study
Activity details Planned Planned date Percentage Reason for delay
date of start of completion completion as on
(Base date)* (Base date)* schedule date of
completion as per
Concession
Agreement i.e.
28.02.2014*
Land acquisition 1.09.2011 14.12.2011 75 Delayed land acquisition process
I 183
(3D & 3G) and late disbursement
of compensation to land owners.
Delay is also caused due to denial
of land acquisition by land owner
and the same is challenged in the
court.
Tree Cutting 1.09.2011 28.03.2012 100
Utility 1.09.2011 28.03.2012 90 Delay due to late approvals of the

Shifting(Electrical estimates/proposal and deposition
poles and water of supervision charges.
pipeline
Construction of Main 1.09.2011 14.12.2013 90 Delayed due to late/non shifting of
Carriageway utility (H.T. electric line and water
pipe line). Delay is also caused
due to late approval of change of
scope.
Construction of 1.09.2011 7.01.2014 90 Delay due to encroachment.
Service Road
Construction of 1.09.2012 5.10.2012 0 Delay is caused due to late
Entry and Exit Ramp approval of change of scope.
for service Road
Construction of 15.10.2011 7.12.2012 90 Delay is caused due to late
PUPs approval of change of scope.
Construction of 21.11.2011 17.05.2013 95 Delayed due to late/non shifting of
VUPs utility (H.T. electric line.
Construction of 9.12.2011 29.05.2013 70 Delayed due to late/non shifting of
Flyovers utility (H.T. electric line and water
pipe line). Delay is also caused
due to late approval of change of
scope.
Construction of 1.09.2011 28.01.2013 83 Delay due to deployment of
Major bridge inadequate resources.
Construction of 1.09.2011 19.01.2013 100
Minor bridges
Construction of Pipe 1.09.2011 15.08.2012 100
Culverts & Box
I 184
Culverts
Construction of 1.09.2011 5.03.2013 87 Delay due to encroachment.
Drains
Construction of Toll 15.12.2011 2.05.2012 60 Delay in land acquisition and late
Plazas approval of change of scope
Construction of 1.09.2012 9.11.2012 100
Truck lay byes
Construction of Bus 1.09.2012 14.12.2012 10 Delay in land acquisition.
byes
Development of 1.09.2012 14.12.2012 75 Delay in land acquisition.
Minor Junctions
*Planned date of start and completion is the base individual activity as on scheduled date of completion
date scheduled during the start of the project and (as per concession agreement) is shown in the table
afterward there was several changes in construction for exhibiting the importance of time management in
schedule as per the progress and constraints in the the Project.
project. Those scheduled date of start and completion
is not produced here as it is not required for this
S- curve of cash flow in the Project
paper. However percentage achievement of
Figure 2: S- curve of cash flow in the Project
I 185
Conclusion mathematical model to predict extra time
required for accomplishing the projects. This
Time Management is very crucial in BOT mathematical model will be helpful in
Road Project. The above case study of Six predicting the actual time in the beginning
lane BOT Road project shows that of the project. This prediction will be helpful
traditional Time Management i.e. in effective implementation of Project
estimation of time & resources for each management process in BOT Road project
activity from the available reference by developing realistic resource based
(Standard data book of MORTH), scheduling.
scheduling ,monitoring and control is not
sufficient to avoid time overrun in the References
project. Due to myopic approach in Time
Management, effective Project Management 1. A Guide to Project Management Body of
Knowledge (POMBOK Guide) Fourth
Process is not getting implemented in the
Edition, Project Management Institute Inc.,
BOT project. Additional time for land
2008.
acquisition, utility shifting and change of 2. Arun,C. and Rao,B.N., Knowledge based
scope is not included in the time estimation Decision Support Tool for Duration and
during the planning process. Due to Cost Overrun Analysis of Highway
Construction Projects, Journal of The
underestimation of time, balanced
Institution of Engineers, India, Civil
mobilization of resources in the project is
Engineering Division, vol. 88, no8, pp. 27-
not done. Scheduling in the project is also 33, 2007.
getting changed number of times without 3. Concession Agreement of Indore-Dewas
any solid back ground. Cash flow in the section of NH-3 six lane(BOT) project,
National Highway Authority of India.
project as shown in the S-curve of the
4. Construction Extension to A Guide to
project is also not balanced. There is need to
Project Management Body of Knowledge
analyze all the major factors causing time (POMBOK Guide)-2000 Edition, Project
overrun in the BOT road project by Management Institute Inc., 2003.
collecting adequate data from several 5. Czarnigowska,Agata, Earned value method
as a tool for project control, Budownictwo i
ongoing and completed BOT Road projects
Architektura, 3, 2008, pp. 15-32.
in India. These data of time overrun from
6. Expenditure Budget Vol. 1, 2015-2016,
various projects will be utilized to develop a Ministry of Finance, Government of India.
I 186
7. Hammad , Ayman A. Abu , Ali, Souma M. 16. The working Group Report on Road
Alhaj , Sweis, Ghaleb J. and Bashir, Transport for the Eleventh Five Year Plan,
Adnan, Prediction Model for Construction Planning
Cost and Duration in Jordan, Jordan Journal 17. Commission, Government of India
of Civil Engineering, Volume 2, No. 3,
2008.
8. Chawla,H.L, Infrastructure Projects in India
Requirement, Planning, Execution, Reason
for Delay, NBM &CW, July,2010 ( Source:
http://www.nbmcw.com/reports/construction
-infra-industry).
9. Internet website : http://www.nhai.org
10. IS: 15883 part2: Construction Project
Management Guidelines-Time Management,
Bureau of Indian Standard, 2013.
11. Joshi, R.N., Public Private Partnership in
Infrastructure, Vision Books Pvt. Ltd., New
Delhi, 2010.
12. Sharma, R.N., Project Construction
Management of Large Highways Packages,
Indian Road Congress Jounal, pp. 243-
269,2004.
13. Singh, Ram, Delays and Cost Overruns in
Infrastructure Projects: An Enquiry into
Extents, Causes and Remedies, Working
Paper no. 181, Centre for Development
Economics, Delhi School of Economics.
14. Skitmore ,R. Martin and Ng, S. Thomas,
Forecast Models for Actual Construction
Time and Cost, Building and Environment
8(8), 2003, pp. 1075-1083(Source:
https://eprints.qut.edu.au/secure/00004137/0
1/NG_03-954.doc).
15. Standard Data Book for Analysis of Rates,
Ist Revision, Ministry of Road, Transport
and Highway 2003.
I 187
UNDERSTANDING THE ROLE OF VILLAGE HEAD IN

EMPOWERING RURAL INFRASTRUCTURE DEVELOPMENT
THROUGH SOCIAL MEDIA; A CASE STUDY OF VILLAGE
SAHAWALI IN WESTERN UTTAR PRADESH
Pradhuman Singh*, Corélia Kostović**

*Ex-Doctoral Research Scholar @ UPES & Manager and EA to the ED- DLF LTD, New Delhi
pradhumans@gmail.com, singh-pradhuman@dlf.in
**Digital Strategist, Clever Today Inc., Montreal, Quebec, Canada
corelia.k@hotmail.fr, corelia@clevertoday.com
Abstract model village that runs on social media based

A country with a population of 1.25 billion, inclusive participation that has had an
of which approximately 70% of the International outreach and henceforth,
population resides in the villages as per presents a low cost example for villages in the
census 2010, establishing governance at other developing countries to emulate.
grassroots level can prove to be a humongous
Key Words
task at hand. Fortunately, India had
Agriculture, Crowd-funding, Digitization,
established a process of rural governance by
Globalization, Infrastructure, Social Media,
introducing democracy at the lowest level
Urbanization
post the British colonial rule and created post
of village heads that can oversee the welfare Introduction
of the villagers, including developing India is the largest democracy on the planet
necessary physical and social infrastructure. earth and has so far been one of the oldest
In the age of Digitization, a village head from civilizations that have existed on earth since
Sahawali has used Social media to ensure time immemorial. This civilization has had
provision of Infrastructure development at its share of civilizational ties with numerous
rural level by creating opportunities through other civilizations when it existed in and
internet based micro-financing and crowd- around Indus valley since the dawn of time
[1]
funding in addition to providing e-banking . Besides monarchies and imperial rule, the
and other essential e-services by cost villages continued to build a self-sustaining
effective solar power. Praveen has been government composed of the पँच परमेश्वर (Panch
instrumental in helping create Sahawali as a Parmeshwar) / ग्राम पंचायत (Gram Panchayat)/
I 188
Assemblée de Village(Fr) the five sacred Muzaffarnagar has been chosen as a model
representatives / village assembly who had village to study that phenomenon.
become the age old foundation of democratic Additionally, the study allows us to look into
governance in the rural heartlands in the various facets of democracy thereby giving a
subcontinent [2]. In the present context, when bird’s eye view of how administration and
the present Indian Government has expressed private sector entities interact with the village
a need for rejuvenating the Infrastructure head for meeting their respective roles and
sector at all levels in the country, the rural responsibilities in carrying out infrastructure
sector cannot be ignored. Given the fact that developmental work in the rural
maximum population of the country resides communities.
[3]
in the villages, approximately 70% to be This includes administrators, private
precise, there is a need to ensure the contractors for rural infra projects, private
development of the rural regions of the sector infrastructure developers, public
country. This makes the role of the village representatives at constitutional post and the
assemblies which is headed by the village village folk.
head (ग्राम प्रधान/ Gram Pradhan Chef du village
(Fr)) all the more significant for an Inclusive
The research method involved three
growth of the country. Using the case of
following steps:-
village Sahawali, where a village head
1.1.1 Analysis of functions of a village
innovatively uses Social media for
assembly headed by the village head.
infrastructure development has further
- This involved the accessing of
brought in additional ways and means to
secondary data and government
work towards that cause.
archives and gazette prescribed
Objective of the study for village heads as per the new
The primary objective of this study is to Panchayati Raj gazette for 2016.
understand the role of village head/ ग्राम प्रधान in 1.1.2 Survey of impact of village head’s
developing and managing rural infrastructure engagement with other entities
in the light of digitization and social media. - The survey was conducted for the
For that purpose, Sahawali in district following entities with their

respective sample size.
I 189
a) Administrators – Sample Size the needs and wants of the rural communities
10 at the grassroots level with a higher degree of
b) Higher position Public responsiveness within the village. The
representatives – Sample Size 10 geographical proximity to an elected
c) Private contractors - Sample representative of the village allows a greater
Size 10 accessibility as compared to a representative
d) Developers - Sample Size 10 based out of district center or the state capital
[5]
e) Villager - Sample Size 10 .
1.3.3 Study of Sahawali in the light of new Fan, Hazell and Thorat (2000) had studied
social media development the pattern of government spending in the
- Key steps taken by the village head Indian rural context for promoting growth
and their respective outcomes and poverty alleviation of village folk by
- Benefits accrued to the villagers at engaging village heads. Micro economies
large based on agriculture may not suffice to help
- Implications and limitations generate funds for village community
mentioned infrastructure development. With this regard,
an engagement of government funding and
Literature review private sector support may go a long way in
Besley, Pandey and Rao (2005) examine the building rural road connectivity and
socio-political status of the politicians in the agricultural research [6].
villages and their relation to the Ravallion and Datt (1995) probed the
decentralization of power from the center, overcoming of poverty through increasing
state and district to the levels of one on one agricultural output and the contribution made
interaction with the respective villagers who by state funds diverted through village
may or may not have elected them. It has representatives. There is also an additional
shown that the politically dominant groups factor that comes into play by migratory
within the village may eventually influence pattern of labour force available in the rural
the overall development of infrastructure areas. Also, the consumption patterns and
within their village [4]. preferences of the rural masses may affect the
eventual need for better development of the
Besley, Pandey, Rahman and Rao (2004)
village infrastructure with the need of better
had also analyzed the ability to provide for
I 190
road connectivity or rural power availability employed in order to seek approvals,

[7]
. permissions, compliances and licenses for
various works carried out in the rural sector
Zhang and Fan (2004) concluded that
in India. While corruption may have been
investment of public funds brought higher
considered an illegal and undesirable
returns than by private entities in Indian rural
phenomenon, there have been instances
scenario by the virtue of greater degree of
where the work had been done at a much
engagement by the of a structured political
faster pace and eventually helped a large
representation at lowest village levels. This
section of villages. Supply of goods and
model is can be replicated at the level of other
services at the rural level in fact in many
South East Asian and East Asian economies
instances had been the facilitator at multiple
due to similar scaling and expandability
levels [10].
options. The time-series data shows a healthy
Mazzarella (2010) simplifies the role of ICT
pattern with regard to the increased spending
(Information and Communication
at the rural level in both India and China in
Technology) in actual development thus
spite of India having a more democratic
creating a case for balancing the approach
functional system vis-à-vis China [8].
between realistic development and hype
Parida (2014) dissects the PMGSY (Pradhan
around ICT. Establishing a cost effective and
Mantri Gram Sadk Yojana) through an IAS
robust ICT infrastructure for rural
(Impact Assessment Study) in the light of
communities may need more than just setting
enhancement of rural road connectivity and
up an electric supply network, it will need
engagement of village heads in helping
satellite enabled communication signal and
develop the local networks of road transport
systems that can reach remote areas and help
and other developmental projects pertaining
bring real time support in form of benefits to
to urban development. The social benefits
agriculture production and aid provision in
accrued involve having the capacity to
case of natural disaster prone environment
provide access to education and medical
[11]
.
facilities for the children and the elderly
Cecchini and Scott (2003) assess the role of
respectively [9].
next generation technologies available for
Nagarajan, Jha and Pradhan (2013) throw the building a foundation for rural and suburban
light on the excessive usage of unfair means communication platform that have been
I 191
made available by the private and public and Rajya Sabha), Ministerial annual
sector telecom operators in India. Some of funds/ Grants released by state and/or
the key areas where telecom connectivity has Central Governments.
brought about a recognizable change are the c) First approving authority for CLU
ability to manage risk due to increased (Change of Land Use) of village
security through communication. The other agricultural land
areas include access to healthcare facilities, d) First approving authority for land
insurance, crop sowing and harvesting transfer for industrial/ residential/
timings, smart cards and other technologies Commercial use
that enable overall welfare of rural e) Sole approving authority for
communities [12]. providing village assembly/ common
land for rural developmental projects.
The functions of a village head with
f) Member of audit committee for
respect to rural infrastructure
release of payment for all the
development
construction contracts carried out in a
As per the Panchayati Raj Gazette 2016,
District Block (Collection of villages
following is the summary of key functions
and suburban centers)
carried out by the village assembly with
g) Recommending authority for social
respect to rural infrastructure developments.
infrastructure projects to the
The village head is assisted by a member of
state/central government in the
the Block Development Committee which
village.
also is an elected post.
a) Planning, implementing and Findings and analysis of the survey
execution of Projects approved by the - 80% of the public representatives (MLA
Block District Panchayat/ Assembly & above) felt that village head is the
headquarters through the District primary point of contact for executing
Magistrate rural infrastructure projects.
b) Applying for Projects to be fulfilled
through MLA (Member of
Legislative Assembly), MLC
(Member of Legislative Council), MP
(Member of Parliament-Lok Sabha
I 192
- 50% of the developers feel,

Village Pradhan primary
point of contact for village head is easier to help with
executing rural
the acquisition of land
infrastructure projects
No Key person to help

20% you acquire
agricultural land
Yes
80% Patwari/
Village Kanungo
Pradha /
n Tehsildar
50% 30%
Figure 1
- 90% of the public representatives
(MLA & above) are of the
opinion that the village head Property
Broker
proves decisive in helping them 20%
win an election.
Village Pradhan helps

you garner votes Figure.3
during elections
No - 70% of the villagers would
10% approach a village head for the
redress of their infrastructure
related issues.
Yes
90%
Figure 2
I 193
Communicate Active initiation and

infrastructure related participation of Infra
issues to projects
70%
60% MP
30% Pradh
an
50% 40%
40% MLA/
MLC
30% 30%
20%
Figure 5
10%
Social media driven Infrastructure

0%
Pradh Tehsil Contr development initiative at Village Sahawali
an dar actor
Series1 70% 20% 10% Village Sahawali is located in Muzaffarnagar
district of the State of Uttar Pradesh in India
having the coordinates 29°26'42"N
Figure.4
77°43'17"E. It is almost equidistant from
- 40% bureaucrats and contractors Dehradun as well as Delhi mapping approx.
felt that village heads are most 120 kilo meters. At first glance, it appears just
proactive in initiating and like a normal village. However, with the
participating in infrastructure subsequent state elections, the dynamics had
projects with 30% each for changed. The villagers had refrained from
MLAs and MPs. voting for the assembly elections for lack of
infrastructure developmental work. In the
local village assembly elections, the villagers
unanimously elected a village head who was
less than forty and had the challenge to bring
about serious developmental challenges
I 194
ranging from nearly battered roads to land with water depth of 11 feet at the deepest
lackluster power supply. There would be point and lying unused being filled by the
little or no help from the MLA who receive Ganga canal at a close proximity. The water
an annual fund of ₹ 2 crores (approx. € was fresh and considered suitable for fish
280,000/-) as per UP Gazette 2010 and MP rearing and breeding. Praveen went to the
annual fund of ₹ 5 crores (approx. € local fisheries office and put up a tender for a
700,000/-) for their respective constituencies contract for Pisciculture. Praveen also
respectively. In comparison, the annual grant uploaded the picture of the pond available for
for a village head starts from ₹ 0.40 crores lease on facebook page of the village
(approx. € 55,000/-) which is miniscule Sahawali. Within a span of 4 weeks, 3 bidders
compared to the allocation to the had contacted Praveen and the highest bidder
representatives of the state and national was given the contract for 3 years at a cost of
parliament. Given such set of circumstances ₹ 0.29 crores for 3 years with 50% of the
Praveen had multiple hurdles to overcome. amount i.e. ₹ 0.145 as advance contract fee.
The answers came from the most unlikely The work took off and labour cost was
source. reduced by 1/3rd by giving employment to
those who were jobless and could not move
Generation of funds: the first step
out of the village due to commitments to their
In order to carry out any sort of
farming land. The metaling and leveling of
developmental work, funds were a necessity.
the entire road network was completed in less
The annual funding released would have
than 11 months with the total cost touching ₹
come in installments of 12 each month;
0.31 crores thereby saving approx. ₹ 0.08
thereby no project could take off and finish
crores for the village. Out of this saved fund,
before a year. In order to help the village fund
approx. 0.02 crores was used to build a
its dire need for building a proper road infra,
drainage system all along the road to ensure
the villagers build an estimate of ₹ 0.38
no water logging on the road takes place from
crores for metaling of roads approximately
household water discharge. Thus the village
spanning 14 kilometers. After pooling in the
had established rural road connectivity for a
funds from 400+ households, the maximum
span of time. This was crowd-funding in
amount was approx. ₹ 0.21 crores still falling
action at village Sahawali.
short by ₹ 0.17 crores. Having said that, there
was a pond of about 1.5 acre village common
I 195
Lighting it up. Illuminating the village adjacent to the village Sahawali. Dr Gautam
Now the village had a road network, the other along with his team of students and
hurdle was rural electrification. The power professors managed to calibrate the old
supply only lasted for 12 to 14 hours at max. tractor batteries from the village folk and
The voltage was extremely low and only 1/3rd helped install the Solar panels at few
of the village households were willing to locations around the village that were in dire
invest in a battery based inverter. Also, it was need of illumination. However, the only
felt that the village got really dark during the bulbs that worked well were the Light
sunset, there was a need to illuminate the Emitting Diode types, which cost almost ₹
newly made roads. There was only one 225 for a 7W Syska bulb in 2012. While this
halogen light that was placed at the entry was not a big amount, it was felt that there
point to Sahawali village. That too would would be a need for more bulbs for the entire
only work when there was power on. Also, village in the times ahead. Incidentally, a
there had been a few instances of robberies Delhi based developer was scouting for a
that had taken place where the cattle were patch of land on the main road leading to
stolen. Even speaking to the State Power Bijnore. However, that land was not a part of
supply would not be of much use. There had Sahawali village, but Shernagar which was
to be an alternate source of power. Praveen an adjacent village to Sahawali. Praveen
and his team contacted the District Rural sought a meeting with the village head of
Development Authority and requested them Shernagar who was not willing to sell his
for redressal of this issue at hand. The ancestral land. Praveen contacted the
presiding officer was kind enough to provide company facebook page and brought the
very basic set of 20 solar panels at subsidized developer and the village head of Shernagar
cost of ₹ 1500 per unit minus the battery. and helped negotiate a deal that would
However, they would not prove too effective provide the Shernagar village head with a
with conventional bulbs or even CFLs as they share in the revenue from the township, while
provided very low voltage current even when retaining the ownership of the land parcel in
they were charged for the entire day. Praveen his name. Praveen did not ask for brokerage
contacted the Head of Department of for helping strike the deal, but instead
Electronics Dr A.K. Gautam at SD College of requested the broker to procure LED bulbs
Engineering and Technology situated for the village when ordering their own for
I 196
the construction of their township directly Other key achievements

from the manufacturer at discounted rate. The Praveen also managed to secure free wi-fi
LED lights were subsequently installed at the access for the village by installing airtel
20 places and finally, there was light. towers above the Village Assembly Hall/ ग्राम
सभागार/ Village Hall d’assemblage. A part of
Cleaning up the mess. Rural sanitation
the revenue generated was not only diverted
Having connected and lighting up the village,
towards village buffer funds, but also paid for
Praveen wanted to do a little bit of cleaning
the free Wi-fi center and a Village online
up to do. This was the beginning of the year
Services Center adjacent to the village
2014 and there was a need felt for the setting
assembly hall. This service center helped
up of toilets in the village as the problem of
access Aadhar services, Pension for ex-
defecating in the open had health as well as
servicemen, Old age pension and various
safety implications. Also, not everyone had
other host of online facilities including job
the funds to build a toilet in their homes
application and other services for village.
owing to which an urgent need was felt by the
womenfolk of the village as well. In order to Key Findings and Conclusion
fulfill the requisite number of toilets, a 1) Muzaffarnagar district in general has
Western Uttar Pradesh based NGO ‘Shuddhi’ been associated with high crime rate
was roped in again using Social media to help and sugarcane production globally,
avail low cost toilet seats and sewage pipes. however in the absence of media
DRDA (District Rural Development reporting, Sahawali village within the
Authority) was active in providing assistance district
to create multiple septic tanks which could be 2) Sahawali village however has set an
used to procure bio gas as well as manure for example by the virtue of which, the
the plantation in and around the village roads. hamlet has a robust infrastructure vis-
In a span of 6 months, a total of 232 toilets à-vis other village in the region in
were constructed and subsequently additional spite of minimal state funding. This
source of organic manure and bio gas used for involved not just roads and canals but
future heating needs was created. This was also creating solar powered wi-fi
done at 0 expense from the village assembly hotspots and e-banking to e-shopping
funds. services.
I 197
3) The village Pradhan, Praveen Kumar, outside a rural block can be organized
is a young graduate who has created a to fund local infrastructure projects.
facebook page through which not As exhibited in the case of Sahawali, rural
only has he been able to highlight the startups generated jobs can be created instead
achievements in terms of executed of depending on schemes like MGNREGA
micro-projects, but has also used and hence, check mass migration from rural
micro-financing and crowd-funding. to urban masses.
4) The village head has received a
Limitations:
National award from the Central as
i) The study has been carried out for
well as state government for the
one village in India.
creative and innovative
ii) In order to study the feasibility of
However, owing to the reservation policy application for similar strategy in
practiced in village assembly elections, other 3rd world countries, the
Sahawali has become an SC/ST reserved seat existing ground realities will have
due to which Pravin will not be able to to be understood.
contest the village head election and be Internet connectivity is the backbone.
allowed re-election. Villages with no digital access may not be
able to implement the Social Media based
Implications:
strategy.
a) This model of Infrastructure
development through crowd funding References:
using digital media can be replicated 1. Kenoyer, J. M. (1998). Ancient cities of the
Indus valley civilization. Oxford University
in not only India, but also the
Press; American Institute of Pakistan
SAARC, GCC, SE Asia and African
Studies.
nations wherever digital connectivity 2. Reddy, G. R. (1977). Patterns of Panchayati
can be embraced. Raj in India. Macmillan Co. of India.
b) In absence of funding by the central/ 3. http://www.business-
standard.com/article/economy-policy/70-
state government or private Corporate
indians-live-in-rural-areas-census-
Social Responsibility based funding,
111071500171_1.html
crowd funding from within and
I 198
4. Besley, T. J., Pande, R., & Rao, V. (2005). 9. Parida, A. (2014). Role of Rural Road
Political selection and the quality of Connectivity (Pradhan Mantri Gram Sadk
government: Evidence from South India. Yojana) in Accelerting Development &
5. Besley, T., Pande, R., Rahman, L., & Rao, V. Improving Quality of Life. International
(2004). The politics of public good Journal of Innovative Research and
provision: Evidence from Indian local Development, 3(9).
governments. Journal of the European 10. Nagarajan, H. K., Jha, R., & Pradhan, K. C.
Economic Association, 2(2-3), 416-426. (2013). The role of bribes in rural
6. Fan, S., Hazell, P., & Thorat, S. (2000). governance: The case of India. Available at
Government spending, growth and poverty SSRN 2246525.
in rural India. American Journal of 11. Mazzarella, W. (2010). Beautiful balloon:
Agricultural Economics, 82(4), 1038-1051. The digital divide and the charisma of new
7. Ravallion, M., & Datt, G. (1995). Growth media in India. American Ethnologist, 37(4),
and poverty in rural India. World Bank 783-804.
Policy Research Working Paper, (1405). 12. Cecchini, S., & Scott, C. (2003). Can
8. Zhang, X., & Fan, S. (2004). How information and communications technology
productive is infrastructure? A new applications contribute to poverty
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Economics, 86(2), 492-501. Development, 10(2), 73-84.
I 199
Land Acquisition in India: An Unresolved Issue of Compensation

Tapas Roy*, Dr R Jayaraj**, Dr Anil Kumar***
*Ex-Director, Exide Industries & Research Scholar, College of Management and Economic studies, UPES
**Associate Professor, College of Management and Economic studies, UPES
***Professor & Head (Department of Power), College of Management and Economic studies, UPES
Abstract
Modern land acquisition laws for payment to consider qualitative and quantitative
of compensation presume that land is a attributes of agricultural land which are
fungible commodity. This also considers a often the price differentiators, for fair
no scheme world. Hence average of past market value computation. This can be
sales price of comparable lands can be rationally defended to arrive at a “just”
considered as “fair market value” of the compensation metric in a post-acquisition
acquired land. World Bank advocates for scenario.
“replacement cost” which is not necessarily
the land that is lost, but the cost of a Key Words
replacement land in the adjacent area for Land Acquisition, Public purpose, Fair
compensation. With high population density Market Value, Just Compensation,
and due to India’s colonial past the land Replacement Cost.
holdings in India are fragmented. Quality
and quantity attributes affecting sales price Introduction
vary. Land market is thin. Hence using In the power and property matrix, land is the
average sales price based on last 3 years data most important possession of man - since its
cannot give a fair average. The new Act holding can influence both economic and
LARR 2013 has used increased solatium as political power. Whenever there is any threat
a means to overcome all the short comings. of losing the ownership of land, conflict
This paper argues that an arbitrary addition ensues. In the early societies ownership of
to the pre-acquisition land price in the form land was mostly with the clans or with the
of a “solatium” to arrive at the quantum of communal groups. There were reports of
compensation is not logical. There is a need conflict between the communal groups over
I 200
the land boundary they controlled, which and to those who would not take money, a
could be traced in the early Indian writings field for field, where they preferred, I gave.”
(Kautilya, 2009). It is difficult to know (Johns, 2004).
exactly when and how the transfer of
ownership to individual level started but In recent history, the land acquisition and
there are evidences of conflicts when related conflicts continued whether in the
political authority acquired lands from the forested heartland of India or the Bauxite
individuals. Conflict was recorded in the rich areas of Orissa or for agricultural land
Old Testament when King Ahab of Samaria for private industry in West Bengal. New
wanted to acquire a vine yard owned by Act LARR 2013 was introduced and made
Nabath, a land owner. An offer for land operational with increased solatium. But the
against land was also given by the king. issue remains. New government came in
When Nabath did not agree, he was stoned power in 2014. Under pressure from the
to death through a conspiracy hatched by the other stakeholders, the government wanted
queen and the land was acquired by the to reopen the subject but could not resolve
king. In India during the Mughal period the issue. Controversy revolves around how
Shah Jahan acquired the land for Taj Mahal to do a greater good without subjugating
from Raja Jai Singh with a land for land deal individual’s wellbeing and without
as compensation (Badshahnama, TAJ undermining other stake holders’ interest.
MAHAL, A Temple Converted Into A LARR 2013 opted to increase the solatium
Mausoleum). Probably the first recorded component of the earlier Land Acquisition
pecuniary settlement in land acquisition Act (LAA1894) to make it “fair” and to
could be traced in the early Sumerian overcome the land owner’s resistance to part
civilization, when Manistusu, the King of with the land. But how much solatium
Kish, sought to acquire land to build a city should be paid to make the average sale
for his son Mesilim. He paid a price which price of comparable lands as “fair” and
appeared to be the average selling price of “just” in a situation of involuntary
the acquired land. The king commented that separation remains a matter of disagreement.
“I gave money for the pieces of land; This study analyses the inadequacy of
according to the contracts in silver and solatium as a method of paying fair value of
bronze, to their owners to do no injustice, compensation.
I 201
Additional Solatium for Compensation in for private party (Kansas- Office of Revisor
different countries of Statutes, 2015).
It is not India alone which had opted for the
solatium route to resolve the land acquisition Other countries like in Australia, the state
related disputes. In the recent past political laws also vary in solatium payments, which
authorities across the world had opted for vary between nil to 10% excepting in
this route at varying degrees. In the Australian Capital Territory, where the
advanced countries with active land market solatium payment in Section 51 is set at
it is possible to get a “fair” estimate of the A$15,000 (McDonagh, 2015). Variations
current value of the acquired land based on are there in Canada also. When Canadian
comparable land sales data. Solatium here is Federal laws do not provide for any solatium
to pay for the subjective value, which the over fair market value as “just”
owner attaches. In the aftermath of the compnsation, states like Ontario, British
Supreme Court decision on Kelo vs City of Columbia or New Brunswick do provide for
New England, number of states in USA has 5% solatium over fair market value as just
included additional solatium component compensation (Justice Laws Website, 2015).
over and above the fair market value to
compensate takees fully for their losses. Idea In England it is the “open market
is to leave takees subjectively indifferent to value”(under rule ii of the Compulsory
takings. But there are significant differences Acquisition Act), which is considered as
in the solatium component among the states “fair market value”. It assumes a willing
in USA. While a good number of states do seller and ignores the increase in value
not specify any solatium to be paid, created by the proposed developmental work
Michigan requires 125% to be paid as (“no scheme world”) (Plimmer, 2008). But
solatium (State Constitution (Excerpt)- British laws make variation in compensation
Constitution of Michigan Of 1963, 2015). In when expropriation of agricultural land
Indiana solatium is 125% for agriculture and disturbs a farmer’s operations (Land
150% for residential property (Ind. Code § Compensation Act 1973, Art. 34, 35 & 36
32-24-4.5-8, 2015)and in Kansas a (Eng.) (Special Compensation laws for
minimum of 200% is to be paid when taken Farmers) (www.
Legislation.gov.uk/ukpga/1973/26, 2015).
I 202
In Italy, when farmers land is taken, vicinity during immediately preceding three
depending on their legal relation to the land years (Sec 26 (b), Explanation 1).
compensation varies. Non-cultivating land
owners are entitled to 1.5 times the VAM. In the preceding paragraphs the solatium
Tenants are entitled to 2 times the VAM. figures not only vary from country to
Owner operators are entitled to 3 times the country but also among the states in the
VAM. For urban land the market value of same country. This even varies depending on
the land (VAM) plus ten times the cadaster the owner’s legal relationship with the farm
income (RD) divided by two, i.e. (VAM + land within the same country. Percentages
10RD)/2 is paid (Roy Prosterman, Tim are ad hoc and is applied as a percentage of
Hanstad, 1999). historical “average sale price” of
comparable lands in the vicinity. Fair market
In China compensation payment for farm value so derived is no better than an estimate
land is based on 6–10 times of its average and is often being questioned of its
production value in the past three years prior “fairness”. As an obvious fall out of this, it
to acquisition. Settlement subsidy payment has not been able to reduce the conflict
(solatium?) is made over and above this to between the state and the land losers.
each person who needs to be resettled as 4–6 Violent confrontations are also not few and
times the average production value of the far between. Dingzhou in China,
land taken (s.47, par. 2) (Chan, 2003). Nandigram in India, Manor Project in
Vietnam, Exxon Mobil's Cepu Block in
In India The Right To Fair Compensation Indonesia to Church’s lands in Johannesburg
And Transparency In Land Acquisition, in South Africa, or Narita Airport in Japan-
Rehabilitation And Resettlement Bill, 2013 all bear the testimony of violent protest by
(LARR 2013) defines compensation in the land losers against state’s expropriation.
respect of land acquired as 4 times the
average market value for rural land and two World Bank’s View on Compensation
times for urban areas as “just” (The First Development agencies like World Bank, IFC
schedule, Sec 30(2)). Here, average sale or Asian Development Bank’s policy
price is determined by taking into account approach is to focus on fully restoring, if not
the sale deeds of similar land in the near improving, the well-being of project-
I 203
affected persons. Flowing from the bottom Literature Review

line principle of the above, World Bank In India land acquisition by the state
proposes prompt and effective compensation authority started in an organized manner
at full replacement cost for losses of assets during the British Raj through an Act by the
attributable directly to the project. Here, government. The Act (LAA1894) defines
“Replacement cost” is the method of the right of the state to acquire property of
valuation of assets that helps to determine individual for public purposes and state’s
the amount sufficient to replace lost assets responsibility to compensate the owner for
and cover transaction costs. (World Bank, the involuntary separation. As it is in the
2001). But the process of replacement of the British legal system, this Act also owes its
lost assets is a need that arises at a post- origin to the legal treatise of Hugo Grotius
acquisition scenario when the asset is lost who upheld the authority of the State to
through acquisition and compensation is infringe upon the property of subjects on all
received. At this stage the neighboring land occasions, where ever the public good was
prices have started escalating in anticipation involved (Paul, 1987). However, the
of the use changes in the locality. This is authority was subject to the following two
different from the “fair market value” conditions: Expropriation was for public
approach of compensation when the past purpose and fair compensation was paid
sales price of comparable lands is without delay for such loss. Both the
considered with no scheme world and not conditions are often subjected to varied
the post-acquisition price. Further in the interpretations not only in India but across
World Bank’s “replacement cost” it is not the world. A quick look at the varying
necessarily the land that is lost, but the cost interpretations may be useful at this stage to
of the replacement land (Asian Development appreciate the issue related to land
Bank, 2007). Appropriate adjustment for acquisition compensation in India.
different attributes of land is also necessary
to make the local sales data as comparable Public Purpose
for the computation of the replacement cost. Most countries have left the definition of
public purpose open ended, providing much
greater space for the exercise of discretion
and interpretation. But the overarching
I 204
principle in most cases has been that a compensation is assessed (based on

government’s taking powers are comparable land sales figures without
extraordinary powers that are intended to adjustment for land’s attributes) and not
meet public needs that are not well- calculated. The fair value is thus a fictitious
addressed through the operation of the value, an abstraction that is linked to a
market. However, this principle has been hypothetical sale of a property at a given
subject to varying judicial interpretations. In point in time. But the indemnity aspect of
India, the decision of the Supreme Court of “Just” compensation requires that “An
India (Dev Sharan and Others vs State of UP owner of property is entitled to be put in as
and Others, 2011) contradicts another of its good a pecuniary position, as if his property
decision of (Scindia Employees Union vs has not been taken” (United States vs 564,
State of Maharashtra and Others, 1996). 1979). However, this has not been given
Similar differences were evident in USA “full and literal force” in the judiciary
where interpretation of public purpose in the interpretations because of the need for a
Berman vs. Parker case (348 U.S. 26) “relatively objective working rule” (United
(Berman Vs Parker, 1954) contradicts the States vs 564, 1979). Absence of such rule
spirit of the judgment of Wayne v. Hathcock has led to adopting assessed fair market
(684 N.W.2d 765) (Wayne County v. value as a close surrogate. Laura H. Burney
Hathcock, 2004). claimed that judiciary has interpreted “Just”
compensation as the fair market value of the
Fair Compensation property taken unless it can be shown that it
Controversies in the interpretation of fair fails to indemnify to such an extent that it is
compensation also continue. Most countries very unfair; i.e. “fair market value is fair
have constitutional requirements for paying unless it is very unfair” (Burney, 1989).
fair compensation which in general is the There are different schools of thoughts to
“fair market value” of the expropriated asset define what can be considered as the “close
as the standard. The normative basis for surrogate” of “fair market value” for just
providing “fair” compensation in all compensation. Epstein has argued that the
expropriation cases is to provide degree of public interest should dictate the
constitutional protection of fairness and level or amount of compensation payable as
indemnity. But the sales price for fair “Just Compensation”. In cases where there
I 205
is a low degree of public interest, Epstein CORPORATION, et al., Plaintiffs-

has argued that the compensation should be Appellants,v. VILLAGE OF HOFFMAN
higher (Epstein, Takings: Private Property ESTATES, et al., Defendants-Appellees.,
and the Power of Eminent Domain, Ch 12, 1988).
1985). He has also brought the tax payer’s
perspective in the ‘takings’ when he has said Paying ‘Just compensation’: An
that the money raised to finance unresolved issue in India
compensation is a ‘taking’ from the The earlier Land Acquisition Act
taxpayers, who have received ‘in kind’ (LAA1894) even with subsequent
compensation in the form of benefits from amendment in 1984 could not meet the
the public project. This has necessitated the aspirations of the land owners of India and
need to balance the compensation to land had triggered hundreds of popular protests,
owners with the loss incurred by payment of including those over the 2005 proposal to
higher taxes (Epstein, Takings: Private establish 513 special economic zones
Property and the Power of Eminent Domain, (SEZs). The dismal record of the State in
Ch 18, 1985). Since the act of taking rehabilitating and resettling those
property itself through compulsory involuntarily displaced by land acquisition
acquisition is inherently confrontational and had created serious resentments. Between 60
aggressive, by its spirit, there is no voluntary and 65 million people are estimated to have
sale. In absence of the assent, no been displaced in India since Independence,
compensation can be considered just in the the highest number of people uprooted for
context of a takeover (Bratland, 2006) . development projects in the world
Similar views are expressed by Judge Posner (Displacement and Rehabilitation of People
when he says “many owners value their Due to Developmental Projects, 2013). This
property at more than its market value (i.e., has led to land-related conflicts. Whether it
it is not “for sale”). Such owners are hurt is in the forested heartland of the country, or
when the government takes their property in the bauxite-rich areas of Odisha or in the
and gives them just its market value in agricultural hinterlands of West Bengal, the
return. The taking in effect confiscates the conflicts have become all too common. This
additional (call it “personal”) value that they had resulted in stalling of all major projects
obtain from the property.” (CONISTON
I 206
which required large tracts of contiguous similar lands unless they fall in a "narrow
land. bandwidth". Taking cue from an earlier
Madras High Court judgment Supreme
LAA1894 considered just compensation as Court had directed that it would be only fair
fair market value of the land acquired plus a that the sale deed that representing the
solatium of 30% over and above the fair highest value should be preferred to the rest
market value, where fair market value was unless there are strong circumstances
computed from the average market value of justifying a different course (Supreme Court
the comparable lands sold. Both the of India on "Just compensation " in Land
comparable land sales data and the period to acquisition, 2010). Thus average sales price
be considered for past sales created cannot be taken as the close surrogate of the
controversy. 30% Solatium was far too “fair market price” of the acquired land in
small to work as an all-encompassing Indian condition. LARR 2013 has not
solution to the basic inadequacy of using the addressed this basic anomaly and conflict
average sales price as base for continues.
compensation. More often than not there
were complaints of inadequate All these had resulted in stalling of all major
compensations. Nandigram area of West projects which required large tracts of
Bengal, India captured headlines in the news contiguous land. In spite of the serious short
due to its violent protests against the forcible comings of using average sales price as
land acquisition under the Left Front estimated fair market value of the acquired
government. Couple of years later the land the new Act continues the same basis
farmers again protested against the land and has used the increased solatium for
acquisition for the purpose of building roads resolution for paying just compensation. But
by the next government. The underlying solatium by its nature is subjective and
reason remained to be “because of what they devoid of any quantitative rational. In a
perceive to be unfair and ad hoc treatment of developing economy like India with 1.2
different types of land in terms of the billion people plots are generally smaller.
compensation rates”. (Maitreesh Ghatak, Quality and locational attributes vary and so
2013). Supreme Court had deviated from the also the price. Land markets are thin and
concept of averaging of the sale price of the comparable land sales data are scanty; this
I 207
reduces statistical significance of averaging. they are not eligible to compensation but
More over when land is acquired for lose livelihood. Additional solatium in the
infrastructure or industrialization, it opens new Act only multiplies this inequity. There
up opportunity of alternate use of are other stake holders too. Ad hoc increase
agricultural land for higher returns; price in sloatium has made the cost of land
shoots up. Steep appreciation in value that significantly higher and at times prohibitive
often occurs when land is converted to wherever there is a need for large land plots
higher value urban uses brings discontent for investment in industry or infrastructure.
among the evictees, who get compensation It is not the industry bodies alone, it is also
based on past use. To some extent, this the government departments who are
might be addressed by including a engaged in infrastructure buildings like
compensatory increment designed to NHAI are feeling the pinch. As a result there
represent a share in the presumed future is a considerable slowing down in the
value increase through solatium payments. infrastructure investments at the ground
Since one size does not fit all, an ad hoc level. The increase in solatium approach has
solatium without appropriate adjustments for also ignored the tax payers’ aspect. Since the
attributes which are land specific, cannot money is raised to finance compensation is a
meet the requirements of “making victims ‘taking’ from taxpayers for which they
subjectively indifferent to whether [the received ‘in kind’ the compensation in the
taking] took place or not” (Craswell, 2003). form of benefits from the public project.
There is a need to balance the compensation
Moreover, in India the land holders are not to land owners with the loss incurred by
the only stake holders to lose their living in payment of higher taxes, (Epstein, Takings:
the event of any use change of the Private Property and the Power of Eminent
agriculture land. The percentage of landless Domain, 1985).
and near landless peasant in India is nearly
43% of the rural population who are Conclusion
dependent on agriculture (All India Report Modern land acquisition laws for payment
on Agriculture census 1991-2000 in1995-96, of compensation presume that land is a
2013 collected). Due to the absence of their fungible commodity and do not undergo any
legal relationship with the expropriated land significant change in price in a pre and post-
I 208
acquisition scenario. Averaging the past data need for a computation basis which can be
of comparable land sales is a true reflection rationally defended to arrive at a “just”
of the market determined price of the compensation metric by identifying
acquired land. This is far from true. With qualitative and quantitative attributes of
high population density and due to India’s agricultural land which are often the price
colonial past the land holdings are differentiators.
fragmented. Attributes affecting sales price
of land vary. In a thin land market arriving References
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India : Constitutional and Legal Approach.
years sales data of comparable land is
New Delhi-110002: MD Publication Pvt.
unlikely to be statistically significant. Any
Ltd.
attempt to even out this shortcoming through 2. All India Report on Agriculture census
increased solatium increases the inequity 1991-2000 in1995-96. (2013 collected).
and adds confusion. http://www.empowerpoor.org/backgrounder.
asp?report=162on. Retrieved from “Land
use and Ownership in India”.
The authors believe that the land owners
3. Anjani Molu Dessai vs State Of Goa & Anr
should be compensated so that they can fully (Supreme Court of India December 7, 2010).
restore, if not improve their well-being with 4. Asian Development Bank. (2007). ADB
the government takings as without them; but Report on land taking, law and practice in
China, India, Combodia. Rural
they should also not to be hugely
Development Institute, 4.
overcompensated. Fund is necessary to
5. (n.d.). Badshahnama, TAJ MAHAL, A
create jobs and develop skills for other stake Temple Converted Into A Mausoleum.
holders also. This necessitates a need to Retrieved 10 1, 2010, from
rationalize the compensation policy which http://indianresurgence.com/history5.htm
6. Berman Vs Parker (US Supreme Court
should consider all the stake holders’
1954).
aspirations. World Bank’s policy of
7. Bratland, J. (2006). On The Impossibility of
compensating the land owner’s for the cost ‘Just Compensation’ When Property Is
of an equivalent replacement land in Taken: An Ethical and Epistemic Inquiry;.
adjacent area may be considered as an U.S. Department of the Interior.
8. Buhler, G. (2011). Manusmriti: The Laws of
alternative which is more equitable than ad
Manu,1500 BC. www.hindubooks.org.
hoc solatium for compensation. There is a
9. Burney, L. H. (1989). Just Compensation
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and the Condemnation of future interests: University press.

Empirical Evidence of the failure of Fair 18. Ind. Code § 32-24-4.5-8. (2015, August 26).
market value. Brigham Young University Indiana Code - Section 32-24-4.5-8:
Law Review. Compensation for owners of acquired
10. Chan, N. (2003). Land Acquisition property . Retrieved from
Compensation in China - Problems and http://codes.lp.findlaw.com/incode/32/24/4.5
Answers. nternational Real Estate Review; /32-24-4.5-8#sthash.ScKdxmbI.dpuf.
2003, Vol. 6 No. 1,, 136-152. 19. Johns, C. H. (2004). Babylonian And
11. CONISTON CORPORATION, et al., Assyrian Laws, Contracts and Letters .
Plaintiffs-Appellants,v. VILLAGE OF Kessinger Publishing Co.
HOFFMAN ESTATES, et al., Defendants- 20. Justice Laws Website. (2015, August 26).
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Appeals, Seventh Circuit April 20, 1988). Retrieved from http://laws-
12. Craswell, R. (2003). Instrumental Theories lois.justice.gc.ca/.
of Compensation: A Survey. 40 San Diego L. 21. Kansas- Office of Revisor of Statutes. (2015,
Rev, 1135-1149. August 26). 26-501b. Eminent domain.
13. Dev Sharan and Others vs State of UP and Retrieved from http://www.ksrevisor.org/.
Others (Supreme Court of India March 7, 22. Kautilya. (2009). Chanakya's Arthasastra .
2011). Retrieved from Chanakya’s Arthasastra
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Due to Developmental Projects. (2013). Disputes, Determination of Boundaries and
(Reference Note No. 30/RN/ Ref./ December Miscellaneous Hindrances).
/2013). India: PARLIAMENT LIBRARY 23. Maitreesh Ghatak, S. M. (2013). Land
AND REFERENCE, RESEARCH, Acquisition and Compensation- What Really
DOCUMENTATION AND INFORMATION Happened in Singur? 2013 EPW Economic
SERVICE (LARRDIS). & Political Weekly vol xlviii no 32 21.
15. Epstein, R. A. (1985). Takings: Private 24. McDonagh, M. T. (2015). Solatium
Property and the Power of Eminent Domain. Payments for Public Works- An
Cambridge, MA 02138: Harvard University International Comparison.
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16. Epstein, R. A. (1985). Takings: Private 25. Paul, E. F. (1987). Property Rights and
Property and the Power of Eminent Domain, Eminent Domain. New Jersey: Transaction
Ch 12. Cambridge, MA 02138: Harvard Books.
University Press. 26. Plimmer, F. (2008). Compulsory Purchase
17. Epstein, R. A. (1985). Takings: Private and Compensation: An Overview of the
Property and the Power of Eminent Domain, system in England and Wales. Nordic
Ch 18. Cambridge, MA 02138: Harvard Journalof Surveying and Real Estate
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Research, Special Series Vol. 3 (2008), Compensation laws for Farmers). Retrieved
which quotes Sec. 3 for Compensation for from www.
the land taken and S. 7 CPA 1965 for right Legislation.gov.uk/ukpga/1973/26.
to compensation and S.5 of CPA 1961 for
assessing compensatio.
27. Roy Prosterman, Tim Hanstad. (1999, June
). http://www-wds.worldbank.org/. Retrieved
from WTP 436-Legal Impediments to
Effective Rural Land Relations in Eastern
Europe and Central Asia- A Comparative
Perspective.
28. Scindia Employees Union vs State of
Maharashtra and Others (1996).
29. SECRETARIAT, L. S. (2013). Displacement
and Rehabilitation of People Due to
Developmental Projects. PARLIAMENT
LIBRARY AND REFERENCE, RESEARCH,
DOCUMENTATION AND INFORMATION
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Michigan Of 1963. (2015, August 26).
Michigan Legislature - Article X § 2.
Retrieved from
http://www.legislature.mi.gov/.
31. United States vs 564, 441 US 506, 510
(1979).
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33. Wayne County v. Hathcock, 684 NW 2d 765
(Michigan Supreme Court 2004).
34. World Bank. (2001, December).
http://web.worldbank.org. Retrieved from
WBSITE/EXTERNAL/PROJECTS/EXTPOLI
CIES/EXTOPMANUAL- OP 4.12:
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(2015, August 26). Land Compensation Act
1973, Art. 34, 35 & 36 (Eng.) (Special
I 211
Transportation
Critical analysis of hazards associated with Routine Ship Towage

operations: Cases of Indian Coastal Waters
Abhijit Singh*, T Bangar Raju**
* Assistant Professor (Sr. Sc.) CoMES UPES,
** Associate Profesor and Head, Department of Transportation, CoMES UPES
Abstract and risk factor volumes were greater.

Statistical testing of the relationship
Accidents are not because of fate or chances between individual risk factor and
always. It researches on safety has stressed consequence significance also revealed a
upon the point that accidents are resultant link.
of a chain of incidents, which ultimately
shaped into an adverse outcomes. The first Harbour towage operations are influenced
task of risk assessment is to recognize the by numerous risk factors: including tow
inherent hazards. Harbour towage which is planning, safety management system,
also known as routine ship towage is vessel speed, interactions among
potentially a hazardous operation. In order teammates, their training and tug type.
to operate in an efficient manner safely, this
requires a high level of understanding about This research primarily aimed on
role and accountabilities of persons identification and quantification of
involved in operation of their own and their significant factors influencing safety ship
teammates, proper training and equipment towage operations in Indian coastline. In
should in addition be provided as a order to achieve this objective, literature
prerequisite. available on factors influencing safety of
harbour towage operation was analysed.
Recent accidents in harbour towage Questionnaire methodology is applied to
operations emphasized on potential safety collect the required data. Data was
concern. Preliminary researches showed a subjected to factor analysis, principal
requirement of empirical scientific research component analysis in order to find
with respect to the specific accidents faced grouped dimensions from hazard variables
during harbour towage operations. identified from literature and critical
Therefore, this research aimed to ascertain analysis of incident type frequency, cause
if harbour towage operations face a and consequences to have an understanding
particular risk. of critical safety risk factors. This research
resulted into identification of 31 criteria in
Comparative analysis depicts the diverse 7 dimensions safety risk factors.
nature of harbour and non-routine ship
towage operations, with harbour towage Keywords
disaster more prone to be involved in loss Routine Ship Towage, Harbour Towage,
of life as a consequence. Tug Operation, Tugboat, Hazards, Safety
Risk Factors, Safe Tugs in India, Indian
Statistical comparison of harbour towage Coastal Waters Towage.
and Non Routine Ship Towage risk factors
corroborate that certain risk factor were
only present in harbour towage operations,
T1
Introduction sailing in close proximity around the ship.

Tug Boats are small ships which seldom The collective effects depend on draught,
find required mention in seamanship size of ship, trim, underkeel clearance,
despite of their elaborate category. In real speed of approach confinement of the
sense they are the workhorses of ports, an fairway. Researches have been carried out
integral part of mooring and un-mooring from last forty years in order to have a
operations and also proved to be useful in better insight of the factors influencing tug
manoeuvring within the ports as well as on operations which are primarily indulged in
sea. The importance of these small ships is number of accidents recently.
generally ignored in literature despite of
their dominant role in manoeuvring in It should be noticed that tugs are utilized in
adverse weather circumstances in various manner in towage operations and
specifically limited areas of world ports. In these varies from place to place. Mainly
today’s scenario tug boats are a significant tugs are used to assist a vessel by two
indicator of port infrastructure in harbours methods, either tug is fastened alongside of
worldwide and is an inseparable component vessel to pull or push it or tug is fastened to
of business internationally BTA (2010). bow or stern to make a link with towline
Functions at ports determine the type of near the bow in order to tow a vessel on a
tugs to be used. Generally, volume of traffic line. In first method interaction forces
and category of ships serving in the contribute in small fraction while in second
particular port are critical factors method interaction forces have major
influencing the kind of tug to be utilized. contribution. Hiroaki Kobayashi (2007).
Accidents are the collective consequences The objective of this research paper is
of a chain of insecure events, they don’t identification of hazards contributing in
happen by their own, with respect to ports, mooring and unmooring operations in
human faults, unsafe water conditions, routine ship towage in Indian coastal
equipment failure may contribute in waters.
combination or alone and can convert
random events into accidents, sometime
with casualties Alert! (2007) Alert! (2008). Traffic at Indian Ports
With a population of 1.2 billion and being
Mooring and unmooring of vessels at ports the third largest economy by purchasing
is one of the significant hazardous power parity, India tenders to big
operations in ship towage operation. It opportunities for trade and port sector
demands an efficient teamwork in order to despite of its poor infrastructure. There is a
secure safety. Member of the team involved 9.5 times growth in the cargo handling at
should be very well trained and equipped is Indian ports in last three decades.
a prerequisite of this operation. They must
be well aware about their role and
responsibilities as well of their teammates.
ETA (2012)
There are various forces and turning

moments functioning on a tug during
T2
Literature Review
Henson reported that there is high risk

when ship is having high speed and tug is
operating near bow of ship having headway
(2012). Merkelbach and van Wijnen in
2013 stressed upon both on ‘safe speed’ and
safe operating procedure when making
connection of towline in their extensive
global survey report.
Dand reported in his model test reported in

1975 that there is most likely the tug may
Figure 1: State Wise Port Traffic of India
drive itself under the bow near the fore body
of a ship as there are large interaction forces
In India port sector can be distinguished which influence the manoeuvrability of
into two classes, i.e. major ports and non- tugs, these forces is directly proportional to
major ports. Major are controlled and run square of the speed.
by government of India by an act of
parliament whereas non major ports are Transport Safety Board of Canada, (2013)
governed and owned by state government stated in its report that involvement of tugs
and includes private ports and captive ports. and barges with bulk carriers contributes
There are 12 major ports and 176 non ports highest number of accidents i.e. 13 %
spread over 7212 km of the coastal Australian Transport Safety Board in 2011
boundaries of India. statistically observed in its safety report that
Major and non-major ports contribute 90% consequences of accidents which involved
of India’s trade by volume and 70 % by tugs were collisions, contact damage and
value. During 2013-14, 975 million of total capsizing
traffic was handled in by major ports and 40 Dutch Safety Board (DSB, 2010) reported
% of traffic was handled by non-major an accident and exposed that main reason of
ports. Along with the traffic handled by fatal collision with vessel and tug capsized
major and non-major ports, other coastal was hydrodynamics sphere of influence on
vessels are also there to contribute in high tug sailing close to bow of ship.
traffic. Tugs are very important to deal with
this high traffic. They are helpful in Transport Accident Investigation
conducting mooring and unmooring Commission of New Zealand (TAIC, 2001)
operations and assist vessels to come reported in detail about significance of tow
alongside. Increased tug involvement in planning to prevent Routine Ship Towage
these ports caused increase in risk to towage accidents.
operations.
The importance of SMS, Safety
Management System, and its adoption was
described by Marine Accident Investigation
Branch of United Kingdom (MAIB, 2013).
T3
In one of the accident investigated by Bulletin and mentioned the significance of

MAIB, the water tight integrity of tug was Tug Handling techniques in reducing down
weak, release of towing hook was not in streaming conditions.
order and also no assessment of formal risks
associated with tugs was conducted by tug BTA (2010) reported that lack of
operating company. manoeuvring space which may also arise
due to navigational obstacle in harbour
British Tug Association (BTA, 2010) towage operations could be connected with
described the risks associated with Girting hazards as was observed in an accident
in its circular where barge during berthing where tug was assisting vessel in a narrow
capsized and foundered because of channel collided
erroneous operational procedure by tug.
The tug was functioning as resistant that The European Harbour Masters committee
lead uncontrolled yawing of barge. (2010) emphasized on tug approach
manoeuvres and suggesting that towage
Delegates in British Tugowners operations requires pilots and tug masters
Association’s Safety Seminar (2012) need to be very careful.
stressed upon the significance of training
tug crew to compete with incompetency Henson (2011) emphasized upon the right
poor seamanship that are major factor choice of tug type for efficient and safe
which leads to high number of safety towage operation for safe tug procedures.
incidents occurrence. Kunz (2011) was also He suggested to use tugs with propulsion
of the same opinion and stated that unit forward in comparison to tugs with
simulator based training should be adopted propulsion units aft as they are less affected
because it would increase competency in by interaction forces and are much safer to
efficient operation of tug which in turn operate as bow tug, whereas tugs with
leads to boost tug masters confidence. propulsion units aft are more prone to
accidents because tug’s stern will come
The significance of competency which is closer to the ship bow which may lead to
attribute to skills, great teamwork and increase suction forces and more chances of
heavy contact with the bow.
experiential comprehensive training for tug
captains, pilots, ship’s master and crew Australian Transport Safety Board (ATSB,
2006) stated that poor maintenance of tug
involved in towage operations was
propulsion engine that cause collision
described by Henson, Merkelbach and van between bulk carriers. The report also
Wijnen (2013). described about breakdown of main engine,
due to seepage of clutch oil from discharge
Stockman (2010) reported significance of
pipe, this resulted into loss control over tug
following standard operating procedure in
propulsion which led to heavy contact with
which there was incident of near girting and
starboard ship hull and damaging shell
ultimately could also have led to capsize of
plating.
tug.
Livingstone (2012) emphasized on risk
United States Coast Guard (USCG, 2009)
associated with bad weather conditions
published Marine Safety Information
T4
during harbour towage operation and stated industry were also consulted (International
that accident was due to thick fog which tug and OSV Magazine, 2013).
resulted into girting of tug .
To avail current information, database and
Research Methodology internet search engines were used (Intute,
The objective of this study is to identify 2006).Internet was also proved to be useful
and quantify independent variables i.e. in accessing university library, government
Hazards causing threat to dependent and company databases (KMSB, 2012;
variables i.e. safety of routine ship towage. EMSA, 2012).
An analytical approach was preferred to Except consulting literature online,

experimental methods because it is internet was proved to be a useful way to
impractical to let an accident happen in contact with persons and organizations
controlled conditions to assess risk factors (International Tug masters Association,
associated with towage operation. 2012; UK Harbour Masters Association).
This method comprised of an analysis of An excel worksheet was used based on an

secondary data (top classification society accident data sheet shared by the regional
database located in Indian subcontinent) office of a classification society to collect
and statistical testing in order to assess any the data on risks to safety in harbour towage
correlation. Application of one hundred operations.
seventy five case studies intended to reduce
sampling error. Recent accident case studies were used to
collect data on risks to safety. Information
Process received from this data was analysed in
order to ensure quality and validity of data.
The process was divided into two stages.
The stage comprised of comprised of Case studies provided by classification
preliminary investigation of issues, a societies and government agencies were
complete series of incidents and factors accepted only and date of incident and
involved were explored in order to be names were also rechecked in order to
ensured. In second stage portfolio of Case prevent duplication.
Studies from the databases of five states
were collected. The following generic data was derived
from case Studies and filled in to the Excel
A number of journal, articles , reports and Spreadsheet:
books were consulted including Tug
Company, Maritime Safety Agency, Incident type and consequence: collision or
harbour authority and other organisation’s grounding; damage or injury; Prevailing
safety incident reports (MAIB, 2012; DSB, environmental conditions: weather& sea
2011).Books and manuals providing state; Towage operation particulars: tug
special technical advice on safety risk type& tow point, Findings concerning
factors and best practice guidance analysis, causes and conclusions:
(Slesinger, 2010; Livingstone, 2006) were contributing factors, risks& potential
thoroughly examined. Journals on trade and solutions.
T5
Risk Factors were classified under generic categorized as Incident. Eighty nine percent
headings derived from maritime safety of the CS comprised of Collision, fifty two
reports. Missing of particular factor was percent in Capsize and seventy percent
recorded if that factor was reported to be a Grounding (See Graph 1.).
cause of accident: for instance if
inadequacy in safety management systems
was identified than this would be recorded
89%
as Risk Factor: ‘Safety Management 70%
System’. 52%
Irrelevant cases studies containing

13%
insufficient verifiable facts were identified 5%
and separated.
Rest of the case studies which were

engaged in deep sea towing or not engaged
in towing, were classified as Non Routine
Ship Towage (NRST).
Graph 1: Apportionment of Accident Type
(number). *Figures may exceed total Case
Studies, since one event may lead to several
Results
consequences.
A total of 175 Case Studies (CS) were
selected from five Indian states. 15 CS Analysis of incident consequence shows
were inadmissible through insufficient that twenty nine resulted in Loss of Life,
validation (See Table 5).Out of 160 were forty seven in Injury and eighty four in
admissible CS, 176 were classified as Damage.
Routine Ship Towage (RST) and the
remaining 34 Non Routine Ship Towage
84%
(NRST). Distribution of Event Consequence
State Inadmissibl Routin Non Tota

e Case e Routin l 47%
Studies Ship e Ship
Towag Towag 29%
e e
2 31 5 38 17%
Gujarat
Maharashtr 5 26 11 42
a
Karnataka 6 28 2 36 Loss of Injury Pollution Damage
Life
Tamil Nadu 2 20 6 28
Andhra 0 21 10 31
Pradesh Graph 2: Apportionment of Event
Total 15 126 34 175 Consequence (number)
Table 5: Distribution of RST and NRST
Case Studies Seventy percent concerned Conventional
tugs while twenty five percent
Ninety seven percent of the CS was undetermined tug type (See Graph 3.) were
categorized as Accidents: rest of CS were involved in towage operation
T6
Unknow Amidshi
n ps
25% Tow
7%
fwd
Other/U
VS nknown
38%
3% Conventi 30%
ASD onal
2% 70%
Push To aft
15% 10%
Distribution of Tug Type
Distribution of Tow Position
Graph 3: Distribution of Tug Type
(percentage) Graph 5: Distribution of Tow Position
(percentage)
Sixty two percent of tugs were moderately
powered (See Table 7) while twenty The majority of events (fifty eight)
percent were Medium powered and concerned barges (See Graph 6.).
seventeen percent Unspecified (See Table
58%
4.). Towed Vessel Type
Unspecif
16% 11% 15%
ied, 17%
High
(>70T),
5% Moderat
e (<30T),
Medium 62%
(30T-
70T),
20%
Graph 6: Towed Vessel Type (number)
Distribution of Tug Bollard Pull
The majority of towed vessels (fifty three
Graph 4: Distribution of Tug Bollard Pull percent) had broad bow forms (See Graph
(percentage) 7.)
Thirty eight percent of events involved Towed Vessel

53% Bow Form
Towing from Forward, fifteen percent Distribution
Pushing, while thirty percent were
31%
unspecified (See Graph 5.).
16%
Fine to Broad Unspecified

Moderate
Graph 7: Bow Form Distribution
T7
The majority of towed vessels (forty six RST had almost double the frequency in all
percent) were classed Small (under 10,000 Consequence categories (See Graph 10).
tonnes deadweight) while sixteen percent
were Handy (See Table 8) or were Large RST to NRST Comparison of
(MAN, 2007). There were no Very Large Consequences
Non Routine Ship Towage
vessels (over 160,000 tonnes deadweight)
while twenty percent were of unspecified 68%
size (See Graph 8.).
46%
Towed Vessels Size (Deadweight) 38% 36%
25%
19%
18% 20%
16% 9% 8%
5%
0%
Loss of Life Injury Pollution Damage
Graph 10: RST to NRST Comparison of

Consequences
Graph 8: Distribution of Towed Vessels Forty two percent of NRST operations
Size (Deadweight Category: percentage) involved towing from Forward, while thirty
seven percent of RST (See Graph 11).
Comparison of Routine Ship Towage
and Non Routine Ship Towage Data
Routine Ship Towage (RST) operations

had eighteen percent more Collisions, while
Non Routine Ship Towage (NRST)
operations had thirty percent more
Groundings (See Graph 9).
RST to NRST Incident Category Comparison

(relative frequency)
Routine Ship Towage

48% 45%
29% 33%
30%
15% 9%13%
Graph 11: Comparison of RST and NRST
7%
0% Towage Position (relative frequency)
Comparative analysis between RST and

NRST incidents, represent similar
proportions of barges (fifty eight to fifty Six
Graph 9: RST to NRST Incident Category percent); however there was significant
Comparison (relative frequency)
T8
variation in all other classes (See Graph Graph 14: Comparison of Towed Vessel
12).
Comparison of Towed Vessel Type

Between RST and NRST
56%58%
48%
15% 18% 16%

Size
0% 0%
Tanker, Container, Barge Other

Bulk, RoRo,
Carrier General
etc. Cargo, etc
Graph 12: Comparison of Towed Vessel

Type between RST and NRST Case
Studies
Fifty six percent of NRST Towed Vessels

were Broad Bowed, compared to fifty four
percent of RST.
Graph 15: Case Study Comparison of HT

and NHT Risk Factor Frequencies
Risk Factor comparison between Routine

Ship and Non Routine Ship Towage
produced several findings (See Graph 15).
Eleven Risk Factors were present only in
harbour towage operations (in rank
frequency):
Graph 13: Comparison between RST and
NRST Bow Form Distribution Interaction (42%), Girting (37%), Poor
Supervision (15%), Tug Type (34%),
Comparative analysis between RST and Safety Culture (19%), Poor Mooring
NRST incidents, represented by similar Equipment (19%), Poor Seamanship
proportions of Small Towed Vessels (under (35%), GP Manning (6%), Personal
ten thousand tonnes Deadweight): fifty Safety (15%), Securing and Releasing of
eight and sixty percent respectively; Tug (42%)
however there was significant variation
amongst all other classes (See Graph 14).
T9
Four Risk Factors were noticeably more  Lack of Training;

frequent in RST Operations:  Wrong Operating Procedures;
 Loss of propulsion power;
 No Tow Planning;
Hypothesis Testing: Was there a
 Loss of propulsion power;
measureable difference between Harbour
 Human Factor. Towage and Non Routine Ship Towage
 Lack of Training Operations (Chi Square test)
Seven Risk Factors had prominent
frequencies in RST (and NRST) operations A Chi Square test comparing Routine Ship
(in rank average frequency): Towage (RST) and Non Routine Ship
Towage (NRST) Risk Factors rejected the
 Tug Approach Manoeuvres; Null Hypothesis in ten out of ten cases.
 Human Factors; (The test could not be performed on other
 Lookout; Risk Factors whose Estimated Values were
 Communication; below ten).
Table 22: Chi Square Test values
RST NRST CHI^2

Risk Factors P-value Result
Frequency Frequency Stats
Interaction 42% 0% Test NA - Invalid
Girting 37% 0% Test NA - Invalid
No Tow Planning 82% 16% 16.9030 0.0000390 Significant
Tug Approach Manoeuvres 42% 76% 12.6810 0.0003690 Significant
Poor Tug Handling 67% 4% 40.9240 0.0000000 Significant
Speed 69% 9% 39.4610 0.0000000 Significant
Poor Supervision 15% 0% Test NA - Invalid
Tug Type 34% 0% Test NA - Invalid
Navigational Obstacle 38% 9% 10.5650 0.0011520 Significant
Swell 15% 10% 5.1420 0.0253100 Significant
Current 21% 0% Test NA - Invalid
Wind 39% 10% 8.8925 0.0028630 Significant
Visibility 26% 7% 4.6312 0.0313960 Significant
Safety Culture 19% 0% Test NA - Invalid
Tug Equipment 10% 23% 4.0989 0.0429110 Significant
Poor Mooring Equipment 19% 0% Test NA - Invalid
T 10
Communication 66% 42% 5.3393 0.6208500 Significant
Human Factor 83% 70% 10.6450 0.0012320 Significant
Lack Of Training 78% 60% 4.9688 0.0258090 Significant
Poor Seamanship 35% 0% Test NA - Invalid
GP Manning 6% 0% Test NA - Invalid
Loss of propulsion power 89% 72% 5.1318 0.0239100 Not Significant
Insufficient Manpower 12% 10% 0.0005 0.9821270 Not Significant
Bridge Equipment Ergonomics 20% 14% 0.1921 0.6611940 Not Significant
Watch Keeping Or Lookout 58% 66% 1.0520 0.3050520 Not Significant
Wrong Operating Procedure 62% 48% 2.4351 0.1186480 Significant
Personal Safety 15% 0% Test NA - Invalid
Condition of Mooring Line 60% 38% 5.2894 0.0214560 Significant
Navigation System Failure 48% 22% 6.3582 0.0116840 Significant
Securing And Releasing of

Tug 42% 0% Test NA - Invalid
Others 29% 21% Test NA - Invalid
Detectable difference between Routine may have been because tugs involved in
Ship towage and Non Routine Ship Towage Non Routine Ship Towage, had accidents
operations (See Table 22.) indicated by Chi where no other vessel was involved. This
Square test of Risk Factors. Non Routine Ship Towage characteristic
was repeated, in high proportions of
More frequent Collisions in harbour towage Unspecified Bow Forms and Unknown
(HT) operations, in comparison to more Deadweights; and it compares with a
frequent Groundings in Non Routine Ship broader cross section of categories for
Towage(NHT) operations, indicate the harbour towage accidents. In this respect,
presence of different underlying Risk harbour towage operations accidents are
Factors; for example, Collisions might more likely to involve another vessel.
pointed towards Manoeuvring Space, while
Groundings might indicate Watch keeping With respect to Risk Factor variation,
Risk Factors. eleven factors were present in HT, but
absent from NHT operations; these Risk
While harbour and Non Routine Ship Factors may therefore be considered
Towage had similar frequencies of towed specific to HT operations.
Barges, harbour towage also included a
range of vessel categories. This difference
T 11
Some of the risk factors were reported in total variance of the original variables
over fifty percent of HT operations; their defined as:
presence and high frequency might be
specific to these operations. In comparison B1=x11A1+x12A2+x13A3+…+x1pAp
to other Risk Factors which are present in B2=x21A1+x22A2+x23A3+…+x2pAp
high frequencies in both groups, and
therefore might be common to all types of B3=x21X1+x22X2+x23X3+…+x2pXp
operations while some of the risk factors
With the coefficients being preferred; so
were more prominent in NHT, and may
that B1, B2, B3…Bp are accounted for
therefore not be features of HT operations.
decreasing magnitudes of the total variance
Analysis of the original variables A1, A2, A3….Ap.
Factor Analysis Results – Principal Everitt et al. (2001); Gaspersz (2007) and
Component Analysis Method Mulyono et al., (2009).
SPSS 16.0 is used to analyse data

statistically. In order to analyse the Data Screening
association between various risk factors, Univariate outliers were screened during
Factor analysis using PCA (Principal data screening. Five out-of-range values
Components Analysis) Extraction Method were identified because of clerical or data
and Varimax rotation is applied. A factor collection errors from overall data, these
analysis is useful in identification of values were logged as missing data.
strongly interrelated common underlying Absolute sample size of 126 (using list wise
dimensions (factors) that consist of items omission) was identified as minimum
(in this case concerns) (Hair et al., 2006). sample size for factor analysis.
Eigen values (>1 as threshold), are used as

base for selection of factors. To interpret Factor Analysis
the meaning of the resulting factors factor Following assumptions need to be checked
loadings were used whereas interpretation before proceeding to Principal Component
upon internal reliability consistency was Analysis. 31 items were examined for
assessed with the help of Cronbach’s alpha. factorability. We have nominal values for
0.6 is found to be threshold value for multiple variables. A linear relationship
acceptable construct, which implied that the between all constructs was also needed
items which are not similar measure one because PCA is based on Pearson
single construct and thus may be clustered. correlation coefficients. A matrix scatter
Averaging of scores across issues assigned plot is applied in order to test linearity,
to a specific factor was done for which was selected through random
aggregation. selection for few possible relationships
between variables and tested.
PCA method is applied to alter the variables
in a multivariate data set, A1, A2, A3….Ap Some well-known criteria for the
into new variables, B1, B2, B3…Bp which factorability of a correlation were applied.
are uncorrelated with each other and First of all, 26 out of the 31 items signifying
account for decreasing proportions of the rational factorability, as correlated at least
T 12
0.30 with at least one other item. Reliability Statistics

Additionally Kaiser-Meyer-Olkin measure
of sampling appropriateness was found to Cronbach's
be more than the suggested value of 0.6,i.e. Alpha Based on
Cronbach's Standardized
0.678, and Bartlett’s Test of Sphericity was
Alpha Items N of Items
found to be significant (2 (465) = 5.489E3,
p < .05). The diagonals of the anti-image .777 .762 31
correlation matrix supported sampling
adequacy which were over 0.5 in most of
the cases i.e. Most of the items were
included in factor analysis.
The determinant value of sample data is

1.15E-02 (which is 0.0115) which is more
than the required value of 0.00001.
Therefore, multicollinearity is not a present
in these data. It implies that none of the
variables have correlation coefficients
particularly high and all of them correlated
to each other fairly: Thus exclusion of any
variables at this stage is not required.
No significant outliers were found for data

values. Outliers are significant because
these can influence the results
disproportionately. Considering the mean
values, we can sum up that the most
important risk factor is found to be crew
substandard tug navigational system which
is responsible for maximum impact on
safety; and other two variables Human
Factor, No tow planning & Lack of training.
Cronbach’s alpha was applied to assess
internal consistency for variables. The
alpha is acceptable 0.777.
T 13
Descriptive Statistics
Table 2: Descriptive Statistics (SPSS Software output)
Mean Std. Deviation

Analysis N
Interaction .4206 .49563 126
Girting .3651 .48337 126
No Tow Planning .81746 .387831 126
Tug Approach Manoeuvres

.4206 .49563 126
Poor Tug Handling .6746 .47039 126
Speed .6905 .46414 126
Poor Supervision .1032 .30540 126
Tug Type .3413 .47603 126
Navigational Obstacle .3810 .48756 126
Swell .1508 .35928 126
Current .2063 .40630 126
Wind .3889 .48944 126
Visibility .2619 .44143 126
Safety Culture .1905 .39424 126
Tug Equipment .1508 .35928 126
Poor Mooring Equipment

.1905 .39424 126
Communication .6587 .47603 126
Human Factor .8333 .37417 126
Lack Of Training .7778 .41740 126
Poor Seamanship .3492 .47862 126
GP Manning .0556 .22998 126
Loss of propulsion power

.8889 .31552 126
Insufficient Manpower.1190 .32514 126
T 14
Bridge Equipment Ergonomics

.1984 .40040 126
Watch Keeping Or Lookout

.5794 .49563 126
Wrong Operating Procedure

.6190 .48756 126
Personal Safety .1508 .35928 126
Condition of Mooring Line

.6032 .49119 126
Navigation System Failure

.2937 .45725 126
Securing And Releasing

.4206
of Tug
.49563 126
Others .4762 .50143 126
T 15
Communalities
Table 3: Communalities (SPSS Software

output)
Initial Extraction
Interaction 1.000 .832
Girting 1.000 .879
No Tow Planning 1.000 .829
Tug Approach Manoeuvres 1.000 .838
Poor Tug Handling 1.000 .872
Speed 1.000 .882
Poor Supervision 1.000 .748
Tug Type 1.000 .917
Navigational Obstacle 1.000 .898
Swell 1.000 .868
Current 1.000 .881
Wind 1.000 .912
Visibility 1.000 .794
Safety Culture 1.000 .866
Tug Equipment 1.000 .850
Poor Mooring Equipment 1.000 .844
Communication 1.000 .784
Human Factor 1.000 .834
Lack Of Training 1.000 .878
Poor Seamanship 1.000 .831
GP Manning 1.000 .305
T 16
Navigation System Failure 1.000 .725 11.06% of the variance for third factor,
9.49% of the variance for fourth factor,
Insufficient Manpower 1.000 .599
6.49% of the variance for fifth factor,
Bridge Equipment 5.82% of the variance for sixth factor and
1.000 .846 4.10% of the variance for seventh factor.
Ergonomics
All the seven factors were observed with
Watch Keeping Or Lookout 1.000 .837 Eigen values just over one.
Wrong Operating
1.000 .830
Procedure
Personal Safety 1.000 .928
Condition of Mooring Line 1.000 .710
Loss of Propulsion Power 1.000 .807

1.000 .873
Tug
Others 1.000 .559
Extraction Method: Principal Component

Analysis.
The communalities were found to be all Graph 1: Scree Plot (SPSS software
above 0.3 (see Table 3) confirming that Output)
some common variance is shared by the
items. With these overall indicators Assessment of all seven factor solutions in
provided, factor analysis was conducted factor loading matrix was done applying
with all 31 items. Communalities Table and oblimin rotations. 80.83% of the
exhibit, how much of the variance in the variance was explained by seven
variables has been accounted for by the recognized factor and its ‘levelling off’ of
extracted factors. Eigen values on the screen plot, and
subsequently the insufficient number of
To fulfil primary aim, Principle primary loadings and complexity of
components analysis was applied in order interpreting the eighth factor and
to identify and calculate composite coping succeeding factors. Minor dissimilarity
scores for the factors underlying the was observed between Varimax and
Hazards in Routine Ship Towage. The oblimin solutions, therefore both solutions
initial Eigen values were observed as were assessed in the subsequent analyses
23.655% of the variance for the first factor, before determining Varimax rotation for the
20.19% of the variance for second factor, final solution.
T 17
Total Variance Explained

Table 4: Total Variance (SPSS Software output)
Extraction Sums of Squared Rotation Sums of Squared
Initial Eigenvalues Loadings Loadings
Com
pone % of Cumulative % of Cumulative % of Cumulative
nt Total Variance % Total Variance % Total Variance %
1 7.333 23.655 23.655 7.333 23.655 23.655 5.557 17.925 17.925
2 6.259 20.192 43.847 6.259 20.192 43.847 5.455 17.596 35.521
3 3.429 11.061 54.908 3.429 11.061 54.908 3.684 11.883 47.404
4 2.945 9.499 64.407 2.945 9.499 64.407 3.280 10.579 57.984
5 2.013 6.494 70.901 2.013 6.494 70.901 3.114 10.044 68.028
6 1.805 5.824 76.725 1.805 5.824 76.725 2.260 7.289 75.317
7 1.273 4.108 80.833 1.273 4.108 80.833 1.710 5.516 80.833
8 .919 2.963 83.796
9 .875 2.823 86.620
10 .718 2.315 88.934
11 .636 2.052 90.986
12 .601 1.939 92.926
13 .465 1.499 94.425
14 .367 1.183 95.608
15 .269 .869 96.477
16 .218 .703 97.179
17 .187 .604 97.783
18 .139 .448 98.230
19 .124 .399 98.630
20 .099 .319 98.949
T 17
21 .074 .239 99.188
22 .058 .186 99.374
23 .050 .162 99.535
24 .032 .104 99.640
25 .028 .090 99.730
26 .025 .079 99.809
27 .020 .065 99.875
28 .013 .041 99.916
29 .010 .033 99.949
30 .009 .030 99.979
31 .006 .021 100.000
Extraction Method: Principal any factor. This item had a floor effect,
Component Analysis. with 94% of the participants not reporting
this Risk factor as hazard.
During analysis, one of the items was
disregarded because it did not contribute to The table below shows the loadings of the
a simple factor structure and failed to pass thirty variables on the seven factors
a requisite minimum criteria of having a extracted. The higher the absolute value of
primary factor loading of 0.4 or above, and the loading, the more the factor contributes
no cross-loading of 0.3 or above. The item to the variable.
“GP Manning” did not load above 0.3 on
T 18
Component Matrixa
Table 5: Component Matrix (SPSS Software output)
Component
1 2 3 4 5 6 7
Loss of Propulsion Power .846 -.061 .170 -.059 -.003 .168 -.164
Human Factor -.825 .063 .121 .209 .164 .251 .034
Lack Of Training -.808 .030 .209 .300 .268 .139 .012
Poor Mooring Equipment .789 -.081 .024 -.019 .391 .229 -.097
Navigation System Failure -.788 .029 .192 .096 -.165 .163 -.055
Bridge Equipment
.786 -.079 .006 -.043 .398 .221 -.116
Ergonomics
Condition of Mooring
-.668 .214 -.233 -.117 .080 -.379 -.013
Line
Wind .666 .153 .614 .063 -.029 -.250 -.003
Communication -.564 -.343 .172 .479 .180 .234 .041
Others -.520 .406 -.008 -.207 .107 -.230 -.129

-.097 .824 -.281 .297 .078 -.097 .053
Tug
Wrong Operating
.311 .799 -.145 .114 .146 .104 -.170
Procedure
Poor Tug Handling .426 .797 -.105 .007 -.039 .047 -.202
Girting -.419 .793 -.174 .101 .155 -.035 -.091
Interaction -.340 .782 -.226 .051 .128 .110 -.151
Speed .445 .767 -.035 .048 .122 .139 -.241
Tug Type -.141 .743 .112 -.314 -.321 .278 .233
Navigational Obstacle -.081 .717 .174 -.313 -.437 .203 .133
Tug Approach
.271 .510 .134 -.488 .400 .085 .284
Manoeuvres
T 19
GP Manning -.167 .304 .088 -.218 .114 -.211 -.031
Current .057 .269 .757 .152 -.205 -.409 .014
Swell -.060 .341 .754 .216 -.004 -.316 .184
Visibility .348 .207 .686 .198 .122 -.323 .000
Poor Seamanship -.142 -.238 .558 .473 .150 .435 -.083
Watch Keeping Or
-.453 .378 .487 .162 .273 .345 -.177
Lookout
Safety Culture .376 .222 -.260 .732 -.205 -.101 .137
Personal Safety .332 .212 -.434 .726 -.016 -.085 .224
Poor Supervision .350 .190 -.317 .644 .009 -.086 .257
Tug Equipment .158 .228 .145 -.011 -.588 .520 .369
No Tow Planning -.313 .053 -.133 -.235 .552 -.132 .577
Insufficient Manpower .435 .018 .158 -.115 .357 .187 .457
Extraction Method: Principal Component

Analysis.
a. 7 components extracted.
The principle-components factor analysis applying varimax and oblimin rotations was
conducted for remaining 30 items, with 80.83% of the variance explained by seven factors. The
best defined factor structure was provided by a varimax rotation. Primary loadings over 0.5
was observed in all of the items and only one item showed a cross-loading above 0.3 (GP
Manning).Table 6 represents The factor loading matrix for this final solution.
Factor loadings and communalities based on a principle components analysis with Varimax
rotation for 30 items depicting Risk factors qualified for Hazards (N = 126)
T 20
Table 6 Rotated Component Matrixa (SPSS Software output)
Component
1 2 3 4 5 6 7
Poor Mooring Equipment .882 .065 -.136 -.004 .067 -.166 .107
Bridge Equipment
.878 .078 -.154 -.020 .048 -.180 .104
Ergonomics
Loss of Propulsion Power .816 -.011 -.283 .170 .024 .063 -.165
Condition of Mooring
-.750 .223 .001 -.100 -.126 -.228 .142
Line
Navigation System Failure -.580 -.022 .545 -.037 -.209 .165 -.138
Others -.529 .418 .052 .052 -.281 -.105 .095
Wrong Operating
.232 .840 -.088 .064 .227 .088 -.003
Procedure
Interaction -.310 .824 .171 -.132 .047 .083 .044
Speed .381 .815 -.128 .138 .139 .116 -.067
Girting -.433 .800 .181 -.020 .083 .018 .103
Poor Tug Handling .258 .799 -.268 .135 .170 .191 -.111

-.264 .775 .006 .037 .429 .066 .111
Tug
GP Manning -.230 .377 -.085 .188 -.204 -.029 .159
Poor Seamanship .252 -.227 .802 .223 .023 .032 -.149
Lack Of Training -.487 .047 .777 -.001 -.074 -.126 .115
Communication -.235 -.311 .769 -.080 .112 -.147 -.016
Watch Keeping Or
-.082 .399 .744 .225 -.247 .078 .017
Lookout
Human Factor -.503 .069 .733 -.129 -.111 .017 .095
Current -.111 .040 .031 .916 -.036 .109 -.118
Swell -.139 .102 .218 .874 .022 .109 .120
T 21
Visibility .256 .081 .035 .842 .045 -.089 .030
Wind .499 .022 -.219 .780 .043 .048 -.048
Personal Safety .093 .164 -.060 -.061 .939 -.057 -.008
Safety Culture .104 .129 -.077 .103 .885 .049 -.189
Poor Supervision .132 .124 -.057 .019 .841 -.033 .048
Tug Equipment .132 -.029 .029 .004 .131 .899 -.073
Tug Type -.193 .535 -.044 .079 -.167 .734 .139
Navigational Obstacle -.185 .501 -.119 .170 -.189 .730 -.008
No Tow Planning -.254 .009 .062 -.118 -.061 -.146 .850
Tug Approach
.294 .464 -.189 .142 -.273 .175 .612
Manoeuvres
Insufficient Manpower .504 -.050 -.026 .110 .059 .132 .556
Extraction Method: Principal ComponentDiscussion and Conclusion

Analysis. These analyzes that seven factors were
Rotation Method: Varimax with Kaiserresponsible to a great threat to Routine
Normalization. Ship Towage safety for bad working , poor
a. Rotation converged in 6 iterations. maintenance of equipment, severe weather,

poor or no risk , occupying incompetence,
the suitability of the type of tractor and
poor safety management system . (See
Table 7).
Table 7: Result
Frequency
Extracted Risk Factor Risk Factors
Percentage
Poor Mooring Equipment 19%
Poor Maintenance/
Bridge Equipment Ergonomics 20%
T 22
Substandard condition of Navigation System Failure 48%

Equipment’s
Condition of Mooring Line 60%
Loss of propulsion power 89%
Others 29%
Wrong Operating Procedure 62%
Interaction 42%
Speed 69%
Poor Work Process
Girting 37%
Poor Tug Handling 67%
Securing And Releasing of Tug 42%
Poor Seamanship 35%
Lack Of Training 78%
Incompetency Communication 66%
Watch Keeping Or Lookout 58%
Human Factor 83%
Current 21%
Swell 15%
Rough Weather
Visibility 26%
Wind 39%
Personal Safety 15%
Poor Safety Management Safety Culture 19%
System
Poor Supervision 15%
Tug Equipment 10%
unsuitability of Tug Tug Type 34%
Navigational Obstacle 38%
No Tow Planning 82%
No/Poor Risk Assessment Tug Approach Manoeuvres 42%
Insufficient Manpower 12%
Collision (eighty-nine percent) is the The data was not found to be distributed
potential security event in RST operations normally therefore the test was not
followed by grounding (seventy percent) conducted in order to analyse effect of
and Capsize / foundring (fifty-two
safety risk factor potential, a simple plot of
percent).
The most potential consequence is Damage Safety Factor frequency against accident
(eighty four percentage) followed by Injury severity reported some increase, however
(forty seven percentage) and Pollution there were: fluctuations; noteworthy
(seventeen percentage). There is also maximum Safety Risk Factor frequencies in
indication of a noticeable risk of Loss of average ranked incidents and a lesser
Life (twenty nine percentages). amount of Safety Risk Factor frequency for
the most disastrous incidents.
T 23
Crew incompetency due to poor training International Maritime Conventions) are

and Human factor indicated substantial included in substantial Risk Factor
amount of risk frequency, in fact Human
evidence comparatively.
factor also showed high frequency which
represents the issue related to human
element. Changes to vessel design and increased
complexity were identified as factors.
Although small risk factor frequency is
observed because of tug type involved in Expert Interviews reported that modern
Routine ship towage operation but it engine management systems can provide
indicates a fair relationship with dead slow speeds of ten knots; equally tug
consequences, on the other hand high risk
power has increased to an extent where
factor frequency and significant
relationship with consequences is exhibited bollard strength can be insufficient.
by navigational obstacle or restricted
manoeuvring space. The significance of an adequate number of
appropriately qualified and experienced
High risk factor frequency lies with poor crew were also identified. New entrants
work process components like speed, from other maritime sectors replaced by
wrong operating procedure and poor tug migration might not be aware equally risk
factors associated with harbour towage
handling and interaction. Poor operations.
implementation of safety culture
Many risk factors are related to training. In
contributed by poor Safety Management
harbour towage operations, tow planning
System was responsible for Poor Safety emphasized the significance of prerequisite
Management System and therefore was the of adequate information and experienced
persons involved in operations; Following
main source to threat to RST operation.
Operation Procedures marked the
Rough weather and Poor risk assessment significance of effective tug crew training
were also recognized as Poor Safety programmes; and Tug Handling stressed
upon sufficient training of tug masters.
Management System.
Interviews of experts implied that training
An area of equitable system of regulatory issues might also comprehended to personal
oversight for the benefit of all tugs is attributes and attitudes; emphasizing on the
importance of teamwork and effective
identified which could benefit after further
communication in order to secure safety in
analysis. A disproportionately high number harbour towage operations. A specific code,
of smaller uninspected tugs, involved in analysis of situation ( whether an action was
accidents, provided limited anecdotal safe) was marked; whether it was related to
handle tugs of new generations (with
evidence to support this. High frequency of reported exceptional tug size to power
insufficient Safety Management Systems ratios) or the capability to judge speed of a
and Human Factors (legislated for in
T 24
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22/06/15]
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Investigation Commission, 2001. Tekomihana.
Investigation 01-204 Tug "Nautilus III", capsize
and sinking, Auckland Harbour, 9 March 2001.
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Information Bulletin #03-09. April 3rd 2009.
Reducing Downstreaming Incidents on the Western
Rivers.
T 26
Development of Greenfield Airports and Air Connectivity in

India
D.P Singh*, Narendra N. Dalei**, T. Bangar Raju***
*Department of Transportation, UPES, Dehradun

**Department of Economics & International Studies, UPES, Dehradun
*** Department of Transportation, UPES, Dehradun
Abstract
Keywords
This paper identifies the initiatives taken
Air connectivity, Aviation, Low Cost
by Government of India to develop the
Airport, Greenfield Airports
airports as greenfield/low cost airport to
improve regional air connectivity. In this
JEL Code: R41, R42, R48
context an in depth exploratory
interview of state and central officials of
Introduction
civil aviation, the expert of civil aviation
The economic regulation in airport
consulting organizations and other
infrastructure in India was implemented
related organization were carried out.
after privatization, which resulted into
The XII five year plan document of
the adaptation of different regulatory
MOCA (Ministry of civil Aviation) and
approach for private and public airports.
other reports of the consultants and
In the first cycle of revision of airport
committees set by MOCA were
charges by Airport Economic Regulatory
reviewed in detail to know such
Authority (AERA) in 2009 the prices has
initiatives adopted so far. The suggested
been increased more than four-fold with
solutions and point of view of different
the result that Indian airports has come
organizations have been discussed and
in the category of costliest airports of the
finally the region wise airports have
world i.e. consumer has not been
been identified for development as
benefited as has happened in case of
Greenfield/Low cost airport to improve
competitive industry such as
the regional connectivity.
telecommunication (Singh, Dalei and
Raju, 2015). However, it has recently
been increasingly recognized that
T 27
aviation is not only a mere mode of management of airports with emergence

transportation for an elite group but is of regional patterns of ownership.
crucial for middle and low income group Privatized airports are common in
along with sustainable development of Australia and New Zealand, while partial
trade and tourism. Airports facilitate privatization is more common in Europe.
business tourism, medical tourism, In many cases, an airport may be owned
educational tourism, ethnic tourism, by one entity and operated by another. In
leisure tourism etc. (MOCA, 2012). The the event that an airport is publicly
International Civil Aviation owned and operated or publicly owned
Organization (ICAO) estimated that and operated by a not-for-profit
$100 spent on air transport produce organization, it is highly likely that the
benefits worth $325 for the economy and airport will pursue non-monetary
100 additional jobs in air transport result objectives in addition to earning a return
in 610 new economy wide jobs. The for shareholders.
ICAO study attributes over 4.5% of
global GDP to the air transport The charges levied by Airports
component of civil aviation.1 An Authority of India (AAI) are under two
efficient aviation sector is essential to broad heads viz., Air Navigation
support tourism, an industry with Services (ANS) and Airport Services.
immense employment opportunity. As However, AAI (2013) mentioned only
this is a capital intensive sector, there is the updated ANS charges for the AAI
an obvious need for perspective planning airports. ACRP (2013) studies how to
with a vision for the future and to muster identify the compliance requirements
the combined resources of the public and applicable to small hub and non-hub
private sectors, both domestic and airports during the period from 2000 to
international. 2010 (study period) and to quantify the
costs, including initial costs and
Over the past two decades, there has recurring costs, of federal requirements
been a trend towards the ownership and on small airports. Airports Economic
Regulatory Authority of India has
1
Report on Airport Economics of ICAO Doc determined aeronautical tariffs in 2014
9562
T 28
and proposed multiyear traffic of cargo imposed by governments- does a

handling services in 2013 for Bangalore particular framework represent a good
international airport (AAI, 2013; AERA, compromise between objectives and is it
2014). Aeronautical Tariffs of possible to meet the non-economic
Chatrapathi Shivaji International Airport objectives at less cost in terms of
has been determined by Airport efficiency (Gillen, 2007).
Economic Regulatory Authority during
2014 (AAI, 2014). The current Air connectivity is a major function of
regulatory regime for airports in UK was all airports which already been studied
established over 20 years ago under the by many scholars. However, hardly there
Airports Act 1986. Since then, there exist any studies pertaining to air
have been a number of developments in connectivity in order to meet the lower
the sector. (DoT, 2009). and middle income group’s aviation
demand. This study is unique of its kind
In analyzing airport regulation there are with the objective of purposing
several tasks. One of these is to observe development of low cost regional
the ownership and regulatory pattern in a airports in India which will help in
city or country, and seek to explain it in bridging gaps in aviation literature.
terms of efficiency and other objectives.
Another task is to outline which At the outset we provided introduction
approaches to airport ownership and and touched upon some relevant
regulation are most likely to be literature along with highlighting the
conducive to efficient operation of objectives pertaining to the study. The
airports- have some countries remaining part of this study is as
implemented promising models, and are follows. The data and methodology are
the approaches taken by others flawed? presented in section 2. Section 3
Finally, there is the task of assessing contains analysis and discussion
what ownership and regulatory followed by concluding remark in
frameworks can best promote efficiency section 4.
while recognizing the constraints
imposed by the non-efficiency objectives
T 29
Data and Methodology Indian Aviation Sector

This paper identifies the initiatives taken During the last one decade the civil
by Government of India to develop the aviation sector has grown at a
airports as greenfield/low cost airport to phenomenal pace and India has emerged
improve regional air connectivity. In this as the 9th largest civil aviation market in
context an in depth exploratory the world. As regards to domestic
interview of state and central officials of market, India is the 4th largest market
civil aviation, the expert of civil aviation after US, China and Japan. During 2012-
consulting organizations and other 13, Indian airports handled about 159.40
related organization were carried out. million passengers as against 162.31
The XII five year plan document of million passengers. Number of
MOCA (Ministry of civil Aviation) and passengers handled at Indian airports
other reports of the consultants and was about 73.34 millions per annum
committees set by MOCA were during 2005-06. Passengers handling
reviewed in detail to know such capacity has increased from 72 MPPA in
initiatives adopted so far. The suggested 2005-06 to 197.77 MPPA in 2012-13.
solutions and point of view of different Scheduled air services are operating
organizations have been discussed and from 81 airports connecting 26 States
finally the region wise airports have and 4 Union Territories. 17 state capitals
been identified for development as are connected to National Capital by
Greenfield/Low cost airport to improve direct flights. For these operations Indian
the regional connectivity. Aviation has 437 scheduled aircraft and
500 General Aviation aircraft (Singh,
Analysis and Discussion Batra, Grover, Parate, & Chand, 2012-
Followings are the analysis and 13). In the cargo front, 2.19 million
discussion which highlights importance metric tones of cargo had been handled
of developments of low cost regional at Indian airports during 2012-13 as
airports in order to meet the growing against 1.40 million metric tones during
aviation demand of middle and low 2005-06. Investment on Airport
income groups in India. Infrastructure during XI five year plan
was Rs. 36,371 Crores.
T 30
By the year 2020, India is expected to be class population is expected to rise by

3rd largest aviation market by handling 2.5 times by 2030 with 66% in Asia
384 million passengers (305 million Pacific. Increasing wealth is expected to
domestic passengers and 79 million move these countries (countries with low
international passengers). India will be air trips per capita) along with the flight
the fastest growing aviation market, curve. With these inputs, aviation
expected to be within 4-5 big aviation growth in India is pegged at CAGR of
markets by 2020, 3rd in terms of 10.3% up to 2020 as compared to 8% in
domestic market after US and China and South Asia (Singh, Batra, Grover,
expected to have 1030 scheduled aircraft Parate, & Chand, 2012-13). To facilitate
and 2000 GA aircraft. (ACI, 2012). To aviation growth, airports have to be
support this growth, investment of come up in order to meet the market
Rs.71,000 Crores is envisaged on airport demand.
infrastructure during XII Five Year Plan.
Air traffic in India at Tier-II & III cities
Need for the development of airports in are expected to grow faster than Tier-I
Tier-II & III Cities cities because of shifting of IT, BPO,
Air Trips per capita per annum for India MNCs & other industries to Tier-II & III
is 0.04 whereas for US & Australia is cities due to availability of cheaper land,
2.0; Malaysia is 0.54; Brazil is 0.25 and manpower & other logistics. As the
China is 0.15 showing a very high Head Offices of these companies still
potential for Indian Aviation Market operate in Tier-I cities, requires frequent
(AIF, 2013). According to Air Bus travel from Tier-II / III to Tier-I and vice
Industries forecast, share of GDPs versa with considerably stabilization in
contribution to world’s GDP by 2030 air travel cost. Also airports in Tier-I city
will be 40% by advanced economies (31 has been bursting, as there is little scope
Countries), 39% by BRIC economies (4 for further expansion and train
Countries viz., Brazil, Russia, India & reservations in higher class i.e. 1st AC /
China) and 21% by other emerging & 2nd AC / 3rd AC generally not available
developing economies. Also Air Bus before two months.
Industries forecasted that global middle
T 31
According to MOCA, development of Ranchi, Raipur, Bhubaneswar and

airports in Tier-II & III cities are Khajuraho shall be completed soon.
necessitated because large number of
non-operational airports are situated in Development of 27 other non-metro
the Tier-II & III cities viz., Agra, Salem, airports at Tier-III cities has been taken
Tanjavur, Vellore, Kishangarh, up by AAI. While the development of 15
Warangal, Rae-Bareilly etc., which is airports has been already completed;
either industrial hubs or tourist hubs or development of 5 other airports at
both. These airports can be made Kadappa, Puducherry, Bikaner,
operational with relatively little Jaisalmer & Bhatinda is expected to be
investment. In remote, hilly and completed soon. Airports have been
inaccessible areas of the country, air developed in the Tier-III cities - Mysore,
transport is the quickest and sometimes Pantnagar, Cooch Behar, Jalgaon, and
the only option of mode of transport. Akola; but as of now no schedule flight
Thus development of regional airports in operations have been undertaken. AAI
the Tier-II & III cities is essential to has a plan to activate 13 non-operational
sustain the future aviation growth. airports at Behala, Jharsuguda, Deoghar,
Malda, Along, Daparizo, Pasighat, Tura,
Regional Airports in India Rae-Bareilly, Kishangarh, Warangal,
In India, there are 457 Airports / Thanjavur and Vellore. Development of
Airstrips. Of these, AAI owns and 3 Greenfield airports is also undertaken
manages 91 airports; 125 airports are by AAI at Pakyong (Sikkim), Cheithu
managed by Ministry of Defence; 160 (Nagaland) & Itanagar (Arunachal
are managed by State Governments; 57 Pradesh).
airports are managed by private parties
and 6 airports are managed by Joint Low Cost Airports: Suggested Models
Venture companies. AAI has already We know that the first generation of
taken up the development of 35 non- Indian aviation boom was due to low
metro airports. While the development cost carriers. Low cost carriers made air
of 27 airports has already been traveling affordable to a vast majority of
completed; development of 4 airports at Indians and catalyzed passengers’
T 32
growth unprecedently. Similarly the The development of Low-cost Regional

second generation of aviation boom is Airports would also require a separate
likely to take place due to low cost regulatory framework both for safety
airports and regional airports. and security. For example Airports with
less than 50 passengers in a day may be
Low cost, no-frills airport will focus on exempted from X-ray screening and it
quality and efficiency of services. may be replaced by physical checking.
Airport Design is to permit 25-30 Wherever expensive sophisticated
minutes of turnaround time. The net equipments can be replaced by manual
result is that the airlines operating at or low cost systems without
these airports often require around half compromising on their original purpose,
the space per passengers as the legacy they may be acceptable. The DGCA and
airlines. General feature of low-cost BCAS should examine regulatory
airports is also the absence of a large regimes available in countries where
amount of expensive commercial space. low-cost airports have developed and
These airports will be developed in a adopt a similar minima based systems.
phased manner, initially to cater the
needs of 20/40/80 seater aircrafts These airports will have shared hold
depending on traffic forecast. Smaller rooms instead of individual gates and
aircraft should be treated as the main will not have PBBs, Escalators,
demand driver for the future growth of Carousels, etc. These airports will use
low cost airports. Initially these airports low-cost energy efficient sustainable
may function on the basis of VOR only technology for ventilation / air-
with or without Night Operations conditioning, waste water management,
facilities. These airports can have a water management, STP, etc. and
Runway Length of 1400m to 1700m software solutions to meet functional
with 2 parking bays. Perimeter may be needs.
provided with chain link fencing instead
of permanent wall.
T 33
Commercial Viabilities of Low Cost Low Cost Airports – Concerns, Issues

Airports and Solutions
Introduction of air connectivity or In spite of the progressive commercial
increased air connectivity enables viabilities of the low cost airports, the
manufacturing enterprises to exploit the following concerns and issues need to be
speed and reliability of air transport to addressed.
ship components across firms that are • Limited aero & non-aero revenue
based in different and distant locations sources over short to medium
thereby minimizing the inventory cost. term due to limited traffic.
Therefore the low cost airports are likely • Mandatory expensive safety and
to harvest the huge untapped industrial security requirements.
and commercial capacities in Tier-II and • High cost of mandatory
Tier-III cities and open up the infrastructure may make airports
opportunities for investments. The unsustainable thus there need
resultant economic growth of Tier-II and flexible regulation in licensing
Tier III cities will increase in disposable norms for scheduled operations.
income of middle class people living in • ANS Charges
such cities, which in turn will increase • There is risk of undermining the
the propensity to travel by air to distant viability of the project due to
places for pilgrimage, tourism, business, delay in getting large number of
education, training, etc. With the clearances required from various
emergence of low cost carriers and with authorities / agencies viz. DGCA,
the purchase of small aircraft (20/40/ 80 AAI, Defence, Environment
seaters) augmented with the low cost of Ministry, State Authorities &
operations will result in the affordability Local Municipalities.
in aviation sector. These factors are • Difficulties and delays in land
further strengthened by the interest acquisition, no proactive policy
shown by private promoters and on rehabilitation and resettlement
developers to develop airports in Tier-II of displaced inhabitants.
& III cities. • Access to airports and connecting
infrastructure generally has not
T 34
been factored by City Urban focus on supporting processes and

Planning Departments. functionality, to facilitate Airport
Operating costs of low cost regional operations, baggage claims, flight check-
airports may be curtailed by outsourcing ins and delivery of services. Removal of
of non-core activities. Further it is restriction of 150 km for revival of non-
suggested to enact enabling policies and operational airfields / airstrips, as these
create regulatory environment (including are not greenfield airports will support
licensing criteria, security & safety and benefit the activation of existing
norms) to encourage private sector non-operational airports. NSOPs may be
investment and to induce management permitted to announce schedules on
skills in regional airport infrastructure category II and III routes and
and regional airlines to ensure encouraged to operate to low cost
sustainability. Increased assistance under regional airports.
Viability Gap Funding scheme or India
Infrastructure Project Development Fund Initiatives by various Stake Holders for
will ensure the success of low cost Development of Low Cost Airports
airports. In addition, some monetary Stake holders such as Central
interventions by Government viz., Government, State Governments,
Establishment of Regional Airport Airport Developer, Airline Operators,
Connectivity Fund (RACF) through Commerce and Industry Bodies need to
collections made from passengers to take the following initiatives to
provide subsidies to airlines and for strengthen the commissioning and
establishment of regional low cost operation of low cost regional airports.
airports and heliports. This is in line with
Regional Development of Airports Initiatives by Central Government
Scheme (RDAS) and Remote Area It is necessary to enact enabling policy
Subsidy Scheme (RASS) both of which and regulatory framework to encourage
are in vogue in Australia and Essential private sector investment in the low cost
Air Services (EAS) Programme which is regional airport. Enacting National
in vogue in US. These measures will Policy on Regional Airport Development
supported by IT solutions by operators to will further strengthen the development
T 35
of low cost regional airports. Re- airstrips / airfields either by itself or

categorization of Routes under Routes through management contracts, JVs with
Dispersal Guidelines will facilitate private promoters and AAI. Lowering
operation of regional airlines to low cost sales tax on ATF will go in the long way
regional airports. Essential Air Service in promoting the aviation in the state and
Fund (EASF) / Regional Air the region. State may try to subsidies
Connectivity Fund (RACF) are to be land for airport construction and up
created to support air access to Tier-II gradation and also provide active
and III cities. Guidelines for assistance in land acquisition. State
development of no-frills airport model government may offer either tax free or
without compromising on safety and lower tax on inputs for Airport
security is also suggested. Facilitating construction & operations. State
airport development fee for pre-funding governments may offer direct subsidy to
of airports would help in keeping tariffs airlines to promote connectivity by the
down. Faster, single window mandatory way of underwriting of seats in sectors
clearances – facilitation support; Fiscal with low occupancy to till such time
incentives – infrastructure status & IT when sector stabilizes, say 3-5 years.
exemption be extended to brownfield State governments may also promote the
airport expansion and notification of tourism places by giving impetus to
ATF under ‘Declared Goods’ category Incredible India movement. A classic
with uniform 4% sales tax are the other example is a Kerala Tourism
few initiatives suggested to facilitate the Development Corporation (KTDC).
successful operation of low cost regional KTDC has promoted the state as “God’s
airports. own Country” with a direct focus on
tourism development. In addition,
Initiatives by State Governments provision of utilities i.e. water supply,
Since aviation growth creates business power at subsidized rates; promotion of
and employment opportunities, promotes flying schools, aviation colleges, etc. and
tourism and boosts economy of the real estate development funding in and
region, state governments may be around airport to private developers are
encouraged to develop State owned the other few initiatives suggested to
T 36
facilitate the successful operation of low government, airport operators may try to
cost regional airports. develop the fast connectivity (rail, road)
to the airport. Airport operators may try
Initiatives by Airline Operators to keep airport charges, including night
At the outset airlines must try to offer parking charges at the reasonable level
affordable airfares to cater to price to incentives the airlines and the
conscious regional passengers. Airlines passengers. Airport operators may
must try to use the regional airports as provide facilities for ancillary aviation,
inter-region & intra-region Regional like MRO facilities, Flying Schools, etc.,
Hubs. Airlines must try to develop the to enhance the commercial viability of
concept of code sharing in order to the airport. Airport operators may adopt
provide better connectivity with less green sustainable, environment friendly
time & cost and to minimize leakage of technology, in order to reduce carbon
passengers from the catchment areas. foot print. They may also develop
Regular ‘on time’ connectivity with Hub sustainable business model to offer
& Spoke approach will facilitate to aviation-related non-aero services –viz.,
reduce the operational cost with General Aviation, HRD, Hangars facility
retention of passengers. Leveraging for aircraft parking, Flying / Aviation
Technology (ICT, Software Solutions) to training academy, aero sports, cargo etc.
economies operational cost and and provide services for warehousing,
deployment of smaller aircraft with cold storage, food processing, agro
outsource non-core activity are the other tourism, retail outlets / chains,
few initiatives suggested to facilitate the multiplexes, IT hubs, medical services,
successful operation of low cost regional etc. Leveraging Technology (ICT,
airports. Software Solutions, etc.) to economies
operational cost; Multi-tasking staff and
Initiatives by Airport Operators outsource non-core activity are the other
Airport Operators must explore the few initiatives suggested to facilitate the
possibility of JV with State Government successful operation of low cost regional
/ AAI to develop the low-cost no-frills airports.
airports. In co-ordination with state
T 37
Initiatives by Commerce and Tourism separate policy for regional airports.

Industry AAI may facilitate reduction in airlines’
India has lot of tourists’ places in every operating costs to incentivize airlines to
state from Kashmir to Kanyakumari. serve regional airports, till traffic reaches
Commerce & Tourism Industry may try break-even level. Free Night Parking
to promote tourist places in co- Charges in initial years may also be
ordination with the state governments to considered. It is important that AAI must
generate tourists’ arrivals in their take a lead in building low-cost and no-
respective states. This may be done by frills airports.
developing tourist attraction avenues
along with travel packages at budget Business Models in developing Low
rates, casinos, etc. Commerce ministry Cost Regional Airports
may attempt to develop industry clusters The business models such as Hub-spoke
in airport catchment area; use of Air Model, Tier-II & III Model, Low-Cost
Cargo to the extent possible; No-Frill Airport Model, and Helipad
encouraging employees to travel by air. Development are suggested in
developing low cost regional airports.
Initiatives by Airports Authority of India These models are described below.
AAI may try to revive the non-
operational airports in Tier-III cities by Hub-Spoke Model
JV with the respective State Government In Hub-Spoke model, Tier-I city may be
or Private entities. AAI may try to connected with Tier-II & III cities.
rationalize aeronautical and airport However it is very early to conclude on
charges. It is important to develop the viability of this model.
T 38
Figure 1 : Hub Development Source Adapted from GMR (2014)
Tier-II & III Model  No Congestion.

In this model there is no hub and no tier-  No Restriction of Slots
I city is involved. Under this model Tier-
Helipad Development
II cities are connected with Tier-II cities
Helicopter operations for short distance
and Tier-III cities are connected with
could be considered by developing
Tier-III cities. Advantages of this model
Helipad where aircraft operation may
are
not justify the cost and concept.
Emerging corporate travelers who value
 No Cost Load viz., Airport
time as a precious asset could be the
Development Fees; Airport
target travelers. Less land requirement
Charges etc.
makes helicopter operation a successful
model, where land is a constraint, for an
T 39
airport. Minimum investment advantage Ltd.(BAPL) Changi-
makes helipads financially viable. For Singapore)

M/s.MARG Karnataka Bijapur &
sight-seeing, adventure tourism and
Group Bellary
medical emergencies helicopter
M/s. Super Puducherry Karaikal
operations could be capitalized. Airports
Helicopter operations could be for Source: Compiled by authors in
Remote Area Accessibility. Remote, consultation with various developers
hilly and inaccessible areas of the
country could be connected by In addition task force on development
helicopter operations. airports has recommended 32 airports to
be developed under PPP model at the
Achievement of Development of Low- cost of Rs.6000 Crores (see annex I).
Cost Regional Airports There are also 9 Tier-III Brownfield
Table 1 presents the development of Airports proposed to be developed in
Low-Cost Regional Airport projects in any region of the country (see annex II).
anvil through PPP Model. There are 15 Greenfield Airports
proposed to be developed for which in-
Table 1: Development of Low-Cost principle approval has been granted (see
Regional Airport projects in anvil annex III). Site clearance for 4
through PPP Greenfield Airports has been granted
Developers Region Airports (see annex IV) and 12 Greenfield
M/s. Reliance Maharastra Nanded, Latur,
Airports is under process (see annex V).
Baramati,
Yavatmal and
Osmanabad Conclusion
M/s. Rahi Karnataka Gulbarga &
Developers Shimoga During the last one decade the civil
(Expected to
aviation sector has grown at a
roll-out in the
phenomenal pace and India has emerged
current year)
M/s. Bengal West Bengal Durgapur as the 9th largest civil aviation market in
Aerotropolis Aerotropolis the world. As regards to domestic
Projects (Stake of market, India is the 4th largest market
T 40
after US, China and Japan. By the year AAI has already taken up the
2020, India is expected to be 3rd largest development of 35 non-metro airports.
aviation market by handling 384 million While the development of 27 airports
passengers (305 million domestic has already been completed;
passengers and 79 million international development of 4 airports at Ranchi,
passengers). To support this growth, Raipur, Bhubaneswar and Khajuraho
investment of Rs.71,000 Crores is shall be completed soon. Development
envisaged on airport infrastructure of 27 other non-metro airports at Tier-III
during XII Five Year Plan. cities has been taken up by AAI. While
the development of 15 airports has been
Air traffic in India at Tier-II & III cities already completed; development of 5
are expected to grow faster than Tier-I other airports at Kadappa, Puducherry,
cities because of shifting of IT, BPO, Bikaner, Jaisalmer & Bhatinda is
MNCs & other industries to Tier-II & III expected to be completed soon.
cities due to availability of cheaper land,
manpower & other logistics. Also The development of Low-cost Regional
airports in Tier-I city has been bursting, Airports would require a separate
as there is little scope for further regulatory framework both for safety
expansion and train reservations in and security. The low cost airports are
higher class i.e. 1st AC / 2nd AC / 3rd likely to harvest huge untapped
AC generally not available before two industrial and commercial capacities in
months. In remote, hilly and inaccessible Tier-II and Tier-III cities and open up
areas of the country, air transport is the the opportunities for investments. The
quickest and sometimes the only option resultant economic growth of Tier-II and
of mode of transport. Thus development Tier III cities will increase in disposable
of regional airports in the Tier-II & III income of middle class people living in
cities is essential to sustain the future such cities, which in turn will increase
aviation growth. the propensity to travel by air to distant
places for pilgrimage, tourism, business,
education, training, etc.
T 41
Stake holders such as Central Airports Authority of India. (2013). CHARGES

FOR AIRPORTS & AIR NAVIGATION
Government, State Governments,
SERVICES. New Delhi: Airports
Airport Developer, Airline Operators,
Authority of India.
Commerce and Industry Bodies need to
take the initiatives to strengthen the Department of Transport,UK. (2009). Reforming
commissioning and operation of low the Framework for the Economic
Regulation of Airports Decision
cost regional airports. The business
Document. In Reforming the
models such as Hub-spoke Model, Tier-
Framework for the Economic
II & III Model, Low-Cost No-Frill Regulation of Airports Decision
Airport Model, and Helipad Document (p. 139). London: DT
Development are suggested in Publications.
developing low cost regional airports.

Gillen, D. (2007). The Regulation of Airports.
Vancouver,: Centre for Transportation
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ACI. (2012). World Air Transport Statistics. MOCA (2012). XII Five year plan of MOCA .
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order 32/ 2012-13. New Delhi: Airport Multidisciplinary Research and
Economic Regulatory Authority. Development. 2(5), 414-418.
T 42
ANNEXURES
Annexure I
In Task Force has recommended the following 32 airports to be developed under PPP
model at the cost of Rs.6000 Crores.
1. Jharsuguda (Odisha)
2. Warangal (AP)
3. Chakulia (Jharkhand)
4. Raxaul (Bihar)
5. Rupsi (Assam)
6. Kishtwar
7. Lahual Spiti (Jammu & Kashmir)
8. Hissar
9. Karnal
10. Ludhiana
11. Adampur (Punjab)
12. Radhanpur ( Gujarat)
13. Parsoli (Gujarat)
14. Chandrapur
15. Karwar
16. Donakonda (AP)
17. Durgapur
18. Malda
19. Bhagalpur
20. Muzaffarpur
21. Jogbani
22. Madhubani
23. Jagdalpur
24. Ambikapur
25. Daltonganj (Jharkhand)
26. Jaypore (Odisha)
T 43
27. Utkela (odisha)

28. Gopalpur (Odisha)
29. Lenglec (Mizoram)
30. Agartala
31. Kamalpur (Tripura)
32. Juhu (Mumbai)
Annexure II
The following Tier-III Brownfield Airports proposed to be developed in any region.
i) Tezu
ii) Daparazo, Arunchal Pradesh
iii) Along, Arunchal Pradesh
iv) Ziro, Arunachal Pradesh
v) Pasighat, Arunchal Pradesh
vi) Rupsi, Asam
vii) Lengpui, Mizoram
viii) Kamalpur
ix) Tura ( Meghalaya)
Annexure III
The following are the Greenfield Airports for which in-principle approval has been
granted.
i) Kannur, Kerala
ii) MOPA, Goa
iii) Pekyong, Sikkim
iv) Sindhudurg, Maharashtra
v) Gulbarga, Karnataka
vi) Bijapur, Karnataka
vii) Hassan, Karnataka
viii) Shimoga, Karnataka
ix) Andal-Faridpur, West Bengal
T 44
x) Navi Mumbai, Maharashtra

xi) Kushinagar, Uttar Pradesh
xii) Dabra, Madhya Pradesh
xiii) Shirdi, Maharashtra
xiv) Karaikal, Pudducherry
xv) Aranmula, Kerala
Annexure IV
The following are the Greenfield Airports for which site clearance has been granted
i) Itanagar, Arunachal Pradesh
ii) Machiwara, Ludhiana, Punjab
iii) Dholera (Ahemadabad), Gujarat
iv) Ongale (Prakasham Distt.), Andhra Pradesh
Annexure V
The following are the Greenfield Airports for which site clearance is under process
i) Sholapur, Maharashtra
ii) Bhaini Bhairon (Meham Div. Rohtak Distt.), Haryana
iii) Chakan (Pune), Maharashtra
iv) Belora, Amravati, Maharashtra
v) Shirur (Pune), Maharashtra
vi) Kotkasim (Alwar Distt.), Rajashthan
vii) Bellari, Karnataka
viii) Ankkara (Idukki Distt.), Kerala
ix) Dwarka, Gujarat
x) Jamshedpur, Jharkhand
xi) Velankarani, Nagapattinam, Tamilnadu
xii) Rumari, Assam
T 45
Efficiency assessment at major ports of India for the period 2007-08

to 2013-14 using Data Envelopment Analysis (DEA)
N. Bhanu Prakash*, Dr. Tarun Dhingra**, Dr. T. Bangar Raju***
*Assistant Professor
**Assistant Professor
*** Professor,UPES, Dehradun
Abstract trade of a nation. They act as nodes of transit

The present paper is an attempt to measure for the imports and exports of a country and
efficiency trends at major ports of India support international trade of shipping
during 2007-08 to 2013-14 using DEA industry. Existence of efficient ports
technique. With the full-fledged functioning facilitates trade prospects of a country and
of Ennore port, India, today, has 12 major help economic development of a nation.
ports that compete among themselves apart Mechanisation of production processes and
from the stiff competition posed by numerous technological innovations have mandated
private ports. Reforms initiated at major ports greater trade flows among nations of the
have given boost to their performance and world. Factors such as evolution of newer
enhanced market expectations on their markets and initiation of economic reforms
efficiency levels. Therefore, it is important to across the world have given an opportunity to
check the actual efficiency levels at these the developed nations to invest in developing
ports so that appropriate future plans can be countries. Growing competitive market
envisaged for their sustainable growth. The environment has forced developing countries
study found better efficiency levels at a to look for ways and means to promote their
majority of these major ports. physical infrastructure and subsequently
foreign trade. Seaports, being a key segment
Key Words of infrastructure providing place utility, have
Major Ports of India, Data Envelopment to perform efficiently and enhance trade
Analysis, Efficiency, Performance. attractiveness of a country.
Government of India, under the economic
Introduction reform program, initiated privatisation
Seaports, a key wing of infrastructure sector, process at port sector during 1995-96
play a significant role in growth of foreign (Maritime Agenda-2020, 2010) to improve
T 46
the performance standards. Key facilities conclusions and scope for further studies in
such as terminals, berths, yard, stevedoring this direction.
activities, physical assets, etc., at the major
ports were outsources to private operators Literature Review:
under Build, Operate, and Transfer (BOT) Extensive review of research covering port
contracts for concession periods ranging efficiency studies collected is segregated as
from 5 to 35 years. studies covering world ports and Indian
While privatisation of port facilities is Ports. The synthesis of the same is listed in
initiated with a view to enhance their this section.
performance, a check on actual performance, Studies covering efficiency measurement of
help in determining whether the reform World Ports, is discussed in this section.
program has helped in enhancement of Studies on performance of seaports have
efficiency levels and also to determine been initiated lately with limited number of
further actions to be taken to ensure studies available via-a-vis the other sectors of
sustainable and everlasting improvement in infrastructure Dooms (2014). Few of the
efficient working of these ports. authors, Ntow-Kummi (2012); Brooks et. al.
Port performance holds a key for the growth (2011); Panayides et. al. (2009); Jiang & Li
of both industrial growth and foreign trade of (2009); Pallis & Vitsounis (2008); Langen et.
a country. Therefore, efficiency at which al. (2007); Blonigen & Wilson (2006) while
ports perform has been an interest for studying efficiency of ports, proposed
researchers as well as policy makers. The inclusion of performance parameters for
current study attempts to assess performance better assessment of port efficiencies.
of the 12 major ports of India during the
period 2007-08 to 2013-14. Esu & Inyang (2009), studying port
The paper is divided into five major sections performance concluded that absence of
with the first section covering introduction, Performance Measurement Standards (PMS)
followed by literature review in section two. has contributed to high rate of business
While section three details about the data and failures in public sector. Park & De (2004)
methodology, section four discusses key reviewed existing studies on port efficiency
results. The final fifth section deals with measurement across the world. The study
divided overall efficiency into several stages
T 47
by transforming inputs and outputs in each of economy, planned reforms, infrastructural

stage showing efficiencies according to & technological investments, port location &
production process and stage-wise role of accessibility, and improved service
inputs and outputs. Bichou, Gray (2004) standards. Weille & Ray (1974) suggested for
studied performance of logistics and supply dedicated infrastructure setup at berths for
chain management with relevance to port better efficiency.
sector. This study found that the concept of
efficiency to be vague and its assessment to Few authors, Cheon et. al. (2009); Pallis &
be difficult at port organisation. It further Syriopoulos (2007); Liu (1995) linked
suggested that port activities extending into efficiency at container ports to reform
production, trading and service industries program and suggested for existence of
make assessment more complex. Marlow & strong support from government in the form
Paixao (2001) reviewed existing research of regulatory environment, reforms covering
works to propose theoretical framework for overall economy, Authors such as Tongzon
measuring lean ports performance and & Heng (2005); Cullinane et. al. (2002)
suggested that both qualitative and found that privatisation without existence of
quantitative indicators to be significant for strong regulatory environment cannot be a
sustenance development of agile ports. complete solution for improving port
efficiency. Authors like, Cullinane et. al.
Empirical studies covering container ports by (2006) & Tongzon (2002) compared the
Navarro-Chavez & Zamora-Torres (2014); techniques of efficiency evaluation and
Ng (2012); Pjevcevic et. al. (2012); Barros suggested Data Envelopment Analysis
(2012); Nwanosike et. al. (2012); Bergantino (DEA) as a robust method to trace efficiency.
& Musso (2011); Wanke et. al. (2011);
Padilla & Eguia (2010); Caldeirinha (2009); Herrera & Pang (2008) gauged efficiency at
Park & Ro-Kyung (2008); Barros & Mangi 86 container ports across the world using
(2008); Haddad et. al. (2007); Cullinane & non-parametric methods. The study observed
Wang (2006); Trujillo & Tovar (2005); excess usage of 20 to 40 percent inputs by
Tongzon & Heng (2005); found that inefficient ports. The authors observed that if
improvement in efficiency is possible with the current level of 40% infrastructure costs
better strategies, financial discipline, growth can be reduced to 12%, all the inefficiency
T 48
ports can revive and become efficient. They most researchers, few of the authors have
also suggested that most ports in the third considered the financial aspects of port
world can reduce their inefficiency by operations. By and large, authors have traced
contracting scale of operations. efficiency improvements at the ports
considered for evaluation. Most authors have
Kaisar et. al. (2006) assessed efficiency at found greater efficiency gains due to
selected US ports and identified a set of best privatisation of ports across the world. Few
practices for inefficient ports. The study of the researchers have also proved efficiency
suggested that sources and extent of gains at ports due to containerisation of
inefficiency that a port should focus to cargo.
improve operations. Estache et. al. (2003)
studied sources of efficiency improvement at Studies covering Indian Ports, by Rajasekar
Mexican terminals between 1996 and 1999. et. a. (2014), Mokhtar & Shah (2013),
The study observed constrained efficiency Rajasekar & Deo (2012), Gaur et. al. (2011),
improvement at ports in spite of improved Nihar (2011), Jim Wu Lin (2008);
technologies with a large gap between actual Chudasama & Pandya (2008) found that
and expected performance levels. Weille & efficiency of a port is not influenced by size
Ray (1974), studied capacity of port of port but due to factors such as
operations that can maximise the net benefits infrastructure setup, technological
to both port authority and ship owners and upgradation, investments into capacity
concluded that specialised berths would buildings, business & operational acumen,
enhance the performance for ports. The study investor-friendly policies, and ability to
also suggested that reduction in service time utilise resources. Rajasekar et. al. (2014)
can enhances efficiency levels. traced that with the help of strong long-term
strategies, smaller ports have improved their
Although studies measuring port efficiency efficiency levels in comparison to the bigger
have initiated during the 1970’s, the number ports. Rajasekar & Deo (2012) and Bhatt &
and type of variables taken by the researchers Gaur (2011) have found better efficiencies
are mostly influenced by data availability and due to containerised cargo.
context of work done. While technical
indicators of efficiency were considered by
T 49
Dama & Zawar (2013), aimed to study the operational and financial performance of
growth economy and Indian sea ports found ports.
positive correlation with GDP. But the
growth of non-major ports has higher
correlation with the growth in GDP. Ghosh Data and Methodology
et. al. (2010), working on growing Indian Port performance indicators suggested by
Port sector and need for private investments UNCTAD in 1976 have been a base for
observed that extent of participation and checking efficiency of ports across the world.
investment interest shown by the private However, dynamic business environment and
sector in different spheres of port activity port ownership models have given
despite several constraints would help in the opportunity for evolution of newer
overall growth of the sector in future. performance indicators over a period of time.
Deveshwar (2010), suggested for policy Numerous researchers over a period of time
refinements like amendment of certain Acts have proposed some pertinent performance
to make the sector lucrative for private indicators that reflect operational and
investments. Wu & Lin (2008) found that financial efficiencies of ports at the minutest
India with relative comparative advantage possible levels.
over many other industrilised countries needs
to overhaul its port infrastructure to The current research considered, in line with
accommodate growing volumes of imports the research methodology requirements,
and exports. identified a total of 8 variables including 6
input and 2 output performance indicators.
The above review vindicates that port The input variables cover selected financial
performance across the world, including and physical facilities at the berth including
India, has improved due to privatisation. cost per berth; cost per employee; cost per
Infrastructural investments by private sector vessel handled; operating expenses to total
at ports leading to mechanisation has resulted expenses; number of berths; and number of
in improvement of overall port efficiency. cranes. The output variables include two of
However, the review also supports existence the important output performance indicators
of strong regulatory environment for better namely throughput and operating income. Of
the six input and two output variables, 4 input
T 50
and one output variable reflect financial is considered to be a powerful tool to assess
indicators and two input and one output efficiency.
variable reflect operational indicator of port
performance. Data Envelopment Analysis (DEA), a
methodology used to measure performance
Data covering the years from 2007-08 to has routed from linear programming. It is a
2013-14 published by Indian Ports tool being successfully applied to assess
Association, an apex authority under relative performance of a set of firms that use
Ministry of Shipping, Government of India is multiple of identical inputs to produce
considered for this study. Each of the 12 multiple of identical outputs. The basic
Major Ports are taken as separate Decision principle of DEA is originated by Farrel
Making Unit (DMU), include Kolkata-Haldia (1957). Cooper et al. (2005) updated and
Port Trust (KHPT); Paradip Port Trust (PPT); comprehended material on DEA. Ji & Lee
Visakhapatnam Port Trust (VSPT); Ennore (2010) developed DEA command that selects
Port Corporation (EPC); Chennai Port Trust chosen variables from Stata data to construct
(ChPT); Chidambaranar Port Trust (CbPT); a LP model based on selected DEA options
Cochin Port Trust (CPT); New Mangalore to check efficiency of tested DMUs. Adler et.
Port Trust (NMPT); Murmogao Port Trust al. (2002) reviewed research papers that
(MgPT); Mumbai Port Trust (MbPT); attempted to improve differential capabilities
Jawaharlal Nehru Port Trust (JNPT); and of DEA for ranking efficient and inefficient
Kandla Port Trust (KPT). DMUs. Banker et. al. (1984) argue that with
the adoption of DEA, Mathematical
Data Envelopment Analysis (DEA) is a programming is extended for use as a tool for
nonparametric method to quantify efficiency control and evaluation of past
of a decision-making unit (DMU) which is an accomplishments and also to aid in planning
organisation public or private. The concept future activities. They have separated
was initially introduced in the Operations efficiency on the basis of technical and scale
Research (OR) literature by Charnes, Cooper, aspects without altering the basic conditions
and Rhodes (CCR) (European Journal of of DEA on observed data. Charnes et. al.
Operational Research [EJOR], 1978). DEA (1981) proposed model for measuring
efficiency of Decision Making Units (DMUs)
T 51
along with methods of implementation and ∑𝐽𝑗=1 𝑣𝑗𝑚 𝑦𝑗𝑚

max 𝐸𝑚 =
interpretation. Authors suggested that results ∑𝐼𝑖=1 𝑢𝑖𝑚 𝑥𝑖𝑚
of the DEA model proposed by them Subjected to:
facilitates validation of results and thus, helps ∑𝐽𝑗=1 𝑣𝑗𝑚 𝑦𝑗𝑛
0≤ ≤ 1; 𝑛 = 1, 2, 𝐾, 𝑁
in further studies. The following three modes ∑𝐼𝑖=1 𝑢𝑖𝑚 𝑥𝑖𝑛
of DEA are generally used for analysis. 𝑣𝑗𝑚 , 𝑢𝑖𝑚 ≥ 0; 𝑖 = 1, 2, 𝐾, 𝐼; 𝑗 = 1, 2, 𝐾, 𝐽
Where
𝑢1 𝑦10 + 𝑢2 𝑦20 +. . . +𝑢𝑛 𝑦𝑛𝑜
(𝐹𝑃0 )𝑀𝑎𝑥 = Em is the efficiency of the 𝑚𝑡ℎ DMU
𝑣1 𝑥10 + 𝑣2 𝑥20 +. . . +𝑣𝑚 𝑥𝑚𝑜
yjm is 𝑗 𝑡ℎ output of the mth DMU
Where:
vjm is the weight of that output
u – weight of output;
y – output value; xim is 𝑖 𝑡ℎ input of the mth DMU
v –weight of input; uim is the weight of that input, and
x – input value yjn and xjn are 𝑗 𝑡ℎ output and 𝑖 𝑡ℎ input,

respectively, of the nth DMU, n = 1, 2, … , N.
Fractional DEA Programs: Note that here n includes m.
Each of the 12 major ports of India is taken
as an independent DMU and their efficiency Key Results
is assessed with a mathematical model. Results obtained from the analysis are
Efficiency of each of the DMUs can be depicted in the following table:
assessed with the following formula:
PORT 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08

KHPT 1.000 1.000 1.000 1.000 1.000 1.000 1.000
PPT 1.000 1.000 1.000 1.000 1.000 1.000 1.000
VSPT 1.000 1.000 1.000 1.000 1.000 1.000 1.000
EPC 1.000 1.000 1.000 1.000 1.000 1.000 1.000
ChPT 0.841 0.767 0.744 0.787 0.925 0.935 0.884
CbPT 0.714 0.743 0.741 0.731 0.702 0.987 1.000
CPT 0.490 0.469 0.478 0.421 0.426 0.402 0.420
NMPT 1.000 1.000 1.000 1.000 1.000 1.000 1.000
MgPT 1.000 1.000 1.000 1.000 1.000 1.000 1.000
MbPT 1.000 1.000 1.000 1.000 1.000 1.000 1.000
J.N.P.T 1.000 1.000 1.000 1.000 1.000 1.000 1.000
T 52
KPT 1.000 1.000 1.000 1.000 1.000 1.000 1.000
As per DEA technique, DMUs with results 1 privatisation is yet not taken by all the major
are considered as efficient and DMUs ports of India. Unlike most other studies, the
showing less than 1 are considered as variables studies in this paper are dominated
inefficient. As per the results during the by financial performance indicators. The
period 2007-08 to 2013-14 all DMUs except results showing better efficiency level at
ChPT, ChPT, and CPT ports have performed most of the ports is encouraging and become
efficiency. a source for further studies that can include
some of the privately owned ports in India. It
From the data considered and results would also be interesting to have a
obtained it is evident that majority of Indian comparison between the Indian ports and
ports to be working efficiency at their their international counterparts covering
existing level of operational and financial financial variables.
factors of input. Three ports ChPT, ChPT,
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Energy, Infrastructure and Energy
High speed railway- challenges & options: An Indian perspective

Avishek Ghosal*, Dr. Anirban Sengupta**, Dr. Anil Kumar***
*Lecturer, Dept. of Power & Infrastructure, College of Management & Economics Studies, UPES
**Professor & Dean, College of Management & Economics Studies, UPES
***Professor and Head, Dept. of Power & Infrastructure, College of Management & Economics Studies, UPES
Abstract European Union defines high speed rail as

In June 2015 the new government under the lines specially built for speeds greater than
leadership of Narendra Modi unveiled the or equal to 250 kmph or lines that are
plan for laying down tracks for High Speed specially upgraded with speeds greater than
Railway (HSR) lines for better connectivity. 200 kmph or 124 mph (Feigenbaum, 2013) .
In implementing such a program, it is most The USA defines high speed differently as
important to find out the factors that will Emerging rail which has 90-110 mph,
help in better decision making for the Regional rail that has speeds 110-150 mph
eventual success of the Railway project. In and Express rail which has speed of at least
this review paper we tried to summarize and 150 mph.
identify the factors that will lead to the
success of HSR in India. We tried to identify History of High Speed Railway
the factors through the case of Ahmedabad- High Speed Railway (HSR) has been one of
Mumbai corridor which will be the first line the most innovative mass rapid transit
that will be commissioned by December systems that the world had ever seen since
2016 the World Wars. The term “High Speed “is a
relative concept and its definition had
Keywords changed every decade since railway became
Transportation, Economic of scale, the part of our society. The first of the
Investment, Mobility modern high speed line was opened in Japan
for the 1964 Tokyo Olympics (Feigenbaum,
Introduction 2013). The name given to this line was
Definition of High Speed Railway “Shinkansen” which literally means new
High speed rail has different definitions in main line. It connected the cities of Tokyo
different countries. According to the and Osaka. The line was built in a corridor
International Union of Railways, The well suited to train travel and was used to
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mitigate the capacity constraint that the principle worked successfully and it helped
government faced there. Construction of in the economic recovery of some cities in
“Shinkansen” was financed with loans from France. Looking into the above countries
the World Bank and the Japanese success Germany, Spain, China and many
government (Feigenbaum, 2013). Japanese other countries started building their own
railways historically had been using narrow HSR. Spain’s plan is to increase the size of
gauge (1067 mm) for their railway lines. its HSR network to 6200 miles and China’s
First of the HSR was built on the narrow plan to increase the network to 10000 miles
gauge, but as time passed by it was by 2020. But safety remains the main issue
converted into standard gauge (1435mm) for regarding the success of HSR. China was
safety purpose (Gourvish). At present Japan forced to reduce its HSR Speed due to
has an impressive 2000 km network of High Wenzhou crash which killed 39 people in
Speed lines, but facing financial problem as 2011 and one year later in Spain.
enough revenue is not being generated to
cover their operating costs. Why High Speed Corridor is needed in
India
The world’s second high speed line and first India is the largest democratic country and is
in Europe was opened in Italy connecting the third largest economy of the world. The
Rome and Florence in 1977 (Feigenbaum, average GDP growth rate of India for the
2013). At present in Italy there are another last 15 years had been around 6 %. But India
two lines connecting Turin and Venice and is still an energy deficient country as peak
second linking Salerno to Milan (the fashion deficit remains at around 3.5%. Also, every
capital of Italy). France was next in line country is moving for technologies that
open its HSR corridor, referred as the TGV consumes less energy and can keep the
(Train a Grande Vitesse). The line was environment clean. So as of Mr. V.
opened in 1981 linking Paris to Lyon Ramachandran, Director General, Indian
(Feigenbaum, 2013). At present the French Railways say “HSR brings clear and
system had approximately 1270 miles of significant economic benefits to the
High Speed rail line. The TGV was built on communities they serve not only in terms of
the principle that travel time of HSR should rise in GDP, but also in terms of its
be in between two to four hours. This environmental impact. HSR uses much less
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energy per mile than auto or air travel. HSR economic doldrums had started to
transit is thus quickly gaining popularity as a revive.
key alternative in transportation policy
planning” (Agrawal, 2011). Urbanization in Challenges & Issues: Indian perspective
India is also increasing rapidly. By 2040 it
Political Will & Policy Framework
had been said that urban and rural
Each HSR corridor will have a long
population will be almost equal. As most of
gestation period and will require huge
the so called Tier I cities are already over
capital investment. So strategic thinking is
populated so we have to build up new cities
required at the top most level for
to accommodate this increased population.
implementing the project in programmed
But connecting with the Tier I cities should
manner. Coordination should remain smooth
remain viable, so that the economy does not
in between Central government ministries,
get affected because this Tier I cities
State Governments and the Local
contributes to about 60 % of India’s GDP.
governments. They should look into the
Another important factor that remains an
success stories of HSR all over the world.
issue, especially with India is Land. HSR
The business plan will be formulated should
will allow more passengers to travel with
be designed to assign responsibilities and
less requirement of land.
risk to parties- both public and private- best
able to manage them (Authority, 2014).
The main motives that we can find out for
Responsibility should be shared.
the need of HSR are:
1. HSR will save Energy Costs and
Selection of Project Corridors for
reduces GHG emission.
implementation
2. Land Requirement is smaller
India is a vast country. There are many
3. It will help in decongestion of Tier I
potential corridors where HSR can be
cities
implemented. But we have to start with a
4. Will be able to handle high rates of
pilot project so that if there are any failures
Urbanization.
we can easily identify them and can build a
5. It will trigger a Modal Shift
framework that will mitigate the errors.
6. If we see through the history of HSR
Economic/ financially viable corridors
some the cities which got into
should be given priority. HSR project needs
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huge capital. As of 2015 per Km cost subsidy from road/ air travelers, etc...
remains at around 10 Million US$. Also, Integration of HSR with airline operations
HSR will be a dedicated line, so there will will be pursued where feasible. This will
remain a high demand risk due to higher help in substituting feeder flights feeder
tariffs as compared to conventional rail. The flights to hub airports. In Germany such
willingness of local governments to strategy had been implemented and made
participate in the project by way of land and some of the HSR projects feasible.
funding support can also be helpful
(Feigenbaum, 2013) (Agrawal, 2011). Financing HSR Projects
The high capital cost of HSR makes it a
Economic Costs financial challenge. Government of India
The Development of an HSR network does not have the required funds to do it by
requires huge construction and operation its own. As per the initial prefeasibility
costs. The key decision at the outset study per km cost is coming around 9.5
concerns the complementary of carrying million US$. Most of the private sector
passengers and freight (Albalate & Bel, firms will hinder in investing such a huge
2010) (Waddell, 1995). Complementarity amount for the HSR projects. The only
with freight transport increases costs, since option that comes out is funded through
the track gradients have to be more carefully multilateral and bilateral agencies or through
controlled. Various types of other hidden PPP mode. Most of the HSR projects around
costs have to be taken into account when the world had been funded by the World
considering the additional expenditure Bank. From India’s perspective World Bank
incurred while constructing HSR tracks. is eager to fund the HSR projects. A Public
Land cost increases the initial capital costs private Partnership (PPP) approach can be
substantially and is the key factor when an ideal fit for new build high speed rail
HSR tracks enter the densely populated infrastructure. It focuses simultaneously on
areas. So Emphasis on other alternative minimizing whole life cost while ensuring
revenue sources other than fare box revenue that incentives and protections are in place
has to be considered. Some of the examples for responsible long term upkeep of the
of alternative revenue sources are like Real infrastructure (Rail at high speed – Doing
estate revenues, carbon credits, cross large deals in a challenging environment).
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Land Acquisition  Rolling stock

Large scale railway projects usually require  Signaling and communication
land acquisition and displacement of homes  Train control
and businesses. While the government may  Fare collection
have the authority to acquire land when
needed for development purposes, land Competitiveness of HSR
acquisition often draws controversy and full A drive to an airport, followed by hours in
scale riots as in case what happened in line before boarding a short haul flight and
Kerala. This mainly happens due to the then another drive after reaching one’s
associated human costs may be much more destination seems positively irrational. If we
than the monetary compensation available. see the world over after coming into effect
Transparent and tested land acquisition laws air travel between Paris and Lyon now
and agreement between stakeholders over makes up only 7% of the travel market as
fair compensation play a crucial role in the opposed to the TGV, which takes 72%
timely and successful completion of railway (Waddell, 1995). The Eurostar between
projects (PwC, 2014). Paris and London took three quarters of air-
rail passengers in 2009. By the second year
Selection of Technology of its operation, the AVE between Madrid
Choice of technology remains an important and Barcelona had captured 89% of the air -
factor. The technology is mainly divided rail market. Even in Japan, where airlines
into two parts: competed vigorously against the original
a) Fixed Infrastructure: HSR between Tokyo and Osaka, the
 Mix of Shinkansen carried 85% of the corridor’s
Embankment/Elevated/ air-rail traffic in 2007 (Chestera &
Underground Structures and Ryersonb, 2014). There is clearly a
their dimensional control “SWEET SPOT” for HSR somewhere
 Construction Gauge; between 400 to 800 kilometers that makes it
 Fencing of the complete overwhelmingly the preferred mode of
track/elevated track; travel over both air and road (Waddell,
 Electrical Installations 1995). HSR has become faster over the
b) Fast Upgrading Technology years, the outward limits of that range
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increase. Still, most specialists believe that a 2. 30% of the population of this belt
journey above 900 kilometers makes air has monthly income above Rs.
travel the more viable option. 50000.
3. According to the Sweet Spot theory
There are several some other variables that the corridor suits HSR as the
help in the determination of the success of distance between two cities is 525
high-speed rail. The first is population km.
density near the rail station. To compete 4. The urbanization growth rate for this
with the airlines, trains must depart area is above the national average.
frequently, but they must also fill or nearly 5. Transparency in State Government
fill (Feigenbaum, 2013). Connectivity of policy initiatives.
rapid transit is also remains an important 6. It is also the part of Delhi-Mumbai
factor. In Tokyo and Paris, passengers can industrial corridor.
arrive at stations and travel by heavy rail or 7. Weather condition suits the region.
commuter rail to nearly all the destinations 8. The area is not situated in an
in the urban area. A short taxi ride or bus Earthquake prone zone.
ride may be necessary to reach one’s final 9. Average daily passenger movement
destination. In India we have that option. is around 50000.
Ahmedabad- Mumbai Corridor Conclusion

The proposal for the Ahmedabad- Mumbai Most of the high speed railway lines all over
corridor is submitted and if everything goes the world had been loss making. To even
according to plan, we can reach from touch break even lots of study is required,
Mumbai to Ahmedabad in one hour, 52 especially for a country like India, where for
minutes by HSR and the HSR can be on the any infrastructure project funding and land
horizon of the year 2021 (University, 2014). acquisition had been the toughest. HSR in
But why this corridor was chosen first. India it can give a fight to the low cost
There are many reasons behind this. carriers specially for connecting CBDs in
1. The above corridor generates around between distance of 500 to 900 km. In India
20% of India’s GDP, which is HSR can be a solution to decongesting
around 356 billion US dollars
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traffic movement, but will be not feasible for 10. Jenkins, B. M., Kozub, C., Butterworth, B.
R., Haider, R., & Clair, J.-F. (2013).
many routes
Formulating a Strategy for Securing High-
Speed in The United States. MINETA
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Identification , Characterization and Analysis of Selected Research on

Transportation Public-Private Partnerships from 2007-2015
Authors: Akhil Damodaran*, Dr. Tarun Dhingra**
* Prof Akhil Damodaran (Asst Professor , Department of Strategic Management ,UPES)
** Dr.Tarun Dhingra (Senior Associate Professor , Department of Strategic Management ,UPES)
Abstract related literature is published in the area of

civil, project etc... , in the field of transportation
Public–Private Partnership in transportation
the list also includes journals outside area of
is a major research interest worldwide
civil, project management.
therefore this paper aims to methodically
A systematic Review of PPP articles related to
review studies on the PPP in transportation for
the area of transportation is presented here ,
implementing PPP from some selected top tier
the main intention of writing the paper is to
academic journals from 2007 to 2015 (years
provide a broad review of articles from 2007-
inclusive). The search results indicated an
2015 , and to analyze research gaps if any, and
increased research interest in the exploration
also to provide insight on PPP in the field of
of transport PPP since 2007. The mostly
transportation to understand how much
identified Themes are Contracting, Design,
academic work is done.
Finance, General Concept, National
Application, Procurement, Public Sector
Literature Review
Issues, and Risk.
Ken et al. (2009) examined PPP-related
articles in seven construction journals from
Keywords 1998 through 2008. The seven journals found
PPP, Transportation, Review, Risk, Value for to publish the most PPP content were:
Money, Airports, Rail, Concession, Pricing. Construction Management and Economics
(CME) ,Engineering, Construction and
Introduction Architectural Management (ECAM) ,
With the increasing importance of Public International Journal of Project Management
private Partnership in the field of Infrastructure (IJPM) ,Journal of Construction Engineering
delivery and Transportation, it is important to and Management (JCEM),Journal of
analyze recent work in Academic front with Management in Engineering (JME)
respect to Public private partnership in the ,Proceedings of the Institution of Civil
domain of Transportation. Most of the PPP
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Engineers – Civil Engineering (PICE-CE) , Search Tools

Public Money and Management (PMM) . We have used Science Direct and Google
Tang et al(2010) The authors investigated scholar as our primary search tools
articles in six journals from 1998 to 2007,
selecting CME, ECAM, IJPM, JCEM, Search keywords
JME,The 107 PPP-related papers in these The search terms for the title query were
journals were tallied by year and research developed from Garvin et al(2012) working
method, with extensive discussion on the paper because it was covering most of search
application of empirical and non-empirical criteria required . Total of 35 journals had
approaches. been identified using below search criterias.
Garvin et al(2012) Studied 140 journals in search strings are given as “public private
their working paper , they grouped their paper partnership” OR “public private partnerships”
into number of citations of the paper ,Impact ? PPP OR PPPs ? “build operate transfer” OR
factor, broad themes and sub themes. BOT ? “private finance initiative” OR PFI ?
“public sector comparator” OR PSC ? “value
Research Methodology for money” OR VFM ? toll + (road OR
Present Study is an extension of the work of highway OR transport OR infrastructure) ?
Garvin et al(2012) , we will see the trend in (finance OR financing) + (road OR highway
the area of PPP with respect to area of OR transport OR infrastructure) ? (franchise
transportation and also we will touch across OR franchising) + (road OR highway OR
themes which may be related to other areas transport OR infrastructure) ? (concession OR
also because to know PPP in transportation , concessions) + (road OR highway OR
knowledge in any topics of PPP is important transport OR infrastructure OR length OR
which are used across domains. We divided term)
our paper into broad categories, Classification, Categorisation and Citation
1) Themes We have analyzed total 204 articles related to
2) citation of articles (to broader categories as PPP which again filtered out to total 101
per relevance). articles which were related to Public Private
Partnership in the area of transportation.
We have included papers which are either
directly focuses on PPP in transportation or it
is one of the important focuses of the paper.
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Research Themes and Subgroups
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Theme categories with Author List and Citation

Main Theme Author Citations
Contract
Design Alonso-Conde, Ana Belen; Brown, Christine; Rojo-Suarez, Javier 75
Byoun, Soku; Xu, Zhaoxia 1
Chang, Chen Yu 17
Daito, Nobuhiko; Chen, Zhenhua; Gifford, Jonathan L.; Porter, Tameka; Gudgel, John E. 2
De Schepper, Steven; Haezendonck, Elvira; Dooms, MichaÃ«l 1
MacÃ¡rio, RosÃ¡rio 5
Meunier, David; Quinet, Emile 13
Rangel, Thais; Vassallo, JosÃ© Manuel; Arenas, Blanca 6
Viegas, JosÃ© M. 15
Wang, Grace W Y; Pallis, Athanasios a. 0
Zheng, Jurong; Roehrich, Jens K.; Lewis, Michael a. 0
Finance Bonnafous, Alain 10
Demirag, Istemi; Khadaroo, Iqbal; Stapleton, Pamela; Stevenson, Caral 28
Hodge, Graeme a.; Greve, Carsten 119
Hodges, Ron; Mellett, Howard 10
Lopez-Lambas, MarÃa Eugenia; Monzon, Andres 6
Love, Peter E.D.; Liu, Junxiao; Matthews, Jane; Sing, Chun-Pong; Smith, Jim 1
MacÃ¡rio, RosÃ¡rio 7
Maffii, Silvia; Parolin, Riccardo; Ponti, Marco 0
Sawyer, Malcolm 5
General
Concept Aerts, Geoffrey; Grage, Thies; Dooms, MichaÃ«l; Haezendonck, Elvira 0
ÃœlkÃ¼, Tolga 1
Auriol, Emmanuelle; Picard, Pierre M. 29
Cabrera, MarÃa; SuÃ¡rez-AlemÃ¡n, Ancor; Trujillo, Lourdes 4
Carnis, Laurent; Yuliawati, Eny 5
Chou, Jui-Sheng; Pramudawardhani, Dinar 1
Chou, Jui-Sheng; Tserng, H. Ping; Lin, Chieh; Huang, Wen-Haw 1
Cruz, Carlos Oliveira; Marques, Rui Cunha 25
De Clerck, Dennis; Demeulemeester, Erik; Herroelen, Willy 9
Evenhuis, Emil; Vickerman, Roger 24
Gangwar, Rachna; Raghuram, G 2
Garvin, Mike; Gross, Martha 3
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Henjewele, Christian; Sun, Ming; Fewings, Peter 8

Hwang, Bon Gang; Zhao, Xianbo; Gay, Mindy Jiang Shu 48
Kwak, Young Hoon; YingYi, Chih; Ibbs, C William 190
Lehtiranta, Liisa 13
Liu, Tingting; Wilkinson, Suzanne 16
Medda, Francesca Romana; Carbonaro, Gianni; Davis, Susan L. 10
Mladenovic, Goran; Vajdic, Nevena; WÃ¼ndsch, Bjorn; Salaj, Alenka Temeljotov 8
Ng, S. Thomas; Wong, Yoki M W; Wong, James M W 21
Nisar, Tahir M. 8
Osei-Kyei, Robert; Chan, Albert P.C. 2
Oum, Tae H.; Yan, Jia; Yu, Chunyan 167
Phang, Sock Yong 63
Sambrani, Vinod N. 1
Sobhiyah, M. H.; Bemanian, M. R.; Kashtiban, Y. Kh 16
Tang, LiYaning; Shen, Qiping; Cheng, Eddie W L 115
Tsamboulas, D.; Verma, a.; Moraiti, P. 17
Villalba-Romero, Felix; Liyanage, Champika; Roumboutsos, Athena 0
Willoughby, Christopher 0
Zou, Weiwu; Kumaraswamy, Mohan; Chung, Jacky; Wong, James 0
Governance
Issue Guo, Feng; Chang-Richards, Yan; Wilkinson, Suzanne; Li, Ti Cun 5
Assaf, A. George; Gillen, David; Tsionas, Efthymios G. 1
Chang, Zheng 2
de Jong, Martin; Mu, Rui; Stead, Dominic; Ma, Yongchi; Xi, Bao 62
Halonen-Akatwijuka, Maija 6
Loosemore, M.; Cheung, E. 0
Panayides, Photis M.; Parola, Francesco; Lam, Jasmine Siu Lee 0
Tang, LiYaning; Shen, Qiping 17
National
Applications Gordon, Cameron 4
Mu, Rui; Jong, Martin De; Koppenjan, Joop 50
Procurement Engel, Eduardo; Galetovic, Alexander; Fischer, Ronald 199
Glumac, B.; Han, Q.; Schaefer, W.; van der Krabben, Erwin 1
Public Sector
Issues Beria, Paolo; Ponti, Marco; Ramella, Francesco 0
Bray, David; Sayeg, Philip 2
Burke, Richard; Demirag, Istemi 7
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Demirag, Istemi; Khadaroo, Iqbal 26

Galilea, Patricia; Medda, Francesca 26
Geddes, R. Richard; Wagner, Benjamin L. 20
Haralambides, Hercules; Gujar, Girish 13
Iseki, Hiroyuki; Houtman, Rebecca 7
Kharizam Ismail., Roshana Takim., Abdul Hadi Nawawi 11
MacÃ¡rio, RosÃ¡rio; Ribeiro, Joana; Costa, Joana Duarte 1
Martins, JosÃ©; Marques, Rui Cunha; Cruz, Carlos Oliveira 3
Ng, S. Thomas; Wong, James M W; Wong, Kelwin K W 12
Perkins, Stephen 8
Vining, a. R.; Boardman, a. E. 0
Zhang, Shuibo; Gao, Ying; Feng, Zhuo; Sun, Weizhuo 0
Zhang, Zitao Arthur; Durango-Cohen, Pablo L. 0
Risk Carmona, Miguel 19
Chou, Jui Sheng; Ping Tserng, H.; Lin, Chieh; Yeh, Chun Pin 23
Chung, Demi; Hensher, David a.; Rose, John M. 44
Crozet, Yves 2
Cruz, Carlos Oliveira; Marques, Rui Cunha 41
Dementiev, Andrei 0
Doll, Claus; Karagyozov, Kiril 2
Jin, Xiao-Hua; Zhang, Guomin 70
Ke, Yongjian; Wang, ShouQing; Chan, Albert P C; Lam, Patrick T I 126
Medda, Francesca 168
Nasirzadeh, Farnad; Khanzadi, Mostafa; Rezaie, Mahdi 8
Ng, a.; Loosemore, Martin 226
Solana, Erick F. Oechler 0
Wang, Yin 0
Wang, Yinglin; Liu, Jicai 0
Xu, Yelin; Yeung, John F Y; Chan, Albert P C; Chan, Daniel W M; Wang, Shou Qing; Ke,
Yongjian 0
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Research Themes categorized with respect to Author with major citations

Main Theme Author Citation
Contract design Alonso-Conde, Ana Belen; Brown, Christine; Rojo-Suarez, Javier 75
Contract design Chang, Chen Yu 17
Contract design Viegas, JosÃ© M. 15
Contract design Meunier, David; Quinet, Emile 13
Finance Hodge, Graeme a.; Greve, Carsten 119
Finance Demirag, Istemi; Khadaroo, Iqbal; Stapleton, Pamela; Stevenson, Caral 28
Finance Bonnafous, Alain 10
Finance Hodges, Ron; Mellett, Howard 10
Finance MacÃ¡rio, RosÃ¡rio 7
General Concept Kwak, Young Hoon; YingYi, Chih; Ibbs, C William 190
General Concept Oum, Tae H.; Yan, Jia; Yu, Chunyan 167
General Concept Tang, LiYaning; Shen, Qiping; Cheng, Eddie W L 115
General Concept Phang, Sock Yong 63
General Concept Hwang, Bon Gang; Zhao, Xianbo; Gay, Mindy Jiang Shu 48
National
Applications Mu, Rui; Jong, Martin De; Koppenjan, Joop 50
Procurement Engel, Eduardo; Galetovic, Alexander; Fischer, Ronald 199
Public Sector
Issues Demirag, Istemi; Khadaroo, Iqbal 26
Public Sector
Issues Galilea, Patricia; Medda, Francesca 26
Public Sector
Issues Geddes, R. Richard; Wagner, Benjamin L. 20
Public Sector
Issues Haralambides, Hercules; Gujar, Girish 13
Risk Ng, a.; Loosemore, Martin 226
Risk Medda, Francesca 168
Risk Ke, Yongjian; Wang, ShouQing; Chan, Albert P C; Lam, Patrick T I 126
Risk Jin, Xiao-Hua; Zhang, Guomin 70
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After Thorough analysis we found major maximum transfer of risks and costs to the
themes as Contract Design, Finance ,General private sector or highest upfront concession
Concept , National Application , Procurement payments, by specific contractual conditions
, Public Sector Issues , and Risk. (such as compensation schemes, rate of return,
revenue sharing, contract periods, early
Contract design termination) and flexibility to adjust them
1) Concession when the situation becomes detrimental to
(Auriol & Picard, 2013), showed that larger either party;
shadow costs of public funds and larger 4) the agency should limit its responsibility for
information asymmetries entice governments completeness of data regarding environmental
to choose BOT concessions. conditions, and the diversion of upfront
(Wang & Pallis, 2014), identifies the post payments to other uses (particularly outside
contractual moral hazard problem, and transportation purposes);
provides a model involving performance- 5) the agency should be careful not to limit its
based concession fees to align successfully the future improvements to its transportation
Port Authorities’ interests with those of the network, for example, by excluding from non-
terminal operators. compete clauses projects already identified in
2)-Contractual Risk a long-range transportation plan;
(Iseki & Houtman, 2012) gave 6) the agency should carefully develop key
recommendation as per their research through indicators to evaluate performance of the
case study approach the basis of contractor, facility conditions, and the level of
recommendations for future DBFO PPP service, and set up a mechanism of “handing
projects. These include: back” the facility in good conditions;
1) the responsible public agency should 7) the agency should enhance transparency
carefully assess asset values and and accessibility of policy and information of
environmental setting to select projects for PPP arrangements to improve public and
PPPs; political acceptance of PPPs.
2) the agency should examine important
project objectives that cannot be compromised Public Sector Issues
even in exchange with merits in PPP; 1) Value for Money
3) the agency should pursue optimal allocation (Demirag & Khadaroo, 2011) by their
of risks, costs, and benefits, rather than framework makes an attempt to integrate
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research on accountability and VFM in PFI Rule 2: Separate the Analysis, Evaluation,
contracts. Contracting/Administrating, and Oversight
(Sobhiyah, Bemanian, & Kashtiban, 2009) Agencies.
says that in order to increase the value for Rule 3: Ensure That the Bidding Process Is
Money of the services use of Private sector Reasonably Competitive.
efficiency is an important part, for that long- Rule 4: Be Wary of Projects That Exhibit
term partnership between the public and the High Asset-Specificity, Are Complex or
private sector entities through Public Private Involve High Uncertainty, and Where In-
Partnership (PPP) agreements are used. In the House Contract Management Effectiveness
ideal PPP, risks should be allocated to the Is Low.
party who is the best entity to manage them in Rule 5: Include Standardized, Fast, Low-
the most cost-effective way. Cost Arbitration Procedures in All P3
2) Role of Private sector Contracts.
(Alonso-Conde, Brown, & Rojo-Suarez, Rule 6: Avoid Stand-Alone Private Sector
2007) from case study approach shows how Shells with Limited Equity from the Real
the imposed conditions can be treated as real Private Sector Principals.
options, how these options affect the incentive Rule 7:Prohibit the Private-Sector
to invest and how the public sector may be Contractor from Selling the Contract too
transferring considerable value to the private early.
sector through government guarantees. Rule 8: Have a Direct Conduit to Debt
The role of private sector is strictly Holders.
scrutinized which will help academicians to
make a better understanding of private sector Risk
involvement. 1) PPP model
3) Administration Issues (Love, Liu, Matthews, Sing, & Smith, 2015)
(Vining & Boardman, 2008) , give 8 rules for shows that Building Information Model can
government to avoid high transaction costs be used to ensure that an accurate assessment
and P3 failure of value is being attained in real-time instead
Rule 1: Establish A Jurisdictional P3 of relying on the broad brush approach of the
Constitution. public sector comparator (PSC),which is
static, overly reliant on historical data, is
inappropriate for determining efficiency
T 76
gains, and lacks transparency (i.e., black box). indeed complementary forms of exchange
Author emphasis on adoption of Building governance but also that the relational
Information Modelling (BIM) as it not only intentions of all parties frame whether the
provides digital representation of the physical contract is interpreted as a written sign of
and functional characteristics of an asset, but distrust or commitment. Equally, relational
also provides key decision makers with the and contractual governance follow different
ability to make informed decisions across a development paths: both follow cumulative
project's life-cycle. trajectories but (a) inter-personal relational
2) Contractual Risk mechanisms are more incremental and fragile,
(Zheng, Roehrich, & Lewis, 2008), Author’s whereas (b) contractual mechanisms move
conceptual and practical findings confirm that with fewer degrees of freedom and ‘anchor’
relational and contractual mechanisms are the exchange throughout the life cycle.
Figure 2: Number of Papers Published year wise
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Figure 3:Trend as per Year
We can obsereve that in 2010 to 2014, more per author and major citation to categorize
academic work were attempted in the field of major work done in the area of PPP in
PPP, related to transportation. transportation.
Year wise trend of themes are not constant , Our work is still incomplete, it’s a working
we can see variation of activities , such as paper , further scope of work includes
General Concept were focused more in 2007 analyzing work country wise and looking
,2010, 2011,2012 ,2015 , while Public Sector specifically Asian perspective, how much
Issues were focused in 2008 ,2013.Contract percentage of overall work has been done on
Design were focused in year 2010,2012,2014. PPP with respect to Asia and what were the a
Overall we feel general concept were more major theme of the work. To find out gap in
focused in academic literature in recent years. existing work of PPP transportation will be the
Conclusion major focus of our work.
We did a literature review of the last 8 years
and divided the papers into different Bibliography
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T 78
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Intermediate Fuel Oil 380 cst Bunker Fuel Price Forecasting
Vikas Singh Sengar*, T Bangar Raju**

*Doctoral Research Fellow, College of Management and Economics Studies, UPES,
Email: vssengar@ddn.upes.ac.in
** Professor and Head, (Department of Transportaton, College of Management and Economics Studies, UPES,
Email: tbraju@ddn.upes.ac.in
Abstract discussed in the article are macro in nature,

In recent times, Marine transportation but are helpful in understanding the
business models have been balancing importance of analyzing the future price of
themselves in a volatile market. Plummeting bunker fuels in optimizing the voyage
crude oil prices are stressing trading entities, expenses and ultimately stabilizing the
including shipping domain to improve their profitability. In addition to the use case
strategies and stabilize profit margins. For discussion, future scope of the study has also
shipping industry, bunkers; a derivative of been examined to provide more precise
crude, have remained in focus because of its results.
direct relationship with voyage cost. But as
crude oil prices remained volatile for almost Keywords
the last two years, understanding freight rate Intermediate Fuel Oil, Bunker Fuel Price
symmetries have become difficult for Forecasting
players in the domain. In the article, a study
has been carried out to find out a relation Introduction
between then crude oil and the bunker fuel In the present global scenario, Marine
prices. The basis of carrying the study is to transport has reverted as one of the
forecast the bunker fuel future prices with important constituent of trade value chain.
respect to crude oil prices and identification Efficient goods transport from continent to
of such relationship is required to achieve continent is an increasingly indispensable
the objective. Further in the article, the economic growth factor. Even in volatile
future prices of bunker fuels are used to markets as it is today, shipping has been an
discuss its importance in different use cases unavoidable requirement of trade practice.
of the shipping industry. The use cases Countries all around the world are focusing
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on their sea trading capacities as 9/10th of not become too much of a burden, with
cargo (volume) in the world moves with the peaks and troughs corresponding to the
help of sea transportation. (International strength of the freight markets. Then in
Chamber of Shipping) 2007-08 oil prices started to rise steeply, but
the strength of the freight market helped to
Whether it is transportation of dry cargo, cover the impact of rising bunker costs and
crude oil or containers, the basic revenue ensure that the share of bunker costs
model for the industry remains the same. remained below 50%. However, in the wake
Companies or Individuals, who act as of the global financial crisis, a combination
shipowners, put their capital in exchange of of high oil prices and weaker markets
the asset –“The Vessel”, and trade for their caused the share of freight revenues
asset in the market. Other players from the accounted for by bunker costs to climb to
market may hire the vessel, either for much higher levels. This peaked in late 2012
transportation of cargo or may let it to other and early 2013, when bunker costs exceeded
players for the same. Whatever may be the 80% of freight revenue for tanker voyage.
scenario, ultimately the vessel will be used (Clarksons, 2014) Similarly, for a Very
for carriage of cargo by shippers or Large Crude Carrier, bunker cost can be
charterers, as they will pay the freight for 3/4th of the voyage cost (Ship&Bunker,
the transportation. This freight is a 2013). With its ever growing significance in
combination of capital cost, Voyage cost marine transportation, bunker fuel trading
and the profit of the ship lender. has also grown in recent years, with few
major ports leading the business in different
Voyage cost of a ship is contribution of geographies of the world. In Asia,
many factors, of which bunker fuel cost is Singapore; one of the transportation hubs in
most significant. Bunker which act as fuel the modern world, has emerged as the
for the vessels can contribute from 35-50% bunker fuel supply hub as well in the region.
to 75-80% of the voyage cost depending on
the category and class of the vessel and also Bunker fuels are derived from crude oil. By
depending on market conditions. As in the the end of the year 2014, crude oil prices
Pre 2008 crises era, the low and relatively have been falling down. In Jan 2014,
stable oil price ensured that the bunkers did monthly average price for West Crude
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Intermediate (WTI) was 94.61714 $ per relative shipping market as well. The
barrel, which came down to an average price following research is an attempt to fit a
of 47.219 $ per Barrel in Jan 2015 (Energy linear regression model to first identify the
Information Agency). For Bunker fuels, the correlation between the one of the crude oil
same downfall pattern has been realized for benchmark price, West Texas Intermediate
Jan 2014-15 time span. The downfall trend and a major category of bunker fuel IFO
of crude oil has continued till Jan 2016, with 380. The findings, then are applied to
a little spike in the mid of the year (as in predict the future price of the bunkers and
June 2015, average price was 59.82 but in analyzing different use cases on the basis of
December 2015 it was 37.21) (Energy the bunker future fuel prices.
Information Agency). Again the same trend
was reflected by bunker fuel prices. Literature Review
(ShipandBunker) Thus, the pattern may Crude oil is the largest traded commodity in
conclude a strong relationship between the world and refiners have been
crude oil and bunker fuel prices and if the establishing crack spread to have bunker
relationship can be realized in form of an fuels as products. With different aspects,
equation, the same can predict the future author such as (Murat Atilim, 2009),
price on the basis of future settling price of (Moshiri, 2005), (Ye, 2005), and more have
the crude oil. tried different methods and models to
discover future crude oil prices. In modern
Knowing the future price of bunker fuel can world of today, few organizations like
help in managing the voyage expense (OPEC, 2016), (Energy Information
volatility, thus resulting the ship owners, Agency) apply modeling on crude oil prices,
shippers and charterers to plan their cargo to predict its future values. Just like other
transportation in an efficient manner. For petroleum fuels, for sea transportation
bunker trading entities, such prices may bunker fuel prices have proven to be
indicate the future settling prices for significant. Thus few authors have tried to
bunkers, which may be helpful if study bunker fuel prices and crude oil prices,
prospection of hedging is applied. On a to establish a relation between the two. In
macro level, such prices can indicate the articles (SwizStick, 2011) and (Wilson-
future trend of the bunker fuel market and Roberts, 2009), the authors have used linear
T 90
regression models as bunker fuel is a In addition to this, considering the high

derivative of crude and therefore there volatility in shipping markets, especially for
would be some correlation between crude oil freight rates and bunker prices, many
prices and bunker fuel prices. authors have applied the financial tools for
shipping in order to reduce the risk
In the article (SwizStick, 2011) the author associated with such volatility. Few studies
has compared current and long term prices were conducted to understand the impact of
of the Weighted Average Bunker Fuel Price bunker fuel hedging techniques in shipping
against NYMEX and BRENT crude prices markets (Amir H. Alizadeh, 2004),
to determine a simple “bunker fuel (Nomikos, 2004) and some were conducted
multiplier” that makes it handy to at least to understand hedging of freight rates.
come up with a rough estimate of where (Prokopczuk, 2010) (Dinwoodie, 2003)
future bunker fuel levels will be based on (Nikos K. Nomikos, 2000)
any crude oil price assumption. Also, in the
article (Wilson-Roberts, 2009), the author Although a lot of studies have been
has tried to analyze the bullish and bearish conducted in different subsets of a major
market of bunker oils in 2008-09, also topic; identifying a way to predict the future
examining the future of bunker fuel prices, bunker fuel price and application of it, still a
considering EIA price forecast for crude oil. simple study is required to connect all the
subsets and describe how the future prices of
Authors have been examining bunker fuel bunker fuels can be helpful in optimizing
prices, mostly with a major reason; to operational cost, increase profitability and
understand the dynamics of freight rates importantly mitigating risks. The following
with respect to bunker oil prices. Few study is an attempt to achieve the same.
authors have analyzed the role and effect of
bunker fuel prices on transportation cost for Research Methodology
different shipping markets or for whole In marine transportation, different categories
shipping market. (WHELAN, 2015) (Peter of bunker fuel as used of which one widely
Farrell, 2014) (KEMP, 2015) (Alaric used bunker fuel is IFO 380 cst, which has
Nightingale, 2011) been selected as a major constituent of
study. In the study IFO 380 cst has been
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correlated with West Texas Intermediate, a by Energy Information Agency have

bench mark for crude oil. been considered.
 Maxima and minima scenarios are
Scope of the Research not considered for the analysis and
 The research was restricted in terms conclusion, but are part of the
of data gathering, which was appendix.
gathered on per day (except
weekends) for last one year, for both Assumptions
West Texas Intermediate crude oil  The future scenario is predicted
and IFO 380 cst bunker fuel oil. based on the linear regression, thus
(Energy Information Agency) other factors affecting the price of
(ShipandBunker) bunker fuel prices have not been
 Only bunker fuel type IFO 380 cst is assumed.
considered. Other fuel types  The data used in the research is
remained out of scope for the considered valid for the study.
research.  The conversion factor between
 Prices of IFO 380 cst varies in barrels and metric tons is based on
different geographies of the world. last update provided by Energy
For the study prices at Singapore Information Agency.
port have been considered.  No Transportation cost has been
 Of the two crude oil benchmark, considered in this study.
West Texas Intermediate has been  The future scenario of bunker fuel
considered for the study. predicted is based on non-fluctuating
Cushing_OK_WTI_Spot_Price_FOB (less volatile) market conditions.
per day price has been considered in  The findings of the research are used
the research. (Energy Information only to discuss the use cases of
Agency) future prices of bunker fuel prices.
 For predicting the future prices of
IFO 380 cst, future settling price Thus the hypothesis can be concluded as:
West Texas Intermediate predicted Considering the above mentioned research
scope and assumptions, a high positive
T 92
correlation exists between crude oil price Y=IFO 380 cst price at Singapore in $/MT
and bunker fuel price. X= Cushing_OK_WTI_Spot_Price_FOB in
$/MT
A linear regression model is used to prove For establishing the relation, historic prices
the hypothesis. Once the hypothesis is between Jan 2015 and Jan 2016 on a daily
proved, the linear equation will be used to basis is gathered. Prior to putting values in
predict the future prices of the bunker fuel the model, all the values are to be converted
prices. With the future prices of bunker fuel, into a uniform unit, which here is $/MT ($
following use cases have been discussed as a per Metric Tons).Since the values of X are
part of analysis and conclusion- in $ per barrels, following equation is to be
 Ship owner (Voyage Chartering) used for converting values in
 Charterers (Time Chartering) $/MT.(International Energy Statistics,
 Liner Shipping Companies (Energy Information Agency))
 Bunker Trading Companies Thus

$/MT= $/Barrel*7.3………………(2)
Data Gathering and Analysis Considering the prices from these data
As the model considered for the study is a sources, the output of linear regression for a
linear regression model, thus the data to be period of one year provides-
considered will be a dependent and

independent variable. For the study Table 1: Output of linear regression
independent variable is crude oil price and Regression Statistics

Multiple R 0.909042082
the dependent variable is Bunker fuel price.
R Square 0.826357507
Thus, if the linear equation is
Adjusted R Square 0.825654501
Y=mX+c,…… …(1) Standard Error 3.541904267
Where, Observations 249
T 93
Table 2: Output of linear regression

Coefficients Standard t Stat P-value Lower 95.0% Upper 95.0%
Error
Intercept -12.42928651 1.518270207 -8.186478569 1.44025E-14 -15.41969391 -9.438879109
X Variable 1 1.064950589 0.031061684 34.28502412 6.97782E-96 1.003771038 1.12613014
Putting the Coefficients in (1), we get,
Y=1.064950589X+ (-12.42928651)…… ……….(3)
Where, R square is 0.826357507
Since the t stat and P-value for the model to predict the future prices of Y, by putting
support the validity of the model, and the R the future prices of X. The Energy
square value is near to +1, thus the Information Agency has been releasing its
conclusion can be stated as- Short Term Energy Outlooks to help
studying the future energy market trends.
There is a strong positive correlation The latest outlook by the agency has been
between X and Y, i.e. IFO 380 cst price at released in Jan 2016, and provides the future
Singapore and contract settling prices of
Cushing_OK_WTI_Spot_Price_FOB. Cushing_OK_WTI_Spot_Price_FOB.
Considering the finding of the linear Following table concludes the data by the
regression model, Equation (3) can be used STEO, Jan 2016 by EIA-
Table 3: WTI Future Prices

Historical STEO Settle Implied Days to Confidence Interval
Month
Prices Forecast Price Volatility Expiry Lower Upper
Jan 2015 47.22 #N/A #N/A #N/A #N/A #N/A #N/A
Feb 2015 50.58 #N/A #N/A #N/A #N/A #N/A #N/A
Mar 2015 47.82 #N/A #N/A #N/A #N/A #N/A #N/A
Apr 2015 54.45 #N/A #N/A #N/A #N/A #N/A #N/A
May 2015 59.27 #N/A #N/A #N/A #N/A #N/A #N/A
Jun 2015 59.82 #N/A #N/A #N/A #N/A #N/A #N/A
Jul 2015 50.90 #N/A #N/A #N/A #N/A #N/A #N/A
Aug 2015 42.87 #N/A #N/A #N/A #N/A #N/A #N/A
Sep 2015 45.48 #N/A #N/A #N/A #N/A #N/A #N/A
T 94
Oct 2015 46.22 #N/A #N/A #N/A #N/A #N/A #N/A

Nov 2015 42.44 #N/A #N/A #N/A #N/A #N/A #N/A
Dec 2015 37.21 37.21 #N/A #N/A #N/A #N/A #N/A
Jan 2016 #N/A 36.00 #N/A #N/A #N/A #N/A #N/A
Feb 2016 #N/A 36.00 #N/A #N/A #N/A #N/A #N/A
Mar 2016 #N/A 37.00 36.60 46.3% 27 27.19 49.26
Apr 2016 #N/A 37.00 37.65 46.2% 47 25.45 55.68
May 2016 #N/A 38.00 38.58 44.8% 68 24.46 60.85
Jun 2016 #N/A 39.00 39.39 43.1% 90 23.77 65.28
Jul 2016 #N/A 39.00 40.07 42.0% 111 23.20 69.20
Aug 2016 #N/A 40.00 40.66 #N/A 131 #N/A #N/A
Sep 2016 #N/A 40.00 41.20 39.2% 154 22.61 75.06
Oct 2016 #N/A 40.00 41.68 37.9% 174 22.48 77.29
Nov 2016 #N/A 40.00 42.17 36.8% 195 22.37 79.51
Dec 2016 #N/A 40.00 42.68 35.8% 216 22.29 81.72
Jan 2017 #N/A 40.00 43.08 #N/A 236 #N/A #N/A
Feb 2017 #N/A 41.00 43.47 #N/A 257 #N/A #N/A
Mar 2017 #N/A 42.00 43.86 32.9% 278 22.27 86.39
Apr 2017 #N/A 43.00 44.23 #N/A 298 #N/A #N/A
May 2017 #N/A 45.00 44.57 #N/A 319 #N/A #N/A
Jun 2017 #N/A 46.00 44.90 #N/A 341 #N/A #N/A
Jul 2017 #N/A 48.00 45.19 #N/A 361 #N/A #N/A
Aug 2017 #N/A 49.00 45.48 #N/A 382 #N/A #N/A
Sep 2017 #N/A 50.00 45.78 #N/A 405 #N/A #N/A
Oct 2017 #N/A 52.00 46.08 #N/A 425 #N/A #N/A
Nov 2017 #N/A 53.00 46.38 #N/A 446 #N/A #N/A
Dec 2017 #N/A 55.00 46.70 28.2% 466 22.05 98.92
Source – Short-term Energy Outlook, January 2016
T 95
West Texas Intermediate (WTI) Crude Oil Price

dollars per barrel
220
Historical spot price
200
STEO price forecast
180 NYMEX futures price
160 95% NYMEX futures upper confidence interval
140 95% NYMEX futures lower confidence interval
120
100
80
60
40
20
0
Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017 Jul 2017
Note: Confidence interval derived from options market information for the 5 trading days ending Jan. 7,
2016. Intervals not calculated for months with sparse trading in near-the-money options contracts.
Source: Short-Term Energy Outlook, January 2016.
Figure 1: Average Future Price for West Texas Intermediate

For predicting the future prices of IFO 380 (3) to get the values for IFO 380 cst at
cst, historic prices and future settle price Singapore. The findings are then plotted into
from Table No. 3 can be put into equation the following graph Source: Short-Term
(2) to get the values in $/MT. The converted Energy Outlook, January 2016.
values then can be applied to equation no.
400
375
350
IFO 380 cst Price at Singapore
325 Dollars per Metric Tones
300
275
250
225
200 Upper and Lower Limit Interval
175
Historic and Predicted Future Price
150
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov
2015 2015 2015 2015 2015 2015 2016 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2017
Figure 2: Average Future Price for IFO 380 cst Price at Singapore
T 96
Thus, it can be stated that with 95% insurance etc. In Voyage chartering, ship-
confidence, the value of one metric ton IFO owner is paid freight in exchange of his
380 cst at Singapore in Dec 2017 would be vessel. So,
between $293.20 to $251.49, if the settle
price for WTI Crude oil per barrel is $46.70 Freight= Bunker Cost+ Other Voyage
as indicated by short term energy outlook, operational Cost+ Capital Cost + Profit
Jan 2016 by EIA.
Now if the ship owner can analyze the future
Conclusion price of bunker fuel price, he/she can realize
As the study concludes that there exists a the minimum freight to be charged, free
strong correlation between crude oil prices from bunker fuel price volatility. Such
and bunker oil prices. Not only EIA but knowledge can help ship owner to analyze
other global organizations like OPAC also his profitability for vessel available in any
publish their future price assessment, in future date, providing ease of decision
order to explain the future market trend for making and negotiating with other ship
crude oil. By using a Linear regression charterer. Additionally ship-owner can fix
model, future value of bunker fuel can be an “option contract” with the bunker trading
approximated, considering other variables as companies for supply of bunker, which he
well, if bunker oil future value can be may exercise if he gets any voyage contract
approximated, it can benefit different between the dates specified in “option
players of shipping industry in managing contract”. In such scenario, Ship-owner can
their profits. One can derive different use the future price for setting the
beneficial aspects of knowing the benchmark for the contract, and thus can
approximate future value of bunker fuel as mitigate the price risk for his/her business.
discussed in following use cases- For an instance, a ship owner may consider
a contract with bunker trading company for
Use Case 1- Voyage Chartering delivery of 1*10 metric tons of IFO 380 cst
Under a voyage chartering, ship owner at Singapore for 10*$293.20, as the price
retains the operational control of the vessel has been figured out in the assessment done
and is responsible for all operating expenses earlier in the study.
such as Port charges, Bunkers, Vessel
T 97
bunker fuel in the future. As the earlier

Use Case 2- Time Chartering study predicts the prices of IFO 380 cst at
In time chartering, the charterer is liable for Singapore for months in the future, a
costs directly connected with the use of charterer may fix a contract in which he may
vessel. In such a case bunker fuel cost has to be receiving the bunker fuel to be delivered
beard by the charterer. For charterers in time at Singapore as –
chartering the overall cost for transportation
becomes Table 4: Forcasted bunker fuel price at
Singapore
Cost of transportation= Time Charter Month of Price per
Equivalent + Bunker Cost + Other Voyage Delivery metric ton

Jul 2017 260.57
expense
Aug 2017 262.84
Sep 2017 265.13
Now if the charterer is known with the Oct 2017 267.46
future prices of bunker fuels, especially on Nov 2017 269.86
the daily basis, charterer can plan the voyage Dec 2017 272.34
on the dates when bunker fuel prices are low

and thus can optimize his fuel cost. As per Also, if a charterer is able to analyze the
assessment done earlier in the study, it is future price of bunker fuel for different
beneficial to plan a voyage in the month of ports, he/she can consider the port with
November 2017 rather than December 2017, lowest price for the future delivery of the
as he can save approximately 3 dollars per bunker fuel, thus optimizing the voyage cost
metric ton for the same voyage. in a more efficient manner.
Additionally, for managing bunker price Liner Shipping Companies

risk, a charterer can establish same contract For liner shipping companies knowing
as was discussed in case of voyage future bunker price can help in optimizing
chartering earlier to receive bunker fuel at the voyage cost. Here also getting bunker
fixed price. But rather than having an option fuels on low rates can increase the profit
contract, charter can go for a future contract, margin for the shipping lines. One more way
stating the time and delivery points of of using future price knowledge is to
T 98
provide freight rates range per container for limits. As for assessment done earlier in the
future dates as well. This is possible as for study, a contract can be established for
big container vessels; 70-80% of voyage delivery in August 2017 for $240.39 per
cost is bunker fuel cost. metric ton. In parallel to this the trading
company can establish future contracts with
Cost of transporting per container = bunker fuel consumers, including its margin
(Bunker cost + Other Voyage cost) for the same month or can produce similar
No of containers to be carried by the vessel contracts for future coming months, taking
settling price from the assessment. For
Once the cost is known, a simple assessment assessment done earlier in the study a
can result into the freight rate per container. trading company may provide future
The future bunker rates used for the contracts as
assessment can also be used to fix a future
contract with a bunker trading company Table 5: Forcasted bunker fuel price
(like it was in the case of Time chartering), Month of Delivery Price per metric ton
to plan a risk mitigated voyage, even Aug 2017 262.84

Sep 2017 265.13
avoiding a container swap agreement and its
Oct 2017 267.46
consequences.
Nov 2017 269.86
Dec 2017 272.34
Bunker Trading Companies-
For all the bunker fuel consuming players, Additionally, trading company may write an
bunker fuel trading companies can act as option based on future price assessment,
suppliers. The knowledge of future bunker such that if the option is exercised, then the
fuel price can help such market entities in company would be making profits from low
establishing various contracts with ship price buying and high price selling case. If
owners, Charterers and liner shipping the option is not exercised as well company
companies. Bunker trading companies’ may can enjoy the premium of the option as the
go for a future contract with an oil refining benefit.
company, and settling the price in a month
having low future bunker fuel price based on A trading company, trading all across the
future price assessment considering lower globe, may also enjoy arbitrage if it can
T 99
analyze the future price of bunker fuels in strong. Extending the research in above
different geographies of the world. mentioned directions can certainly provide
almost accurate bunker prices, which
Future scope of the research ultimately can be useful in use cases
The research conducted above was an discussed above. Also the research have
attempt to identify a way for predicting discussed limited number of use cases, but
future prices of bunker fuels. Though there more use cases are yet to be discovered in
are different categories of bunker fuels, future.
being consumed by the shipping industry,
the research was only performed on IFO 380 References
cst. For further studies similar research can 1. Alaric Nightingale, K. P. (2011, January
19). BloombergBuisness. Retrieved January
be conducted for other categories of bunker
29, 2016, from Bloomberg:
fuel. Also the research was restricted to only
http://www.bloomberg.com/news/articles/20
one geography i.e. Singapore, which can 11-01-19/container-ship-rates-rising-as-
further be extended to other geographies. fuel-prices-slow-vessels-freight-markets
2. Amir H. Alizadeh, M. G. (2004). Hedging
against bunker price fluctuations using
As the model selected in the research was
petroleum futures contracts: constant versus
linear regression model, only one major
time-varying hedge ratios. Applied
variable (Crude Oil Prices) were taken into Economics, 1337–1353.
account. Although, crude oil prices seems to 3. Clarksons. (2014, September 26). Clarksons
be most dominating variable, in future other Research. Retrieved Jan 25, 2016, from
Clarksons Research:
variables can also be considered to have
https://clarksonsresearch.wordpress.com/ta
more precise results. Lastly, for future prices
g/bunker-cost/
of bunker fuel oil, research was dependent 4. Dinwoodie, J. (2003). Tanker forward
on future prices of crude oil prices, being freight agreements: The future for freight
published by Energy Information Agency, futures? Maritime Policy & Management ,
45-58.
U.S. But there may exist a more predictive
5. Energy Information Agency, E. (n.d.).
model, which can be identified to predict
Energy Information Agency. Retrieved Jan
prices in more effective manner. Moreover, 25, 2016, from Energy Information Agency:
future demand and supply statistics can be http://www.eia.gov
considered, to make predictions even more
T 100
6. International Chamber of Shipping. (n.d.). Ship&Bunker:

Retrieved Jan 25, 2016, from ICS_Shipping: http://shipandbunker.com/news/world/71501
http://www.ics-shipping.org/shipping- 4-bunkers-account-for-85-of-vlcc-voyage-
facts/shipping-and-world-trade costs
7. KEMP, J. (2015, April 22). Reuters. 16. ShipandBunker. (n.d.). Ship and Bunker.
Retrieved Jan 29, 2016, from Reuters: Retrieved Jan 25, 2016, from
http://www.reuters.com/article/us-shipping- ShipandBunker: www.shipandbunker.com
fuel-kemp-idUSKBN0NC22L20150422 17. SwizStick. (2011, December 29).
8. Moshiri, S. a. (2005). Forecasting Non Understanding Bunker Fuel: is there a
Linear Crude Oil Prices. The Energy relationship to crude prices?
Journal, 81-95. 18. WHELAN, R. (2015, December 17). The
9. Murat Atilim, T. E. (2009). Forecasting oil Wall Street Journal. Retrieved January 29,
price movements with crack spread futures. 2016, from The Wall Street Journal:
Energy Economics, 85-90. http://www.wsj.com/articles/plunging-fuel-
10. Nikos K. Nomikos, M. G. (2000). Hedging in prices-buoy-shipping-trucking-firms-
the Freight Futures Market. Journal of 1450365600
Derivatives, 41-58. 19. Wilson-Roberts, G. (2009, January-
11. Nomikos, A. H. (2004). The efficiency of the Feburary). Where to now for bunker prices?
forward bunker market. International Where to now for bunker prices?, pp. 1-2.
Journal of Logistics Research and 20. Ye, M. J. (2005). A Monthly Crude Oil Spot
Applications, 281-296. Price Forecasting Model Using Relative
12. OPEC. (2016, January 28). OPEC. Inventories. International Journal of
Retrieved January 28, 2016, from OPEC Forecasting, 491–501.
website:
http://www.opec.org/opec_web/en/publicati
ons/340.htm
Appendix
13. Peter Farrell, J. M. (2014, Oct 17). Platts
Mcgraw Hill Financial. Retrieved Jan 29, Table 6: WTI, IFO 380 cst Historic prices
2016, from Platts: IFO 380 Cushing_OK_WTI
http://www.platts.com/latest- Date Singapore _Spot_Price_FOB
news/shipping/london/falling-bunker-fuel-
prices-pull-down-dry-bulk-21413727 20-Jan-15 279 46.79
14. Prokopczuk, M. (2010). Pricing and 21-Jan-15 279 47.85
Hedging in the Freight Futures Market. 22-Jan-15 279.5 45.93
ICMA Centre, University of Reading . 23-Jan-15 285.5 45.26
15. Ship&Bunker. (2013, November 4). 26-Jan-15 287 44.8
Ship&Bunker. Retrieved Jan 25, 2016, from 27-Jan-15 281 45.84
T 101
28-Jan-15 283.5 44.08 19-Mar-15 306 44.02

29-Jan-15 281 44.12 20-Mar-15 303.5 46
30-Jan-15 282.5 47.79 23-Mar-15 304.5 47.4
2-Feb-15 300 49.25 24-Mar-15 311.5 47.03
3-Feb-15 319 53.04 25-Mar-15 310 48.75
4-Feb-15 337 48.45 26-Mar-15 327.5 51.41
5-Feb-15 334 50.48 27-Mar-15 326.5 48.83
6-Feb-15 346 51.66 30-Mar-15 315.5 48.66
9-Feb-15 346 52.99 31-Mar-15 310 47.72
10-Feb-15 350.5 50.06 1-Apr-15 307 50.12
11-Feb-15 349 48.8 2-Apr-15 311 49.13
12-Feb-15 352 51.17 3-Apr-15 311 -
13-Feb-15 365 52.66 6-Apr-15 311 52.08
16-Feb-15 371 - 7-Apr-15 325 53.95
17-Feb-15 364 53.56 8-Apr-15 323 50.44
18-Feb-15 373.5 52.13 9-Apr-15 319 50.79
19-Feb-15 378 51.12 10-Apr-15 317 51.63
20-Feb-15 378 49.95 13-Apr-15 333 51.95
23-Feb-15 364.5 49.56 14-Apr-15 330.5 53.3
24-Feb-15 339.5 48.48 15-Apr-15 330.5 56.25
25-Feb-15 335.5 50.25 16-Apr-15 340.5 56.69
26-Feb-15 347.5 47.65 17-Apr-15 344 55.71
27-Feb-15 350 49.84 20-Apr-15 345.5 56.37
2-Mar-15 351 49.59 21-Apr-15 342.5 55.58
3-Mar-15 348 50.43 22-Apr-15 339.5 56.17
4-Mar-15 344.5 51.53 23-Apr-15 344 56.59
5-Mar-15 342.5 50.76 24-Apr-15 352.5 55.98
6-Mar-15 338.5 49.61 27-Apr-15 351.5 55.56
9-Mar-15 334 49.95 28-Apr-15 349.5 57.05
10-Mar-15 327 48.42 29-Apr-15 347.5 58.55
11-Mar-15 323 48.06 30-Apr-15 358 59.62
12-Mar-15 324.5 47.12 1-May-15 358 59.1
13-Mar-15 318.5 44.88 4-May-15 365.5 58.92
16-Mar-15 310 43.93 5-May-15 368.5 60.38
17-Mar-15 314 43.39 6-May-15 389.5 60.93
18-Mar-15 301 44.63 7-May-15 386.5 58.99
T 102
8-May-15 378.5 59.41 29-Jun-15 336 58.34

11-May-15 376.5 59.23 30-Jun-15 336 59.48
12-May-15 377 60.72 1-Jul-15 334.5 56.94
13-May-15 381 60.5 2-Jul-15 330.5 56.93
14-May-15 375.5 59.89 3-Jul-15 327.5 56.93
15-May-15 371.5 59.73 6-Jul-15 318.5 52.48
18-May-15 373 59.44 7-Jul-15 310 52.33
19-May-15 362.5 57.3 8-Jul-15 306 51.61
20-May-15 361.5 58.96 9-Jul-15 310 52.76
21-May-15 358.5 60.18 10-Jul-15 317 52.74
22-May-15 367 58.88 13-Jul-15 311 52.19
25-May-15 366 - 14-Jul-15 308.5 53.05
26-May-15 372.5 57.29 15-Jul-15 309.5 51.4
27-May-15 374.5 57.51 16-Jul-15 308.5 50.9
28-May-15 365.5 57.69 17-Jul-15 304.5 50.88
29-May-15 362.5 60.25 20-Jul-15 306 50.11
1-Jun-15 365 60.24 21-Jul-15 303 50.59
2-Jun-15 377.5 61.3 22-Jul-15 301.5 49.27
3-Jun-15 372 59.67 23-Jul-15 300 48.11
4-Jun-15 360 58 24-Jul-15 297.5 47.98
5-Jun-15 354.5 59.11 27-Jul-15 292 47.17
8-Jun-15 353.5 58.15 28-Jul-15 287.5 47.97
9-Jun-15 354.5 60.15 29-Jul-15 285 48.77
10-Jun-15 361.5 61.36 30-Jul-15 284.5 48.53
11-Jun-15 366 60.74 31-Jul-15 283 47.11
12-Jun-15 361.5 59.96 3-Aug-15 274.5 45.25
15-Jun-15 358.5 59.53 4-Aug-15 268 45.75
16-Jun-15 357.5 60.01 5-Aug-15 265.5 45.13
17-Jun-15 358.5 59.89 6-Aug-15 263 44.69
18-Jun-15 359 60.41 7-Aug-15 264 43.87
19-Jun-15 356 59.62 10-Aug-15 263.5 44.94
22-Jun-15 355 60.01 11-Aug-15 264.5 43.11
23-Jun-15 354 61.05 12-Aug-15 267.5 43.22
24-Jun-15 351 60.01 13-Aug-15 266 42.27
25-Jun-15 342.5 59.59 14-Aug-15 263 42.45
26-Jun-15 337.5 59.41 17-Aug-15 252 41.93
T 103
18-Aug-15 253 42.58 7-Oct-15 249 47.86

19-Aug-15 249 40.75 8-Oct-15 252 49.46
20-Aug-15 241 41 9-Oct-15 252.5 49.67
21-Aug-15 230.5 40.45 12-Oct-15 252 47.09
24-Aug-15 212 38.22 13-Oct-15 244 46.7
25-Aug-15 208 39.15 14-Oct-15 238.5 46.63
26-Aug-15 206.5 38.5 15-Oct-15 237 46.38
27-Aug-15 214.5 42.47 16-Oct-15 237 47.3
28-Aug-15 227.5 45.29 19-Oct-15 235.5 45.91
31-Aug-15 243.5 49.2 20-Oct-15 233 45.84
1-Sep-15 254.5 45.38 21-Oct-15 232 45.22
2-Sep-15 257.5 46.3 22-Oct-15 231.5 44.9
3-Sep-15 260 46.75 23-Oct-15 233 43.91
4-Sep-15 258 46.02 26-Oct-15 232.5 43.19
7-Sep-15 251.5 46.02 27-Oct-15 231 43.21
8-Sep-15 245 45.92 28-Oct-15 234 45.93
9-Sep-15 238 44.13 29-Oct-15 238.5 46.02
10-Sep-15 238 45.85 30-Oct-15 242 46.6
11-Sep-15 233.5 44.75 2-Nov-15 243 46.12
14-Sep-15 233 44.07 3-Nov-15 242 47.88
15-Sep-15 230 44.58 4-Nov-15 244 46.32
16-Sep-15 230.5 47.12 5-Nov-15 244 45.27
17-Sep-15 237 46.93 6-Nov-15 240.5 44.32
18-Sep-15 238.5 44.71 9-Nov-15 239 43.87
21-Sep-15 232 46.67 10-Nov-15 237.5 44.23
22-Sep-15 229.5 46.17 11-Nov-15 236.5 42.95
23-Sep-15 234 44.53 12-Nov-15 230.5 41.74
24-Sep-15 236.5 44.94 13-Nov-15 225 40.69
25-Sep-15 233.5 45.55 16-Nov-15 223 41.68
28-Sep-15 232 44.4 17-Nov-15 223 40.73
29-Sep-15 228 45.24 18-Nov-15 221 40.75
30-Sep-15 227 45.06 19-Nov-15 221 40.55
1-Oct-15 230.5 44.75 20-Nov-15 221 39.39
2-Oct-15 228.5 45.54 23-Nov-15 217 39.27
5-Oct-15 238 46.28 24-Nov-15 221 40.89
6-Oct-15 239.5 48.53 25-Nov-15 225.5 41.22
T 104
26-Nov-15 225.5 - Table 7: IFO 380 cst Future Price

27-Nov-15 222 40.57 Prediction
30-Nov-15 219.5 40.43
Bunker
1-Dec-15 216.5 40.58 Confidence Interval
Price
2-Dec-15 214.5 39.93 Mont
3-Dec-15 207 41.08 as Settle
h
4-Dec-15 206.5 40 Price
7-Dec-15 200 37.64 Forecast Lower Upper
8-Dec-15 195.5 37.46
Jan
9-Dec-15 191 37.16
2015 282 282 282
10-Dec-15 187.5 36.76
11-Dec-15 188.5 35.65
Feb
14-Dec-15 184.5 36.31 2015 350 350 350
15-Dec-15 181.5 37.32 Mar 322.34090 322.3409 322.3409
16-Dec-15 175.5 35.55 2015 91 09 09
17-Dec-15 171.5 34.98
Apr 333.31818 333.3181 333.3181
18-Dec-15 169.5 34.72
2015 18 82 82
21-Dec-15 168.5 34.55
22-Dec-15 167.5 36.12 May 371.02380 371.0238 371.0238
23-Dec-15 170.5 36.76 2015 95 1 1
24-Dec-15 175 37.62 Jun
25-Dec-15 175 -
2015 354.25 354.25 354.25
28-Dec-15 174.5 36.36
Jul 305.91304 305.9130 305.9130
29-Dec-15 176 37.88
2015 35 43 43
30-Dec-15 177.5 36.59
31-Dec-15 178.5 37.13 Aug 247.47619 247.4761 247.4761
1-Jan-16 178.5 - 2015 05 9 9
4-Jan-16 186.5 36.81 Sep 238.97727 238.9772 238.9772
5-Jan-16 182.5 35.97
2015 27 73 73
6-Jan-16 176 33.97
Oct
7-Jan-16 168 33.29
8-Jan-16 168 33.2 2015 238.25 238.25 238.25
11-Jan-16 166 31.42 Nov 229.59523 229.5952 229.5952
Source : Energy Information Agency 2015 81 38 38
Dec 184.89130 184.8913 184.8913
T 105
2015 43 04 04 2017 81 12 05
Jan 189.13522 189.1352 189.1352 Apr 253.11638 233.3627 272.8699
2016 32 23 23 2017 97 97 82
Feb 189.13522 189.1352 189.1352 May 255.74404 235.8395 275.6485
2016 32 23 23 2017 88 02 96
Mar 193.78415 177.4390 210.1292 Jun 258.32506 238.2722 278.3778
2016 85 99 18 2017 3 41 85
Apr 201.94700 185.1330 218.7610 Jul 260.57956 240.3972 280.7619
2016 48 04 05 2017 34 25 02
May 209.20805 191.9769 226.4391 Aug 262.84961 242.5368 283.1623
2016 09 16 86 2017 21 63 61
Jun 215.47400 197.8829 233.0651 Sep 265.13520 244.6911 285.5792
2016 72 04 1 2017 9 56 62
Jul 220.76042 202.8656 238.6552 Oct 267.46745 246.8894 288.0454
2016 19 23 2 2017 08 15 87
Aug 225.34716 207.1888 243.5054 Nov 269.86188 249.1462 290.5774
2016 41 65 63 2017 57 94 78
Sep 229.52965 211.1310 247.9282 Dec 272.34961 251.4911 293.2081
2016 1 76 26 2017 03 03 18
Oct 233.29233 214.6775 251.9070
2016 45 99 69 Source : Author
Nov 237.10166 218.2680 255.9352
2016 27 88 37
Dec 241.03537 221.9758 260.0949
2016 72 18 36
Jan 244.17612 224.9361 263.4161
2017 95 39 2
Feb 247.20804 227.7938 266.6222
2017 38 76 12
Mar 250.23995 230.6516 269.8283
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IMAGE ANALYSIS OF MICROWAVE SAR FOR SEMI-AUTOMATIC

DETECTION OF SHIPS
S Senthil Kumar*, Dr. KS Misra**, Dr. RK Tripathi***

*
Pilot, Indian Air force
**Distinguished Professor, Department of Petroleum Engineering & Earth Sciences, UPES, Dehradun
***
Associate Professor, Department of Aerospace Engineering, UPES, Dehradun
Abstract identification of ship under all weather

The objective of the research is to study conditions. The paper also discusses as
the usability of Microwave remote to which filters can be used better for
sensing in the detection of ships and visualization and classification of
evaluate the potential in improving the image, assess usefulness of the data
semi-automatic detection accuracy of towards detection of naval features and
naval features with reasonable degree assess the accuracy of feature detection
of CFAR. The research limits use of in proposed method.
SAR (TerraSAR-X High-Resolution
Spotlight imagery) and ERDAS Keywords
Imagine for analysis. The observation SAR, Ship detection, semi-automatic
of maritime activity is the need of time detection, ERDAS Imagine, TerraSAR-
which has improved since inception of X
synthetic aperture radar (SAR) imagery
from space and aerial platforms. Introduction
However the large amounts of image Today Remote Sensing and Image
data modern SAR systems generate are Interpretation carried out in the field of
capable of quickly overburdening a Security, Earth Observation &
human observer. Conventionally EO Surveillance has shown large
image interpretation is done manually is improvements by the use of software
accurate but has got limitations of high tools for Image analysis. However the
processing cost & time besides being requirement of the Image Interpreter /
in-efficient in adverse weather Analyst is indispensable for the system
conditions like fog or clouding. to operate efficiently. This is because
However Microwave SAR remote the Image Analysis is both a
sensing offers cost-effectiveness with quantitative & qualitative in nature and
better efficiency and flexibility for the also comparative & associative with the
T 107
leading associated features against invaluable tool for defence as no other

knowledge base. The value of platform can reliably and repeatedly
information / Intelligence obtained is revisits an area on such a broad scale.
time-bound. Image Interpretation from The information derived from
huge remote sensing data by qualified remote sensing imagery provides
Image Analysts is time consuming in decision makers to make decisions.
the absence of reliable automatic Activities in the vicinity of shipyards,
analysis tools. Hence an objective dry docks and ships can be regularly
approach to the fundamental Image monitored by the Image analyst who
analysis problem is rather an intelligent receives frequent temporal coverage of
decision making process with a such facilities. It is therefore important
required degree / probability of success. that enables to recognize the main type
Hence I being an image interpreter is of warships and facilities that are apt to
able appreciate the effort required come under surveillance with in short
especially when it comes to targets in notice. As smaller and smaller objects
vast oceans. India being a peninsular are now available, as well as precise
country has potential threats through contours
seas which have been proven by 2008 of larger objects, automatic methods for
Mumbai attacks and various breach of extracting these objects are required.
coastal security lines. The observation Consequently this has given rise to
of maritime activity is the need of time growing interest on image processing
which has improved since inception of tools.
synthetic aperture radar (SAR) imagery
from space and aerial platforms. Objective
However the large amounts of image The main objective of this paper is to
data modern SAR systems generate are develop method for semi-automatic
capable of quickly overburdening a detection of ship and derive naval
human observer. As the data produced features with microwave remote
by radar and optical are different, both sensing. The sub -objectives are to
images can be complementary to one define which filters can be used better
another as they of different perspectives for visualization and classification of
of the earth’s surface providing image; to assess usefulness of the data
different information content. Satellite- towards detection of naval features and
based remote sensing has been highly
T 108
assess the accuracy of feature detection High resolution satellite images are one
in proposed method. of the important sources for automated
naval feature extraction, Terrasar-X
Study Area & Data Used High-Resolution Spotlight imagery is
For the studying the efficiency of any one such dataset that can be used for
method, it would be necessary to such a purpose. The technical
evaluate the performance of the specifications of the image used in this
methodology on a variety of scenarios. paper are given below:-
As our paper deals with the naval
feature extraction, for this purpose
VHR SAR images (Fig-1) of
Visakhapatnam Naval Port, Andhra
Pradesh, India has been provided as a
sample image of TerraSAR-X spot light
mode. Visakhapatnam Port (Fig-2) is
one of 13 major ports in India and the
only major port of Andhra Pradesh at a TerraSAR-X dependably
latitude of 17042' 00'' North and acquires high-resolution and wide-area
longitude of 83023' 00'' East. It is radar images independent of the
India's second largest port by volume of weather conditions. The satellite
cargo handled. It is located on the east features a unique geometric accuracy
coast of India and is located midway that is unmatched by any other space
between the Chennai and Kolkata Ports. borne sensor. TerraSAR-X is
The eastern coastline of 2,600 kms has specifically optimized to meet the
an Exclusive Economic Zone of six requirements of commercial users
lakh square kms, which is about 30% of around the globe, who require, high-
the country’s total EEZ. This area also quality and precise Earth observation
includes the waters of six littoral states data readily available.
of the Eastern Indian Ocean viz.
Bangladesh, Myanmar, Thailand,
Malaysia, Indonesia and Sri Lanka.
This necessitates surveillance and
reconnaissance on the Indian Waters for
the economic and political stability.
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Research Methodology application of a speckle removal filter

This chapter shows the outputs of on the digital image before display and
methodology in this paper and their further analysis. For speckle
analysis that will illustrate the suppression various techniques used in
justification for a chosen parameter. ERDAS Imagine include Frost Filter,
This paper will follow the same Gamma-map filter, local region filter &
structure as the methodology (Fig-3), so Lee sigma filter.
that the steps are well understood. The • Feature Processing: When the
methodology in this paper was input data to an algorithm is too large to
developed observing the Visakapatnam be processed and it is suspected to be
port site. redundant (e.g. the same measurement
A. Pre-processing: The aim of pre- in both feet and meters) then the input
processing is to make the subsequent data will be transformed into a reduced
detection stages easier and hence more representation set of features
accurate. Consequently, the type of pre- Transforming the input data into the set
processing used will depend on the of features is called feature extraction.
nature of the subsequent detection If the features extracted are carefully
stages and pre-processing and detection chosen it is expected that the features
should be considered in unison. The set will extract the relevant information
following techniques were used for from the input data in order to perform
analysis:- the desired task using this reduced
• Speckle Suppression: All radar representation instead of the full size
images appear with some degree of input. In this Edge Enhancement was
radar speckle. Speckle appears as a done using Robinson Filter, Sobels
grainy ‘Salt and Pepper’ texture in the Filter and multilevel filter.
image. This is caused by random • Texture Analysis: This ability
constructive and destructive of radar to detect texture is a major
interference from multiple scattering advantage over other types of imagery
returns that occur within each where texture is not a quantitative
resolution cell. Speckle is a form of characteristic. While
noise which degrades the quality of pixel brightness is a distinguishing
image and makes interpretation more feature of ships, other features such as
difficult. The speckle noise is texture may also be taken into account.
sometimes suppressed by the Most ship detection algorithms are
T 110
based on modelling the background tools were used for better feature
statistically and then finding individual detection. Sieve Tool has been applied
pixels or small groups of neighbouring at different thresholds to study the data
pixels whose brightness values are loss and accuracy assessment with the
statistically unusual. The algorithms original image.
incorporated into ERDAS IMAGINE
are those which are applicable in a wide Results
variety of situations and are not This chapter shows the outputs of
computationally over demanding. This methodology and their analysis that will
later point becomes critical as the illustrate the justification for a chosen
moving window size increases. Four parameter. For this particular SAR
algorithms are currently utilized for image speckle suppression techniques
texture enhancement in ERDAS were used. These outputs show the
IMAGINE include Mean Euclidean quality of the speckle suppression at the
Distance (1st trade off at smoothening the image. For
Order), Variance (2nd Order), the purpose of the interpretation the
Skewness (3rd Order) & Kurtosis(4th Lee-Sigma filter is better than other
Order). because it has not only reduced the
B. ModelMaker: ERDAS IMAGINE speckle but also highlighted the other
supplies many algorithms constructed features in surroundings. The results are
as models (Fig.No.4), which are ready shown in Fig-5. Edge enhancements
to be applied with user input parameters techniques are applied for the
at the touch of a button. These graphical microwave image. The four techniques
models, created with Model Maker, are employed are Robinson filter, sobels
some functions which filter, multilevel filter, weighted filter,
are used in this paper. A model was and 3 X 3 edge enhancement filters. For
created to know the approximate the purpose of visual interpretation 3 X
thresholding to delineate water from the 3 edge enhancement filter is selected for
other features by creating a thematic this SAR image. Results are shown in
layer. By trial and error method Fig.No.6. Further, the image was
approximate threshold value was processed for qualitative textural
supplied. Further the thematic image analysis by the filters given in the Erdas
used for gis analysis in Erdas Imagine Imagine. It is found that output given by
where the tools like clump and sieve the
T 111
variance method is better because it has are presented in both tabular form (Fig-
highlighted the object against 12) and graphical form (Fig-13) for
surroundings compared to other filters. better appreciation. From the bar graph
The final output of the GIS analysis (Fig-13), it is evident that some of the
using tools clump and Sieve at various small ships are not present in the
thresholds at 500 and 2000 are shown in sieve_2000 image because of small in
Fig.No.9. Comparing both the images at size and they are lost in the image
Fig.No.10, it is apposite to see processing.
unwanted clusters were seen in the Therefore, it is clear that care must be
sieve_500 image when compared with opted to exercise the threshold value to
sieve_2000 image. In sieve_2000 meet the goals of any targets of interest.
image there is data loss that means some No of ships identified in the sieve_500
of the required features may not be are 53 out of 58 and percentage is 94.05
available for the analysis. Paramount %. No of ships identified in the
care must be taken to approximate the sieve_2000 are 46 out of 58 and
threshold as per the requirement of percentage is 85.6%. Below is
project. percentage of accuracy assessment
represented in the form of bar diagram
Accuracy Assessment (Fig-14).
The no of ships identified on the
processed image has been put to Discussion & Future Work
accuracy assessment with the original This section discusses some solutions
image and assessment is presented that may help improve this method
below in a tabulated form and graphical further, so that detection of naval
form. To assess the accuracy of the features carried out more accurately.
processed image study area has been The generic problem addressed in this
divided into four parts as shown in Fig- paper is the detection of ships in ocean
11. The image has been divided into areas of interest. However, it is not
four area of interest and named as AOI possible to do this perfectly and various
1, AOI 2, AOI 3, and AOI 4. The ships tradeoffs are required. These tradeoffs
have been classified into large, medium are made within the context of
and small. The ships in each area surveillance scenarios with specific
counted for the purpose of accuracy objectives. Some of the considerations
against the original image and results that need to be taken into account are:
T 112
• Size of the surveillance area this paper is not aimed at addressing

• Type, class, size and velocity of ships any specific surveillance scenario.
to be detected Rather it aims to be a general review of
• Ocean environment in the surveillance techniques for ship detection in SAR
area — sea state, wind conditions imagery.
• Time constraints and revisit rate Future work would solve
• Available computing resources. detection of ships constructed with
• Radar parameters that need to be taken material like small wooden boats and
into account include Frequency, fibre glass boats may also be picked up
Resolution, Incidence angle & by the microwave imagery. Object
Polarisation Based Image Analysis may be carried
Ideally, one would have a out on the processed image for image
particular surveillance/reconnaissance segmentation for better extraction of
mission and the radar parameters would naval features. Capability enhancement
be chosen accordingly. Ship detection of ship detection algorithms by usage of
algorithms would then be designed to Circular Transmit, Linear Receive
suit the resulting imagery. However, (CTLR) mode of RISAT 1 SAR data.
T 113
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T 115
T 116
T 117
Acknowledgment
[2] M. Liao and C. Wang "Using SAR images to
Thanks to AK Singh for his valuable
detect ships from sea clutter", IEEE Geosci.
guidance and assistance towards the
Remote Sens. Lett., vol. 5, no. 2, pp.194 -198
accomplishment of this work. 2008.
[3] Meyer, F., Automatic Ship Detection in
References Spaceborne SAR Imagery, ISPRS Hannover
[1] Crisp, D.J. (2004), „The state-of-the-art in Workshop 2009, High-Resolution Earth
ship detection in synthetic aperture radar Imaging for Geospatial Information.
imagery“, DSTO Information Sciences

Laboratory, DSTO–RR–0272.
T 118
[4] Tonje Nanette Hannevik and Andreas N.

Skauen, Ship detection using high resolution [5] Article on Oil spillage in the sea by
satellite imagery and space-based AIS, European Commission,
Norwegian Defence Research Establishment Joint Research Committee.
(FFI), 15 December 2011, FFI-rapport
2011/01693.
T 119
RoSeCaMERA
Road Sense Commitment among Motor Enthusiasts and Riding Adolescents
R. K. Pavan Kumar, Pannala*, V. L. Narasimham**

*
Assistant Professor (Senior Scale), Department of Mathematics
**
Associate Professor, Department of Petroleum Engineering & Earth Sciences,
Abstract and Riding Adolescents, first of its kind for

Inculcation of ‘road sense’ (the ability to be the parent institution.
a safe driver or pedestrian according to
Collins Dictionary) is important, and the Keywords
article underlines the need to build a focused Road Safety, Motor Enthusiasts, Adolescent
Riders
campaign among the adolescents, and the
students of different higher educational
institutions of reputation. Road sense, when Introduction
encouraged using mixed means and through On 11 May 2011, the first ever Decade of
integrated strategies of communication and Action for Road Safety 2011-2020 was
action, believed to introduce an important life launched with great enthusiasm and
skill purpose among motor enthusiasts and optimism across the world. Governments,
commuting youth using motor vehicles. The international agencies, civil society
article is essentially conceptual in nature with organizations and private companies in more
limited qualitative inputs conveniently than 100 countries celebrated the launch of
deduced from the focused group discussions. the Decade through hundreds of events, both
Dissimilar conditions were tweaked on two national and local [1]. On 18-19 November
consecutive days for two different focused 2015, for only the second time in history,
groups, and a short compilation of the ministers of transport, health and interior and
opinions and suggestions of the students were their representatives convened in Brasilia,
noted. On a progressive note, the authors Brazil to address the global road safety crisis.
propose to initiate and build an exclusive The 2nd Global High-Level Conference on
arm, RoSeCaMERA, an acronym for Road Road Safety defined the urgent measures
Sense Commitment among Motor Enthusiasts needed to achieve the 2030 Agenda for
T 120
Sustainable Development’s ambitious target [National Crime Records Bureau NCRB,

to halve road traffic deaths by the end of this 2015, Exhibit 2 and 3]. Nevertheless, this is
decade. The Conference adopted the probably an underestimate as not all injuries
“Brasilia Declaration on Road Safety”, which are reported to the police [4]. National Crime
will guide action through the end of the UN’s Records Bureau, Ministry of Road Transport
Decade of Action for Road Safety 2011-2020 & Highway, Law commission of India,
and beyond [2]. Global status report on road safety 2013
ranks 10 Indian cities, Delhi (City), Chennai,
Adolescents and Motor vehicle crashes Jaipur, Bengaluru, Mumbai, Kanpur,
Motor vehicle crashes are the leading cause Lucknow, Agra, Hyderabad and Pune in the
of death and a leading cause of nonfatal order of Road Crash Deaths [5].
injury among adolescents aged 16 to 20 years
[3]. Ninety-one percent of the world’s Distraction during driving
fatalities on the roads occur in low-income With speed related fatal accidents in
and middle-income countries, even though question, the problem persists because of
these countries have approximately half of reasons like, developmental issues, driving
the world’s vehicles. In India, the motor skills and driving behavior and thus, there is
vehicle population is growing at a faster rate a necessity to understand short comings of
than the economic and population growth [4]. developmental issues among adolescents.
The surge in motorization coupled with Risk-taking generally refers to behaviors
expansion of the road network has brought associated with some probability of
with it the challenge of addressing adverse undesirable results that could always include
factors such as the increase in road accident poor road safety, substance use, unsafe
[4, 5]. Adolescent drivers are three times sexual activity, and many others [Exhibit 4].
more likely than drivers over the age of 20 to The increase in risk-taking and sensation
be in a fatal crash [3] however, the extent of seeking between childhood and adolescence
underreporting of road traffic deaths in India has been tied to changes in the brain’s social-
is not well understood [5, Exhibit 1]. emotional systems that begin around puberty
According to official statistics 141,526 [6]. Adolescents have higher rates of
persons were killed and 477,731 injured in distracted driving crashes compared with
road traffic crashes in India in the year 2000 older drivers, and driver distraction results
T 121
from secondary activities that disrupt the enforcement should be adapted

visual, auditory, biomechanical, or cognitive simultaneously. Communication campaigns
tasks required for safe driving [6] and by different International bodies, National
references therein. Drivers have always had bodies, State and local bodies, institutions,
the opportunity to eat, chat with passengers, non-profit organizations, celebrities,
and engage in a variety of nondriving-related individuals in responsible position or
activities while operating a vehicle, and these academicians should highlight the dangers of
have long been known to contribute to unsafe behavior and should particularly
crashes [7]. Statistic shows that most target the youth, neighborhood drivers, and
collisions happen within a short distance pre-driving teens. To achieve accident
from home near the campuses within AOR avoidance or engage in safe behaviors, risk
(area of residence), probably for the reasons needs to be recognized and knowledge of
like familiarity breeds inattention [8]. appropriate behaviors needs to be acquired,
retained and put into action [11]. Taking the
Need for Adolescent Transformation literature further, there is a definite need to
In order bring out a more transformational organize communication campaigns among
change in the youth and adolescent, the the youth and adolescents of different parts of
objective driving concept should be India, and educational institutes have been
thoroughly understood, and a wide variety of instrumental in the success of regular
methods of persuasion should be tested. It is campaigns, encourage students to come-up
believed that both soft and hard methods with promising campaigns from time to time.
should be used, and communication plays an
important role [9]. As a matter of evidence,
When Indian education has been touching
positive development and reduction by 1/5th
new horizons and university education has
of road accidents in the unified Germany
been within the reach of remote geographies
compared to erstwhile Wet Germany of
to support the aspiring youth, student intake
1970s was attributed to the successful
has been largely diversified and
implementation of several road safety
proportionately inviting good number of
measures were instruments in the reduction
native and non-native youth as distant as
of the number of fatalities [10]. One such
2000 km or more. Added to this, limited
campaigns, communication and increased
international community has also been
T 122
actively pursuing higher education in India. discussion was lasted for 30 minutes
When premier educational institutes approximately for each group. During the
campaign and compete growing international first day of discussion, the moderator had
standards to extend opportunities with initiated single PowerPoint slide depicting
curriculum that should be able to support the picture of one of the accident scenes, believed
immensely excited youth to pursue global to be fatal involving adolescent youth,
careers, the economically ready youth are sometime in the last couple of years. On the
bound to make sophisticated adaptations, following day, the moderator had initiated the
ease their life styles, use high capacity motor discussion without showing any form of
vehicles for routine commuting. The youth accident picture to the other focused group of
in large volume are also supporting fellow students largely to derive different set of
colleague and other acquaintance as co. reactions and opinions that could be useful
passengers or pillion riders. Keeping the for bring out road sense strategies and to take
road sense as a preamble to larger issues of up further into sustainable action of value.
road safety a major concern all over the
globe, and in order to take a firsthand account Discussion
of what solutions adolescent youth are The first focused group discussion was found
looking forward to avoid driving negligence to be more involved, but progressed into
or become involved with undesired but fatal unpleasant emotional state of great distress
outcomes, a short focused group discussion among the students, and was supplemented
was conducted with the two different batches with vocal suggestions, like creation for more
of undergraduate students at Bidholi campus number of buses to commute the students by
of University of Petroleum & Energy Studies, University management, vehicle pooling
UPES, Dehradun in the month January 2016. along with faculty members or voluntary
Neither the title nor purpose and objective for pick-up by faculty members, and parental/
discussion were previously communicated to elderly guidance were also urged. For the
the students deliberately by the moderator in second day, when the focused group
order to observe and note ingenious discussion was largely generic in nature
reactions. The discussion was spread into without any display of accident scene, but
two consecutive days on two conveniently initiated by the moderator for the purpose of
selected groups of students about 30 and the seeking student opinions about road safety,
T 123
and needed measures to control unwarranted sufficient infrastructure to locally

injuries or fatal incidents, the emotional state accommodate all the students, there is a need
of the students was observed to be at ease, to innovate new options of communication
largely unresponsive, and relatively less campaign on road safety along with
exciting and inspiring. However, similar but continuation of highly acclaimed programs
isolated suggestions were recorded on the using different arts and skills.
blackboard for the convenience of the Some suggestions that could be envisaged
students to check and corroborate outcomes from the discussion include implementing
of the discussion. One of the common both soft and hard methods like, periodic
observations found to be parental advice and reminding of parental advice through voice
support which is not always possible when communication over mobile telephones and
the ward resides far from home. possibility of installation of road safety
A key component for improved road sense focused ring tones, a positive sign of
towards safe driving should include concept increased interest among the students
of shared responsibility, particularly between towards safety participation behaviour.
the road users and road traffic However, the possibility of mandatory
designers/operators along with transport driving log maintenance, and near accident
designers, operators, and or driver schools. and incident reporting, a part of core safety
Associated with them, should be the role of compliance behavior was not mapped from
academicians, non-profit organisations, and the focused group discussion. This could be
adolescent, along with private sector. It was largely attributed to the limited awareness
also suggested that designers and operators, and amenability among the students.
municipalities, police forces, road However, voices for increased frequency of
authorities, Driver training and testing road safety campaigns were observed among
institutions, and the private sector should take both the focused groups, again a largely
lead in bringing out continuous awareness safety participation behavior. The
among the adolescents. Keeping the suggestions, expressions or interpretations
increasing number of participative students, made by the students during the discussion
limited infrastructure expansion from local were their own and do not constitute any
authorities, impractical land acquisition to judgment or account for serious
park large number of buses, time taking self- categorization on the part of the moderator of
T 124
the said focused discussion, and communication approach on the road safety
subsequently, during article preparation. The among the students of UPES and on its
themes generated during the discussions were success, extension into other educational
based on the verbiages used by the students institutes has been envisaged.
do not constitute either in the favor or not in Road Sense Commitment among Motor
the favor of negative behavior particularly Enthusiasts and Riding Adolescents
while extending their opinions. The (RoSeCaMERA) is one of outcomes from
discussion outline attitude among the this article, herewith proposed for taking up
participants to explicitly demand and also as an honest initiative that can integrate
align themselves to a notional rightness to learned academicians, industry fellows,
seek more number of buses from the first technical and administrative personnel along
focused group discussion compared to the with learning pupil, not exclusive to any
second group. According to HSC 1993 and educational institute alone, but as socially
[12], the term safety culture of an responsible pool of individuals that could
organization has been described as he engage in transforming both urban and rural
product of individual and group values, youth located at various pockets of the city,
attitudes, perceptions, competencies, and Dehradun the State, Uttarakhand, and the
patterns of behavior that determine the nation in general. Among the activities
commitment to, and the style and proficiency proposed for RoSeCaMERA include,
of, an organization’s health and safety development of integrated strategies for
management, and the focused group sense making on road safety methods like,
discussion is largely to identify they – introducing, identifying, training on mental
symptoms of among two different groups on dispositions and sustaining on specific
general road sense, and road safety. There talent towards risk resistance and risk
need to be a continuous evolutionary but an aversion, particularly during a drive and
apt method to be developed and executed that usual commuting (RoSeTalent)
can transform mere perception into a – mapping negative influences among the
sustainable road sense commitment among youth and peers through regular exchange
the adolescent group. Extending the context of communication and questionnaire (No-
further, some strategies suggested through veRoSe)
this article include, an integrated
T 125
– introduction of driving log among 4.http://www.jotr.in/temp/JOrthopTraumatolRehabil6

11-1427483_035754.pdf
adolescents along with incidence of near
5. Transport Research Wing, Ministry of Road
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Transport and Highways. Road Accidents in India
– catchy jingle composition through juvenile, 2011. New Delhi: Ministry of Road Transport and
amateur and adolescent but competitive Highways, Government of India; 2012.
artisans of indigenous talent (RoSeMusik) 6. Steinberg, L. (2008). A social neuroscience
perspective on adolescent risk-taking. Developmental
– striking mobile app development on road
Review, 28 (1), 78–106
sense, road use, driving log, or any other
7.http://dx.doi.org/10.1016/j.jadohealth.2014.01.005
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through periodic events (RoSeApp) e%20driving%20rules.pdf
– staging parental and guardian meet on 9. Berg, H-Y (2006) Reducing crashes and injuries
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References safety.com/articles/Towards_a_model_of_safety_cult
References ure.pdfhttp://www.behavioralsafety.com/articles/Tow
1.http://www.who.int/roadsafety/publications/decade ards_a_model_of_safety_culture.pdf
_launch/en/
2.http://www.who.int/roadsafety/events/2015/brasilia
_conference/en/
3.http://dx.doi.org/10.1016/j.jadohealth.2014.01.008
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Exhibit 1: http://tripp.iitd.ernet.in/road_safety_in_India_status_report.pdf
Exhibit 2: http://zeenews.india.com/news/nation/india-no-1-in-road-accident-
deaths_704455.html
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Exhibit 3: http://www.who.int/violence_injury_prevention/road_traffic/countrywork/ind/en/
Exhibit 4: Adolescents and various issues
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Training Port Managers – A Muddled Challenge
Mihir Das*
*Industry Fellow-Transportation Department – UPES CoMES & Ex Secretary Indian Maritime University
(Kolkata Campus)
Abstract – to ensure the training or exposure to be

The way the country’s port or the maritime effective.
sector is organized has a profound impact
So called summer internship or attachment
on trade volume and transport costs, and
to the ports and shipping companies; many
therefore is likely to impact the
a time prove ineffective as the right form
competitiveness of the country. Better
of practical (rather hands on) inputs are
performance is often linked with better
overlooked. Thus there is a mismatch
manpower resources and that
between supply and demand-quality – may
unfortunately remains a challenge to any
be from both sides. Looking at the
port authority. Port operation is often
resource and time constraints of many
benchmarked directly or indirectly at a
ports & port based organizations, the paper
global platform. Better business means
tries to explore some smarter methods that
more jobs, sustenance and creates well-
exist or being developed with a hope that
being. For a country like India; the trade
the findings can be used as beacons of
and maritime transport sector are often
better people development in maritime
subject to constant regulatory changes.
arena.
Thus the port officials must be able to
manage effectively, the growing Keywords
complexities of port management. Training, Maritime, Maritime Education
The paper deals with the challenges in and Training (MET), Cargo
imparting training in maritime logistics
which encompasses both the cargo and Introduction
ship operations in port and these are
Importance of ports & terminals in
possibly common to the other disciplines
maritime domain
in management. Many of the port
management curricula are loaded with On October 15, 2011 , during the General
extensive theoretical inputs. But a good Assembly of the International Association
part of the same needs to be done hands on of Maritime Universities (IAMU), the
International Maritime Organization
T 129
(IMO) Secretary General Ethimios E recycling, ship owning and operating,

Mitropoulos, in his keynote address said: shipbuilding and repair and port services,
“As human element at sea is critical in among others.
ensuring safe, secure, clean and efficient (https://business.un.org/en/entities/13)
operations, it is only feasible to secure,
and to preserve, properly qualified human Services are increasingly occupying center
resources for the maritime industries stage in the global economy with mature
through effective education and training – economies deriving a substantial portion of
based on scientific and academic rigor; their total job growth from the service
the development of a clear linkage sector, countries traditionally viewed as
between practical skills and management manufacturing centers (e.g., Brazil, India,
techniques; and an unerring focus on China) increasing the proportion of their
quality.”(Baylon & Santos, 2011).The role GDP attributable to services.
of maritime education and training
institutions is essential for the success of Looking at the Indian Ports one finds
any maritime industry. In the words of certain disconcerting issues. “Indian ports
Stephen Covey – interdependence is the suffer due to frequent labor strikes,
success mantra and thus a mature, strong malpractices, inefficiency and low labor
and synergistic cooperation amongst the productivity. Most major ports are
different players of maritime industry overstaffed with unskilled and untrained
sectors – government, MET institutions, labor. In addition, labor costs are as high
ports and shipping companies is as 40–60% of the total expenditure on
fundamental to the benefit of the future them.” (New Innings for the Indian Ports
managers, seafarers ultimately for the Sector - Port Finance International 2012 –
success of the industry (Covey, Stephen R: an Ernst& Young Report)
Seven Habits of Highly effective People,
2004, Simon & Schuster, page 44). KPMG mentioned in their Shipping Report
in 2006 through their publication “Due to
Maritime activity has a key role to play in
the high quality of training imparted to
the alleviation of extreme poverty and
maritime personnel, India has always been
hunger as it already provides an important
regarded as a major source of skilled
source of income and employment for
manpower for world shipping. India has
many developing countries, such as the
around 150 training institutes with 4 in the
supply of seagoing personnel and ship
public sector and around 146 in the private
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sector, capable of producing 11,164 Demand on Indian Port Infrastructure

seafarers (4,575 officers and 6,589 ratings) and resources
annually.” Though this is not directly in
Ministry of Shipping estimates that the cargo
the shore arena it gives a view of the
volumes in India are expected to cross the 2-
gamut of constraints in maritime billion tonne mark by 2016–17 and 2.4 billion
education. tonnes by 2019–20. ICRA had forecasted that
the (ICRA Rating Feature, September 2011),
But this fact remains a reality; as late as
released by consultancy firm ICRA, states that
2016 – because the major ports have not
the prospects for cargo growth over the
undertaken any recruitment during this
medium- to long-term remain positive based
period and they are still wary of having on the level of activities in the key end-user
large manpower on their role. industries.
(Employment at India’s Major Ports
Going forward, growth of traffic at Indian
dropped by 5%, between 2001 and 2010:
ports is expected to be driven mainly by higher
ASSOCHAM – Live Mint e-paper 2nd
volumes of coal (to meet requirements of the
January 2013: P R Sanjay). The situation
large number of current and proposed thermal
remained same till mid-2015 when the power projects based on imported coal);
Government wanted some replacement containers (given the market under-penetration
looking at the dangers of getting new hand and potential for cost savings); crude oil and
while en-masse retirement takes place POL (large upcoming refinery capacity);
during coming two years. The adverse fertilizers (strong domestic demand and low
audit reports and the acidic criticism from self-sufficiency); and steel (mega projects
the port user communities have nearly proposed in the eastern part of the country).
Most of the expected traffic growth in India is
rattled the nerves of the port
based on domestic demand drivers, which are
administration. The private ports have
expected to spur growth in various port-related
learnt by observing the ways how their
logistics and service activities, although
senior government counterparts have burnt
competitive pressures in these business lines
the fingers by adding more staff than would remain high.
required. The business plans are now made
with more of outsourcing and better Overall cargo scenario in Indian ports
managed ports look at vendor development India’s ports had been for a long time
as a critical KRA. constrained for capacity and are expected
to remain so for some time in near future.
Port usage was had been hovering around
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80 per cent up to the end of 11th Plan and cargo traffic in 2014-15 after subdued
some of the ports like JNPT, Vizag had cargo movement in the preceding four
utilisation rates above 100 per cent; with years. Cargo traffic is expected to remain
not much change as of date. Development healthy in 2015-16 as well. It was
of Indian port infrastructure has expected that volumes to grow by 7.1 per
traditionally been driven largely by public cent. As of April 2015 the cargo handled
investment. Though some of the leading in Major Ports and private ports stood at
private investors have shown interest in 1.5 billion. (“E-Magazine,” IPA, Jan
that port development and expansion, the 2015). In 2016-17, cargo traffic is likely to
public ports/bodies have come forward in further increase by seven per cent.
many cases to provide the basic
Cargo traffic of petroleum, oil & lubricants
infrastructure like harbor, basins, fairways
(POL), which constitutes around 30 per
etc. It has been generally noticed that
cent of the overall cargo traffic, is
stakeholders lose time and money due to
expected to rise by 3-4 per cent in each of
two major reasons: pre-tendering delays
the years during 2015-17. Refineries in
(mostly due to approvals) and then weak
India are expected to take advantage of the
implementation of projects. While low
fall in crude oil prices and ramp up their
quality designs and engineering is a factor
production levels and the rising demand
that is overtly seen but the other serious
for petroleum products in the domestic and
factor that covertly impact is the untrained
export markets might synergize with the
manpower in different levels – both
growing refining capacity in India. As per
supervisory and also working hands. The
CMIE’s CapEx database, refinery capacity
pool of skilled and semi-skilled
in India is expected to increase by 27
manpower, such as welders and fitters, has
million tonnes in 2015-17. As a result,
not kept pace with the construction needs
imports of crude oil are set to rise.
of infrastructure. The report says that “in
Simultaneously coal cargo traffic is likely
effect 70 to 80 per cent of the existing
to continue to grow at a healthy pace in
workforce is untrained. This affects the
2015-17. Volumes of the commodity are
quality of project implementation.” (Indian
expected to reach 133 million tonnes,
Maritime Landscape, A Background Note
registering a growth of 15.1 per cent in
: 2006.)
2015-16. . Higher imports of thermal coal
The major ports in India are estimated to are expected to support the overall growth
have witnessed a 5.4 per cent growth in in coal traffic with reduced demand in
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China and steep rise in India’s power team. From the beginning there had been
generation capacity. an apparent realization that the ships are
more vulnerable and thus the crew should
Similarly container cargo traffic is likely
be trained to perfection (prescribed in
to grow by 5.1 per cent in the current
various conventions like STCW)(STCW,
financial year. Container volumes are
A Guide to Seafarers, 2010: ITF) so that
likely to stand at 125.1 million tonnes
chances of grounding, collision and
given the logistical advantages of
sinking are to an extent eliminated. But
containerization.
many a times the shore side training is put
Among the remaining commodities, cargo in a lower priority more so because the
traffic of edible oil, fertilizers and other shore work is done from a relatively stable
ores is expected to grow by 10-14 per cent platform.
in 2015-16. Thus the overall cargo growth
The terminals across the world had been
opportunities are bright.
trying to introduce certification in limited
Simultaneously throughput of the Private way as different terminals have different
ports will also follow the lines of Major shapes, sizes and working patterns (cargo
Ports and at times likely to surpass the being different). Thus across the terminals
former’s growth trajectory. and countries it is extremely different to
set standards. But terminals like APM and
A need is evolving for better and smarter
D P World(Traning & Assessment Models
breed of port managers and employees.
: Lewandowski, Co-investigator, &
From a general point of view we may
Lewandowski, 2015) have set their
refer to the National Skill Development
standards but restricted to certain
Corporation’s report created in
categories. However Indian Major Ports
2012,showing a shortfall of 1.7 Crore
are slightly behind, due to reasons like
trained manpower ( in transport sector
absence of comprehensive training plans,
which includes road, ports, rail and
budget constraints and embargo on
aviation) in 2022.
sending port managers to private training
A glimpse of MET provider, barring selective cases. Most of
the annual training plans are based on the
Normally by the Maritime Education and
offerings at Chennai and Kolkata campus
Training (MET) we understand that the
of the Indian Maritime University.
training imparted to the seafarers and
However the other centers at Kochi,
simultaneously to the shore operations
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Mumbai, Kandla and Vizag are also performance and

selectively serving the needs of the knowledge/understanding.
Maritime community (including the port
employees). Adapting these to existing organizational
hierarchy (from base level to the middle
The Government had been keen to skill
level) remains a challenge to the
India from sometime past and the National
Government and also the private
Skill Development Corporation had been
organizations, but with different reasons
empowered to take this forward and they
altogether. The juggernaut that is a
have documented skill gaps with the
government organization is difficult to
assistance of many leading consultants. In
move and the private ports have ever
keeping with the process adopted by the
changing business plans and with that
developed nations (esp. Germany,
recruitment plans get amended. Thus the
Australia & UK) – there has been a move
job descriptions are apparently unfixed. To
to set the occupational standards for
match these the qualifications vary
different job roles. In this article a few
immensely – for example the supervisor
glimpses of UK NOS has been included.
may be a graduate or even an
(DfT, 2013)The National Occupational
undergraduate but the person above this
Standards (NOS) specify the standard of
level often turns out to be an MBA
performance an individual must achieve
however with no great opportunity to hone
when carrying out a function in the
his analytical skills. If the particular
workplace, together with the knowledge
organization or the organizational head
and understanding they need to meet a
belongs to the enlightened lot – he may
standard consistently.(National
allocate some of the analytical jobs that
Occupational Standards:
encourage them. Coming back to the
(http://www.nsdcindia.org/standards-and-
situation in Major Ports – it will be seen
quality-assurance))
that the entry level qualification remains as
To add here each “national occupation Post Graduate or MBA with 50% (or
standard” defines one key function in a job above) marks (RSP Regulations – MOS).
role. Each standard must be a concise and But they are faced with two daunting
readable document, usually consisting of challenges – somewhat inadequate
no more than five or six pages (some are induction into the department or the
only one or two). In their essential form, service or the department and working
standards describe functions, standards of often in blurred hierarchical structures.
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Key issues of employee performance in Some of the port operation managers are
ports managing berths where cape size vessels
are regularly working. The vessels carry
The ports are life lines of any country as it
about two hundred thousand tons of cargo
is normally estimated that 90% of the
though they are capable of carrying more.
cargo is transported by sea and as a
This cargo carriage is limited to the draft
corollary the port facilities are used in the
(depth of water) available at the berth
process. The effectiveness of the ports is
which accommodates the ship. The port or
measured through a number of parameters.
the terminal may be highly mechanized
Some of these are berth level productivity;
thus needing an automated control room to
turn round time, equipment utilization,
be in place. The person could possibly be
berth occupancy, total throughput, and
having an engineering background and
service ratio & so on.
sufficiently knowledgeable about the ship
structures as the ship loading plans are to
But if we go deeper we find that all these
be vetted by the shore side manager /
are highly dependent on the performance
supervisor who is involved in overall
of the men and machines and the man-
loading / discharging of the ship or the
machine interface can only be seamless
shift in-charge.
and smooth when there are right persons at
the right place. It has been noticed that the
Thus the key issue remains as to whether
best of the shore based gantry cranes also
they are able to synergize the KSA in an
go out of commission when the
integrated manner and while undertaking
insufficiently trained operators take
routine control tasks can also take care of
charge. An operator cabin has multiple
the analytical exercises that are possible
joysticks and a number of screens/
and needed basis the huge volume of on
computer interfaces to control or update.
line operational data, generated basis the
The whole cabin is at a height of about two
stream of activities happening in ports on
hundred feet and moving with the
24X7 basis. The core challenge is to have
containers at a speed of 3 meters per
the right person for the right job. HR
seconds (back and forth) and throughout
(Human resource) would now look better
the 8 hour shift (considered to be a hot seat
with RH (right hands).
with a changeover after every hour).
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Glimpse of global trade Managing the growing trade
PWC reports that one of the long-term Under such a condition not much of logic
successes of multilateralism has been the is to be put forward to assume that the
strengthening of trade flows across the management must be more effective which
global economy. Our analysis of IMF in other words mean that the team in the
numbers shows that, since 1980, the port must be knowledgeable and trained.
volume of global trade has increased by a The heat on the delayed infrastructure is
factor of five, compared with ‘just’ a on and the Government has been strongly
tripling of global GDP over the same pursuing the Pradhan Mantri Kaushalya
period (measured in purchasing power Vikas Yojana where in the ultimate aim is
parity terms). This trend has been good to “skill India” – with better and
news for businesses, especially those with sustainable employment possibilities and
a global footprint, which have the ability lesser hiccups in creating infrastructure.
to cushion a down-turn in their home “Skilling is building a better India. If we
markets by switching their sales efforts to want to move India towards development,
overseas markets. then skill development should be our
mission”- Shri Narendra Modi, the Prime
Historically, growth in trade was limited to
Minister of India
a ‘closed club’ of Western economies. But
(http://www.pmkvyofficial.org/Index.aspx
successive rounds of GATT trade
). In simple terms growing trade needs
liberalization talks and the subsequent
better transportation methods and
establishment of the World Trade
practices(including port facilities) the
Organization (WTO) in 1995 helped to
skilling has been a sore point next than the
expand trade on a global basis. It is
financial front. (Stewart, J., Vella, J. &
estimated that the total value of global
Beatty, 2015)[KPMG foresight: Special
goods trade will continue to grow from
Edition January 2015]. Though the report
around $10.3 trillion in 2013 to around
speaks of the group in construction team it
$18 trillion in 2030 (in constant 2013 US
will be right to consider the operations and
dollars) with trade between advanced and
other associated teams as well. The
emerging markets accounting for almost
weakness in the operation team is reflected
half ($3.9 trillion) of this increase.(Global
forthwith as the ships demand quicker
Economy Watch, 2014, Price Waterhouse
service and shorter stay within a port.
Coopers UK) This means that sea trade is
[ibid]
like grow accordingly.
T 136
Training and productivity development. In an environment where

there is high uncertainty tends to present
Professional training is significantly
organizations with high risk, the
important for a secure and efficient
knowledge of business and market
operation of ports (Muntean, Nechita,
intelligence present organizations with a
Nistor, & Sarpe, 2007,Port management -
reliable competitive advantage over those
importance in port activities
that do not have such (Jelena,
development:http://www.fsea.ugal.ro). To
2007).(Aguinis & Kraiger, 2009, Benefits
be more specific the demand for ports is
of Training and Development for
secondary. Global economy is always on a
Individualsand Teams, Organizations and
roller coaster ride. Therefore it is always a
Society The Annual Review of Psychology
struggle to survive in this ever-changing
:http://www.owlnet.rice.edu/~ajv2/courses
market and to sustain and remain
/13c_psyc630002:psych.annualreviews.org
competitive; there is a need for developing
)Training and development is very
human capital. “However, there are other
essential at all employee levels, due to the
factors that affect organizations’ success;
reason that skills erode and become
organizations must possess productive (i.e.
obsolete over a period of time and has to
effective and efficient) employees. In
be replenished (Ekundayo, 2015: Impact
addition, organizations differentiating on
of Training and Development on Workers
the basis of human capital due to its
Productivity: A Study of Selected Oil
intangible characteristics such knowledge,
Service Companies in Port Harcourti).
skills and motivation of workforce
increasingly sees it as invaluable in order
Ministry of Shipping and Transport in its
to remain sustainable in the market.” (Nda
strategy paper Maritime Agenda.
& Fard, 2013,The Impact Of Employee
(“Maritime agenda : 2010 - 2020,” 2011:
Training And Development On Employee
Ministry of Shipping, New Delhi)focuses
Productivity)
on the need for capacity building and
human resource development in the major
Ports must therefore have a group of
ports. It seems that the department is
employees adaptable to such a volatile and
seized with the need for structured training
dynamic business environment. Paradise,
to all port employees including officers.
(2007) in his report stated “that U.S.
The World Bank in their Port Reforms
organizations alone spend more than $126
guidelines 2004also mentioned that it is
billion annually on employee training and
essential to re-train port employees in
T 137
multi-skilling; to avoid any retrenchment Ships, many a times, suffer in Indian

or keeping people surplus without jobs. A Major Ports due to shortage of pilots for
brief quote: “In other words, managers navigation to and from the berths, resulting
accustomed to civil service procedures and in unnecessary pre berthing detentions.
practices have to drastically change their Recommendations exist for starting a three
management styles. This has proven to be year “pilots’ course” consisting of 1 year’s
a difficult transition and is the reason why, theoretical training inIndian Maritime
in many such processes, managers with University and 2 years practical on-the
private sector experience soon replace the job-training in ports so that acandidate can
former civil service senior management. A obtain a port-pilot licence by the
well thought-out training program may be Government and these pilots can be
an effective tool to change attitudes and utilized by the Major Ports.
prepare management and staff for the
different style and culture The Indian Maritime University came into
commercialization brings.” (Port Reforms existence (Gazette notification number -31
Toolkit: Second Edition: World Bank, of 15/11/2008by Ministry of Law &
2007)A need thus evolved to ensure that Justice, New Delhi) with a mandate to “to
every employee would be allowed to establish and incorporate a teaching and
undergo different tiers / levels of training affiliating university at the national level
programmes during ones service period. to facilitate and promote maritime studies
to achieve excellence in areas of marine
The training resources are often scarce – in
science and technology, marine
terms of available knowledgeable faculties
environment & other related fields and to
and institutional supports like props and
provide for matters …”
training gadgets. Logically it might need
revamping the port based training centers
This comes after a long evolution of
and also better industry linkages and often
fragmented efforts at some of the leading
looking forward to “job ready” managers
Major Ports who foresaw the need and had
and people from the organization with
the financial and infrastructural support to
“successful build strategy”. The matter has
start and maintain training centers.
been reviewed quite seriously as to make
Kolkata, Mumbai, Chennai were mainly
the training to be made compulsory before
operating training institutions with
consideration of any promotion.
different names like “Indian Institute of
Port Management”, Mumbai Port Training
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institute, National Institute of Port B-Schools have been trying intensely to

Management and so on. Other ports were introduce several adaptations to align the
mostly sending employees to training Indian culture and work-ethic so that the
institutions to taste the a-la-carte menu of scheme of things is matched seamlessly.
training packages. Till 2008-9 the focus That made Indian Business education;
was nearly absent and the training inputs consequently, face several issues in the
were never questioned. area of academics, development of
infrastructure & financial support.( Kaul,
Meanwhile, there had been proliferation of 2011: Management Education in India – A
Business Schools and simultaneously there case study:Asian Journal of Management
had been Indian Port Sector had been on Research: ISSN 2229 – 3795)
an upswing, 1980 onwards, in terms of
It was a common area of concern that
cargo and capacity. As of date six to seven
appropriate faculty was unavailable
Universities in India are offering full time
because of the large number of institutions
Port Management or closely aligned
sanctioned by the UGC. The training
courses. However the course curriculum is
materials available often lack Indian
mostly same with about 35 to 40 percent
context and often not updated at all.
of General Management content.
Similar condition prevails with the port
based training institutions and also other
Management training – its inherent
universities that are running full time
weaknesses
courses as educational materials for ports
Possibly management training in India, is
and shipping including case studies are
in a critical juncture at the moment.
extremely costly compared with books
Government had liberalized the business
relating to other management disciplines.
education in 1990s, with a specific
Port based training institutions are in a
objective, resulting in rapid growth of
slightly worse situation as there is no
Business Schools offering the programs
framework to assess and review the input
both at graduate & undergraduate levels.
and outcomes. Rather when they work as
Indian B-Schools so far had followed the
departments, an individual (he may belong
pattern of education as of US Business
to any category); often dictate and drive.
schools particularly in the area of
The condition ultimately spells disaster.
pedagogy, curricula, industry interface &
academic research models. With US A sample media report in Economic Times
management literature galore – the Indian bureau says that Management Education in
T 139
India “was facing a deep crisis of placement figures is widening. With feeble
confidence as during past few years they support from the industries in terms of
had been in a rush to tap the high demand approving content and luke-warm
from executives keen to hone their skills. acceptance of students in temporary
Much of this demand has been driven by internship programs – they have only one
engineers keen to grow from being grunt direction by which they can upgrade and
workers to team leaders and managers and update their delivery systems.
with a dream that the certificate will have Independently they are revamping their
a ‘Midas Touch’ with great expectation of course content by including learning
a fatter pay cheque ; once they return to objectives and learning elements in line
work. A muted economy and substantial with the Bloom’s Taxonomy. It is author’s
supply over demand of management personal experience while attending many
graduates had shattered their dreams.” In a state conferences including CII &
hurry to establish such Business Institutes, ASSOCHAM – where high promises from
promoters had paid scant attention in large industry leaders were heard but when
building pedagogy, hiring strong faculty the universities or institutes approached
and attracting top companies to pick up them for employment, internship programs
these newly created talents. or similar support to the students – very
cold reactions were evidenced. But
We hear in the words of Mr. Devanath
somewhere the critical quality of a “job-
Tirupati, Dean (Academic) and the then
ready” person isoften being sought, even
Director in-charge, Indian Institute of
under such cold conditions.
Management (IIM), Bangalore a voice of
frustration: "I am of the firm opinion that But even these facts fail to make the
bad schools must be shut down”. Fly-by- students involved.
night business schools shouldn't be
It is possible that smarter instruments like
allowed to take students for a ride,"
simulators or exposing them to some game
Some deeper thoughts sessions - might be able to improve their
learning. But unfortunately nothing is
A few management institutions are at a
cheap. They might take a glimpse of the
juncture when the “mass” has become one
more modern instruments like simulators
of their key criteria. The business of
and also expose them to some “game
education is looking for more and more
sessions”. A proper and really customized
numbers. Gap between admission and
six degree of freedom simulator demands
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an expenditure of around 2 Crores(two subsequent period of time. The huge

Crores) with associated housing and amount of theoretical literature that is
electrification. While individually such shared with the students of maritime
installation might seem daunting sharing management often remains un-integrated.
of this infrastructure between similar At a particular moment in a classroom
institutions is always a better and workable lecture students find difficulty in
option. Only challenge will remain with connecting to the reality. Well the vast
creating appropriate faculty / instructors array of videos on port or marine related
often through “Train the trainer” subjects that are available on the YouTube
programs. Apparently it is worth is very useful but certainly not a
undertaking. On the other hand a guided replacement of the real life feel - though
exposure in gaming is a more moderate these considerably ease the efforts of the
option – but needs a very integrated and facilitator to explain any related topic.
systematic development of the intuition as
Possibly then we look forward to some
whole.
advanced delivery level whereby one can
Data availability and integration of the derive all the fun and addictive elements
available facts found in games and applying them to real-
port scenario or for that matter any
It is a daunting task to get specific data on
productive activities
the success or failure rate of the
(http://yukaichou.com/). It is a matter of
management programs or ROTI (return on
engagement. Let us take an example.
training investment) as such but it is
When we are teaching safety in operation,
already a commonly established fact that
some movies (considering that right kind
the gorge between the admission and
is available) can show the disastrous effect
placement is getting deeper. The release of
that can happen in case the safety
specific college or university data is likely
processes are breached. But it cannot
to play havoc on the future progress of the
provide an understanding in a step by step
university. But the sheer fact that many
manner how these can be reversed /
private universities are closing down is
controlled and modified according to the
one solid indicator of the statement.
scenario that might be present at the work
The common worries with the learners are site. Additionally the level of interest
takeaways and even if there are some, evinced by different student will be
whether those are of any value, at a
T 141
different. Thus the same delivery may ILO

yield quite different result.
ILO has a number of mandates of which –
Maritime Training institutions the technical cooperation to assist
developing nations has been quite
The UNCTAD inter-alia had been the
important and thus it has steadily
forerunner of the maritime training in
expanded for the past two decades. It is
different continents – initially through
understood that more than 50% of this
their TRAIMAR program (a technical
organizational resources are spent on
assistance programme). This involves a
technical cooperation programs, carried
network of national and regional training
out in close association with the United
centres. Accepted pedagogic and
Nations Development Program and often
substantive standards had been used for
with other UN specialized agencies. It is
the purpose of capacity building in the
described in the Nobel Prize site as “These
maritime sector. The regional development
activities are concentrated in four major
being a key critical focus of the UNCTAD,
areas: development of human resources,
this was used as a fine tool. It built a
through vocational training and
global network during first decade of
management development; employment
existence thereby contributing importantly
planning and promotion; the development
to establish sustainable training capability
of social institutions in such fields as labor
in some of the parts of the world. The
administration, labor relations,
network had involved the UNCTAD
cooperatives, and rural development;
Central Support Team (CST), which was
conditions of work and life - for example,
mandated to provide quality control,
occupational safety and health, social
guidance and service to national and
security, remuneration, hours of work,
regional centres, and programme and
welfare, etc.”
network management. The TRAINMAR
(http://www.nobelprize.org/nobel_prizes/p
methodology of course design and delivery
eace/laureates/1969/labour-history.html)
is structured scientifically. Though at that
point of time the delivery mechanism was ESCAP
aligned to the best pedagogy of the decade
Though ESCAP has a regional presence
but it possibly could not keep pace with
their contribution to domain training in
the latest tools. But their pioneering work
ports and shipping cannot be
can never be forgotten.
underestimated. They had been continuing
T 142
this for last three decades in the component of “Gamification” is how it

background of the shipper’s cooperation promotes “game thinking,” the conversion
council and similar bodies. UNESCAP is of an everyday activity into an opportunity
the forum through which they had been for learning and growth.”
updating the knowledge of the port
It is clear that this model does not make
managers through various seminars, work-
learning a ‘plaything’ but makes learning
shops and publications – which are
more engaging. The competency model
invaluable assets to the fraternity at large.
depends greatly on the attitude; rather than
But all these legacies have possibly out skill and the same translated in a different
lived their lives in a world of hi-tech ports way is motivation. Thus this ensures
and ICT enabled processes. A number of motivation while imparting training and
managers have up-grated and updated their education.
skills through many regional workshops
A series of design principles, processes
and seminars involving best practicing
and systems used to influence, engage and
specialists. ( http://www.unescap.org)
motivate individuals, groups and
Gaming in training – a new avatar communities to drive behaviors and finally
achieve desired outcomes. (Wang, R.
For delivering corporate training and
December 2011: Demystifying Enterprise
education “Gamification” is the buzzword.
Gamification for Business. Constellation
The formal definition of a “game” in an
Research)
educational context: “Such a game is a
space where certain factors converge – Gamification is using game-based
“players,” “abstract” thinking, mechanics, aesthetics, and game thinking
“challenge,” rules,” “interactivity,” to engage people, motivate action, promote
“feedback,” “quantifiable results” and learning, and solve problems. [Kapp, Karl
“emotional reaction” – all within a M. (2012). The Gamification of Learning
“system” that provides structure. and Instruction: Game-based Methods and
Strategies for Training and Education (p.
As a superb tool for engagement
11)]
“Gamification” uses these game-based
dynamics to engage and educate an Here is a simple story and it is one of a
audience and presents an engaging factory owner in USA. His factory wasn’t
aesthetic interface that affects how players doing well. The team members were
experience a game. The most critical working as quickly as they could, but they
T 143
never got ahead of their problems. The in the reorientation exercise might be very
plastic inventory components were stacked costly. But if the quality or process
up around the work centers, customer improvements are tried on the game board
satisfaction rates were low, and product - some great savings could be achieved.
wasn’t flowing through the factory in a
We have talked about games but it is time
timely manner. They had the opportunity
that we take a look at one of the most
to form teams and try out a lean
appropriate definitions of what is called
manufacturing game with an instructor.
game. One of the finest definition for
The instructor from a lean manufacturing
application in an instructional setting was
consulting firm showed on the game board
put forth by Katie Salen and Eric
itself, how they could improve through
Zimmerman in their book "Rules of Play:
streamlining the factory floor layout board
Game Design Fundamentals" which is
which ultimately provided ideas for
reproduced below: “A game is a system in
moving materials to work cell based on
which players engage in an artificial
upstream demand and not simply meeting
conflict, defined by rules, that results in a
a quota. Therefore the paradigm that
quantifiable outcome.”
moving materials faster, from work center
to work center was not that effective as Gaming in port & terminal training – a
correct and timely movement after serious job:
downstream demand was generated.
Learning by doing with simulation games
Subsequent to the demonstration the team
is the upcoming training method of this
reoriented the mock factory and found
century. Port operators are able to
direct benefits. When implemented in
familiarize themselves through practicing
reality - it showed twenty percent
serious games that recreates real-life
productivity increase and fifteen percent
complex situations, and possibly offers a
scrap reduction.
taste of high-risk scenarios. Approximately
Coming back to the maritime arena - there for last three decades the serious games are
are many similar productivity already being utilized in military and space
enhancement ideas that are thrown down age training purposes and at times in
the drain every day because the government crisis handling. The mode has
management finds that many associated been well accepted in industrial equipment
dimensions come in the way for regular handling, oil rigs, dredging, mining,
operation of the organization. The failure logistics, business strategy, and more
T 144
recently, in the medical domain. Last fifty trainees taught with simulation games
years saw tremendous development in compared to people using traditional
advancement in IT, virtual reality and now training methods. Furthermore, procedural
with these developments - gaming has knowledge is 14% higher, retention is 9%
made it possible to develop at relative low higher, and self-efficacy is 20% higher.
cost complex games. (Blank, 1985, Effectiveness of role
playing, case studies, and simulation
There are more than a 100 international
games in teaching agricultural economics)
companies that are involved in designing
and installing these gaming products in Coming back to the maritime sector –
small-medium and large institutions. many of the designers have created
Military, Aviation and port-terminals are business games focused on maritime
the biggest customers. Some representative terminals, as well as interactive, dynamic
names are CAE, AMSEC LLC, planning games aimed at teaching planners
BLACKBOARD, CAMBER and operational controllers the finesses of
EDUCATION, ABB, KRATOS, optimized planning and execution. Now
SIMARSON, SMART, TACTICAL their training scope can be enhanced
MICRO, ARI International & so on. Many substantially by bring employees who are
a times it is found that the manufacturers associated with the typical operational
are keen to offer the readymade product process. The “world” being available in
and the customization adds large the system (simulation software) it is
additional expense. easier for the organization to firm up
objectives and integrate with their training
First question comes to the mind,
needs. Often these soft-wares graduate
especially for people who are just planning
from 2D to 3D, which naturally offers
to take a plunge – is its efficacy. As
more real life and immersing real-life
mentioned before, these are areas where
experience. Such innovative trainings can
not much structured or empirical study has
straightway improve the daily performance
been done. In a way these are rather green
in different port-terminals including
field for research – though the ambit
automated terminals, where the demand is
remains global.
acute for more accurate, fast and
In a 2011 meta-study, which summarized intelligent operations in all levels of
the results of 65 studies, it was proven that employees. From 2015 several fully
factual knowledge is increased by 11% in automated terminals are being operational
T 145
across the world ports and it is imperative For years, websites like YouTube have
that the employees need to be conversant been used extensively as learning
with all the processes before they actually platforms for many companies and
take charge and finally to achieve / retain individuals. These sites have in some cases
the benchmarks. (http://www are already replaced traditional classroom
porttechnology.org/images/uploads/technic training for commonly used programs such
al_papers_081_083.PDF) as CAD, 3D modelling software, Excel,
and the like. As of date - free online
Training games – vision of the future
training videos are often sufficient enough
World is flat and we are deep into the for the training of specific job tasks.
digital age where the YouTube training
Though these videos have quite a large
has already replaced classroom training for
number of viewers (at times over 2
some tasks. Traditional, instructor-led
millions) as in some cases they are
training counts for the majority of training
extremely simulating. Empirical data says
provided in the port industry, while costly
that the recall rate hovers around just 40%
high-end simulation games - supported by
of what the learner sees and hears that the
those instructors - only counts for a minor
viewer does not participate or interact and
share of training provided in the port
the learning outcome are, as a result, rather
industry today. This leaves a training tools
limited in many cases - a is not
gap for those looking for fast, cost
uncommon. On the other hand, gaming
effective training solutions.
technology has proven to be an efficient
Search is on if this gap be filled by low technology to maximize training efficacy –
cost training games played on smart be it in terms of attention, engagement, or
phones and tablets? It seems that Play recall; “allowing the learner to use the
stations and PCs could be put to good use information presented, critically analyze it,
to educate port professionals through 2D and then immediately apply the knowledge
programmes. Port executives in remote in practice with instant feedback.”
geographical locations could certainly
Enhancing reach to manage cost
benefit from such development. This
somehow can sneak into university Port & terminal related training games that
classrooms – if the management of the are available in the market are obviously
institution thinks so. targeted at a selective audience. As pointed
out before many of the port and terminals (
T 146
for that matter port industry as a whole digitized. These training games may then
even on a regional basis, are yet to define appeal to a larger audience of port
their job roles and the occupational professionals interested in learning while
standards. Thus the designs of the games playing games. Key information is that
are dependent on few job roles where the every game should have their own
standards have been set, thus characterized 'surrogate social agent' to keep the
by their specificity and applicability to attention and engage the gamer, rather than
only those job tasks. Compared to other relying only upon an instructor and
management disciplines the size of the simultaneously provide instant feedback,
port community is extremely limited, either in form of explanation in text or by
though in global terms it is significant. any suitable manner to enhance the recall
Thus there is another challenge in rate and of course a recording of the
investing large capital for funding of sessions. In case the learning environment
further training game development. is structured properly – the LMS can have
a living database that has future uses.
The possibilities of application and design
alignment is immense and it is possible to To reduce the investment – it is thought
reach a larger and broader community of that the target audience must increase and
learners with very different profiles, if the port industry is prepared to adopt
through less emphasis on training specific training games with less emphasis on
job tasks and on providing a near perfect mirror image representation of processes
mathematically-modeled virtual reality. and systems and rather look forward to
Let us take an example. The multiple- more attention on attention-grabbing game
crane simulator creates a VR effect that functions, high quality 3D models and
assists in training crane operators in graphics and similar additions to the
RMQC (Rail Mounted Quay Cranes), package. Once these are more affordable
RTG-s (Rubber Tyres gantries) MHC-s the work stations would be more
(Mobile harbour cranes) and so on. The interesting to the trainees.
instructor can swap between different
If simple user interfaces and 2D graphics
modules but it is yet to be used for a yard
become acceptable standards (albeit
supervisor or a safety manager to learn and
shortcomings of a 2D simulation) of the
assess the likelihood of safety breaches
day then eye-catching and very interesting
that can take place when working n a
games could be developed for a wider
container yard that is mapped and
audience at relatively lower cost and
T 147
finally the end users can learn the subject employees. Areas mostly in demand are
or topic easily and can be play in nearly Occupational Health and Safety (OHS)
any location. Trainings in areas like regulations, Port Security regulations, and
advanced port operation, process Standard Operating Procedures (SOPs).
optimization, operational planning and The goal is to launch and carry out training
strategic planning is most appropriately of large employee groups efficiently at low
done with simulation games that deliver cost, and to enable employees to take the
near-to-reality virtual worlds built on training courses any time it is convenient
highly detailed 3D models smart graphics. for them.
While design is important – the quality While at this juncture the Gamification
also counts. Industry experts advise that cannot replace the instructor led training as
training games must not be too visually a whole there training games could be that
simplistic: they must provide either high is worth mentioning is that training games
quality 2D models, or high 3D quality and interactive quizzes can be incorporated
otherwise learners will not take the games into traditional classroom and instructor-
seriously as the visual appearance and user led training, in connection with training of
interface will not look as good as (Ken operational, technical and managerial
Busk: topics.
http://www.portstrategy.com/news101/ad ((http://www.portstrategy.com/news101/ad
ministration/Personnel/training-games: 10 ministration/Personnel/training-
feb 2015) games#sthash-3v5JxXgo.dpuf). In this
connection the processes in following the
Training games is for inductions and a
QUIZBOX can be quoted as a specific
skill assessment is already in use for the
example how the system is designed to,
Aviation industry – especially in the field
not only allow students to attend a lecture
of safety and security induction. These
and participate as they normally would,
games have little similarity to normal
but also allow students to add a social and
games but can be classified as interactive
collaborative experience to the lecture.
quizzes rather than a normal game and
(Giannetto, Chao, & Fontana, 2013)
being so broad-based cost effective too.
Taking a cue from this is one can plan Happening in other countries
resource and cost efficient solution for
Some examples in new models &
ports – when planning for training games
standards:
and online induction movies for
T 148
The Dubai Maritime City Authority bolster the country’s economic sector and
(DMCA) has established new standards of addressing its future needs." Implementing
maritime vocational training in bid to the centre’s training programs will help
enhance human resource investment and DMCA to equip a generation of human
solidify Dubai’s leading position in local resources that can continue the current
and global maritime industry. The development of the local maritime sector.
government authority charged with It is reported that workshops and training
regulating, coordinating and supervising courses introduced by the centre have been
all aspects of Dubai’s maritime sector, created based on highly accurate and
DMCA lauded the operations of its comprehensive methodology, industry
training centre which represents a valuable knowledge exchange and the integration of
addition to its initiatives aimed at theoretic maritime education and practical
enhancing the performance, safety and training. DMCA, he stated, has initiated a
competitiveness of the local maritime wide-scale plan to renovate and update
sector. training facilities and provide it with the
latest world-class technologies and
The training centre is an initiative
equipment. (Dubai establishes new
developed by the Dubai Maritime
standards of maritime training” - DUBAI,
Creativity Lab, which was launched earlier
October 17, 2015:
by DMCA. The centre work revolves
http://www.tradearabia.com/news/IND_29
around supporting the government’s
2526.html)
efforts to introduce and position Dubai as a
safe and sustainable maritime hub via the
implementation of comprehensive set of Similarly in Port of Singapore a modern
world-class workshops and training training activity is being conceptualized.
programs. According to Chairman of PSA International (PSA) and Singapore
Dubai Ports, Customs and Free Zone Polytechnic (SP) are working together to
Corporation and president of DMCA - develop a specialist diploma in port
"The training centre represents an management and operations, which is a
important step into achieving its vision of twelve-month earn-and-learn programme
fully developing maritime human (ELP) under the ‘National Skills Future’
resources segment, which is deemed as an initiative. Management of the PSA
essential element in promoting Dubai as a International feels that there is a need to
global maritime hub while also helping enhance Singapore’s status as a global hub
port with the expansion of Pasir-Panjang
T 149
Terminals and eventually the development  There has been apparently no

of Tuasmega port. The Singapore experiment done to assess the
polytechnic feels that the collaboration effectiveness of case study in port
with PSA reflects their commitment to management trainings ( both for
help deepen the skills and knowledge of the fresh graduates – pursuing
PSA workforce so that they can remain MBA and the managers /
relevant and further strengthen the supervisors undergoing
maritime sector. management training while in
service)
The use of more automated, intelligent and
 Assessment as to why NOS-s is in
sustainable technologies at these terminals
slow progress. Does this process
requires a core of specialists with industry-
anyway can be replicated in
relevant competencies. This collaboration
tweaking with the curriculum in
with SP will help their staff and students
Port & Shipping management –
bridge what is taught in the classroom and
considering Bloom’s Taxonomy is
how it can be applied in the workplace,
a successful platform
and strengthen our pipeline of potential
 Are the Port Management
future talent for PSA’s business expansion.
(including CEO/COO seized with
And they are going for full-fledged this problem and do they agree and
gaming models. believe that the management
training is an essential tool or they
Similar is the case of Maasvlakte II (oil
would like the easier path of “build
terminal) -which is an extension of
strategy” where the HR and the
Rotterdam port – where the Gaming
other persons take the lead?
models are also under test after being used
at automated terminals.  Which is the best way to synergize
the gaming tools with the
Options for further research curriculum? Can the Universities
The concepts that have been discussed have a team to create and market
here can open opportunities for further these?
research in both empirical manner and also  Will gaming at all add value to the
in conceptual way. The following Ports / Shipping and related
dimensions are indicated: logistics? If so when can it mature?
T 150
Conclusion hired 6-DOF simulator and the pilots were

given 10 to 11 critical moves. The test
There can be some apprehensions and
reports were examined by the COO; who
disbelief in thee summary and the
was a veteran mariner.
conclusion arrived in the paper but I have
tried out this paper with a very open mind When the first cape sized ship arrived to
as this would certainly raise some dissents the port in July next year the pilots were
and may garner some support as well. In overjoyed and felt that they had done this
both cases we might gain by generating job before and the movements were safe
new ere could be some new thoughts that and timely. These are mammoth sized
can be used to develop and test it on an ships and any small mistake is disastrous
experimental manner and the results could both for the port and the ship. The only
be encouraging. While the chances of difference here from the normal /routine
failure are never ignored but it is high time simulator exposure is that the “future
that any organization including the working area” has to be mapped correctly
learning institutions – do take a call on and that gives the edge. This is a tricky
trying new pastures and walking off the and complex job and the top management
beaten track – so that there is always an involvement is necessary to make it
winning edge in the course delivery and effective.
A tested example: Port management studies across globe

including that in India the pedagogy is
In 2009 – the Adani Group was
through lecture format, barring ship board
contemplating to bring Cape Size vessels
work and some tanker and terminal
to their new port called west Port – about
operations which are covered substantially
30 kilometers from the existing Adani
through simulator training. At the same
Multipurpose and container terminals. The
time a large volume of information is
band of pilots – many of whom had been
available in respect of role play, case
managing movements of Panamax size
studies, and simulation games which are
vessels – had to be deployed in future say
considered to be three of the main teaching
eight to nine month hence – for piloting
aids being used by university instructors to
the cape sizes. Thus a well thought-out
supplement the lecture format for teaching
plan was made to digitize the critical area
(Blank, 1985)(O'Connor and Osterman;
of the approach channel, berth-face and the
Siegfried and Fels; French; Kendrick). All
grab unloaders. These were merged in a
three of these techniques are simulations
T 151
which can be classified as learning tools Blank, S. (1985). Effectiveness of role playing, case
studies, and simulation games in teaching
(Blank, p. 215).
agricultural economics. Western Journal of
The beginning of Gamification does not Agricultural Economics, 10(1), 55–62.
Retrieved from
mean that the conventional processes are
http://www.jstor.org/stable/40987676
outdated and must be done away with. But
there is certainly a thought that the DfT. (2013). a Guide To Good Practice on Port
Marine Operations Prepared in Conjunction
organisations are trying to balance
With the Port Marine Safety Code, (March).
between adding more numbers and making
Retrieved from
a large percentage job ready. Thus the http://www.dft.gov.uk/mca/gtgp_aug_2009.p
educational delivery system must be more df
effective to manage volumes while the
Ekundayo, J. A. (2015). Impact of Training and
quality is retained and rather enhanced. Development on Workers Productivity : A
Study of Selected Oil Service Companies in
There could be a review of the system,
Port Harcourt, 8(March), 37–47.
both from the view of delivery and
E-Magazine. (2015).
assessment. The standardization can
happen for many at a much greater scale Giannetto, D., Chao, J., & Fontana, A. (2013).
when the tools (like games) are robust and Gamification in a Social Learning
Environment. Issues in Informing Science &
less error prone and can have the full range
Information Technology, 10, 195–207.
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Others
An Analysis of Financial Performance of HDFC Bank:

An Application of PELARI Model
Dr. Vikas Tyagi*, Dr. Vinay Kandpsl**
*FMS, DIT University, Dehradun
**COMES, UPES, Dehradun
Abstract which plays as an indicator and also provide

In any developing economy as the primary a check barrier through indicates high and
objective of any financial institutions is low performance area with the understanding
equitable distribution across all sectors of the of improvement the PELARI (Profitability,
economy. Besides this objective, banking Efficiency, Liquidity, Asset Quality, Risk
sector of developing economy also try to Measures and Investor analyses) model was
achieve some multiple objectives i.e. price developed for financial analysis by the
stability, promotion of investment, expansion researchers in which different financial ratios
of bank credit, controlled expansion of are employed. The present study reveals that
money supply, promotion of export, reduce HDFC bank’s financial performance or
fiscal deficit etc. Besides focusing on these health is good and bank also uses its assets in
multiple objective banks also has to face an effective manner. The bank also has
some challenges i.e. Price volatility, High sufficient funds to meet its current obligation
global debt challenges, dynamic and also manage risk free CAR (Capital
environment, policies paralysis, high-end Adequacy ratio).
competition etc which makes them inefficient
and Nonprofitable. To find out that whether Keywords
PELARI Model, Financial Ratios, Financial
the firms or particular industry on growing performance.
path, it is necessary for every firm to evaluate
Introduction
its financial performance so that they can
In the developing economy, it is essential for
design policies or strategies to attain
every organization to strive for wealth
maximum profit that leads to face these
maximization this objective is also the major
challenges and identify high and low
concern for banking industry of India. In
performance areas. To evaluate the financial
developing economies, many of the banks are
performance of a particular firm or industry
government owned whether central or state
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level government with different objectives in know how efficiently and effectively HDFC
context to different sectors or different uses its financial resources in financial and
industries. While doing the business for a investment decisions making. Estimating the
specific sector or industry these state owned financial health of an organization by
banks have to face various challenges, i.e. checking its ROI, sales and profit growth
dependency on government for resources, now a day is not sufficient today. It is
political pressure, competition with necessary to predict the financial
international banks etc.To know about the performance in its Operations.
financial soundness and efficiency, financial
Reaserch Methodology
analysis is required. Financial analysis is a
The study was concerned with HDFC Bank.
process of critical examination of the
The study was based on the secondary data,
financial information contained in the
which was obtained from the online sources
financial statement in order to understand and
for a period of 05 years from 2010 to
make decisions regarding the operation of the
2014.The collected data was analyzed with
firm. It is indicative of two aspects of a firm
the help of ratio analysis. Accounting ratios
i.e. Profitability and financial position. For
were used to predict the financial
analyzing financial position and profitability
performance of the bank and also the
ratio analysis one of the most important and
PELARI Model/Analysis has been adapted to
widely used technique, which is relevant in
measure financial performance in operations
assessing the firm performance on various
of the bank to predict as well as to know the
parameters i.e. profitability, Liquidity,
financial health or soundness.
Efficiency, Asset Management etc. In this
study there is an attempt to know or examine Measuring Financial Health
Ratio analysis is generally used to ascertain
the financial health of HDFC bank with the
the liquidity, leverage, activity, profitability
help of the PELARI Model in India.
and growth. No single ratio can provide a
Objective of the Study meaningful or complete picture of a
The major objective of financial analysis is to
company’s financial position. Keeping the
clearly understand the organization’s
above point in mind, this study uses PELARI
financial position and performance. This
model, which captures the financial
study is carried out to find out the financial
performance of a bank in its operations by
performance or soundness of the bank and to
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using a combination of financial ratios that Net interest income by total funds and return
ultimately predicts financial health of HDFC of net worth.
Bank. 2- Efficiency Ratio: - This ratio measures
The study would provide management with how well the assets are utilized to achieve
the true state of financial performance in profitability. To measure the efficiency
operations of HDFC bank. following ratios are considered i.e. Interest
The PELARI (Profitability, Efficiency, spread, Interest income by total funds, Total
Liquidity, Asset Quality, Risk Measures income by capital employed.
and Investor analyses) model provides a 3-Liquidity Ratio: - Liquidity is an
good assessment of financial performance important ingredient in bank management
based on financial statements. The paper and long run Profitability. The reason for
provides an ongoing means of analyzing the calculating the liquidity ratio is to find out if
financial performance of Pharmaceutical a firm has adequate funds to meet its short
industry while the model used could be term obligations whenever they are due. To
employed on both banking and non-banking measure the liquidity of HDFC bank here we
Industries in terms of financial analysis. have taken different ratios i.e. Current ratio,
Quick ratio, cash deposit ratio and debt
Acronyms of PELARI equity ratio.
P - Profitability Ratio 4-Assest Quality Ratios: - Asset quality is
E - Efficiency Ratio related to the left-hand side of the bank
L – Liquidity Ratio balance sheet. Bank managers are concerned
A – Asset Quality Ratio with the quality of their loans since that
R – Risk Measures Ratio provides earnings for the bank.
I – Investor Analysis Loan quality and asset quality are two terms
with basically the same meaning. To find out
1-Profitability Ratio: - This ratio indicates loan quality different ratios have to be
the operating efficiency of a firm by considered, i.e. Advance by loan funds, Loan
measuring the revenue of a firm. To measure turnover, Total assets turnover ratio and
the operating performance of HDFC bank ROA.
here we have taken four different ratios i.e. 5-Risk Measures Ratio: - The risk measures
Net profit margin, Net profit by total funds, the equity capital and return available to
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equity shareholders. It measures the these ratios provide a picture to whom who
fluctuations in return. This ratio is calculated employed there valuable resource in the firm.
with the help of Capital Adequacy ratio and This ratio includes Earning per share,
Total advance and total loans. Dividend per share, Operating profit per
6- Investor Analysis:-These ratios are share and Net operating profit per share.
necessary to find out for any firm because
Analysis Presentation and Interpretation

1-Profitability Ratios
S.No. Particulars 2010 2011 2012 2013 2014 Mean
1 Net Profit / Total Funds 1.45 1.57 1.68 1.82 1.9 1.68
2 Net Interest Income / Total Funds 6 4.22 4 4.28 4.14 4.53
3 Net Profit Margin 14.76 16.18 15.88 16.04 17.28 16.03
4 Return on Net Worth(%) 13.7 15.47 17.26 18.57 19.5 16.90
Net Profit / Total Funds

Net Interest Income / Total Funds
Net Profit Margin
Return on Net Worth(%)
Inference: This ratio indicates the operating creditors and debtor’s interest have to be kept
efficiency of the bank by measuring the in mind. From the data is has been clearly
revenue. However, social obligation, observed that Net profit ratio, Net profit
employee satisfaction, shareholders,
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margin ratio and return of net worth are a revenue stream. A positive net
increasing which is a sign of good efficiency. interest margin means
Net Interest Income is the difference the investment strategy pays more interest
between interest earned and interest paid, and than it costs. Conversely, if the net
is commonly tracked by banks and other interest margin is negative, it means the
institutions that lend money. As banks both investment strategy costs more than it makes.
pay interest (to other banks or to individuals So from the Profitability point of view the
with deposits at the bank) and earn it (from HDFC bank’s Operational Efficiency is
loans), interest is both an expense and good.
2-Efficiency Ratios
S.
No. Particulars 2010 2011 2012 2013 2014 Mean
1 Total Income / Capital Employed (%) 9.85 9.71 10.57 11.36 11 10.50
2 Interest Spread 5.89 8.25 8.42 8.78 8.01 7.87
3 Non Interest Income / Total Funds 0.01 1.73 1.7 1.86 1.78 1.42
4 Return on Net Worth(%) 13.7 15.47 17.26 18.57 19.5 16.90
Return on Net Worth(%)
Non Interest Income / Total

Funds
Interest Spread
Total Income / Capital

Employed(%)
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Inference: This ratio measures how well the income ratio and return on net worth ratio
assets are utilized to achieve profitability. shown increasing trends which is a sign of
From the data is has been clearly observed effective asset utilization which create wealth
that the total income to capital employed for the bank and other contributories.
ratio, Interest spread ratio, Non interest
3-Liquidity Ratios
S.No. Particular 2010 2011 2012 2013 2014 Mean
1 Current Ratio 0.03 0.06 0.08 0.06 0.06 0.06
2 Quick Ratio 7.14 6.89 6.2 7.84 8.55 7.32
3 Debt Equity Ratio 7.78 8.22 8.24 8.18 8.45 8.17
4 Cash Deposit Ratio 9.35 10.79 8.81 5.46 6.02 8.09
Cash Deposit Ratio

Debt Equity Ratio
Quick Ratio
Current Ratio
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Inference: The reason for calculating the available as a percentage of the total amount
liquidity ratio is to find out if a firm has of money its customers have paid into
adequate funds to meet its short term the bank. This amount is calculated so
obligations whenever they are due. From the that customers can be sure that they will be
above data Quick ratio and debt equity ratio able to take their money out of the bank if
are same and current ratio is constant which they want to. If the ratio is too low, banks
again a healthy sign for bank and shown that may not be earring as much as they could be.
the bank has adequate funds to meet or pay If the ratio is too high it means bank might
off short term liabilities. not have enough liquidity to cover any
The cash deposit is the contingency which may affect assets liability
the amount of money a bank should have mismatch
.
4-Assest Quality Ratios
S.No. 2010 2011 2012 2013 2014 Mean
1 Advances / Loans Funds (%) 77.24 79.34 79.19 -- 82.33 79.53
2 Return on Assets 470.19 545.46 127.52 152.2 181.23 295.32
3 Loans Turnover 0.18 0.14 0.15 0.36 0.27 0.22
4 Asset Turnover Ratio 0.11 0.09 0.10 0.11 0.10 0.10
Advances / Loans Funds(%)
2010
2011
2012
2013
2014
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Return on Assets
2010
2011
2012
2013
2014
Asset Turnover Ratio

Loans Turnover
Inference: Asset quality is related to the The Return on assets is the ratio of annual
left-hand side of the bank balance sheet. Bank net income to average total assets of a
managers are concerned with the quality of business during a financial year. It measures
their loans since that provides earnings for the efficiency of the business in using its
the bank. Loan quality and asset quality are assets to generate net income. Thus higher
two terms with basically the same meaning. values of return on assets show that business
is more profitable and in case of HDFC bank
Advance to loan funds used for assessing a this ratio is more than 100% from last five
bank's liquidity by dividing the banks total years.
loans by its total deposits. In HDCF bank the Loan turnover/account receivable ratio
ratio constant for last 5 years. measures how many times a business can turn
its accounts receivable into cash during a
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period. In other words, the accounts generate sales, so a higher ratio is always
receivable turnover ratio measures how many more favorable. Higher turnover ratios mean
times a business can collect its average the company is using its assets more
accounts receivable during the year. efficiently. Lower ratios mean that the
company isn't using its assets efficiently an
The total assets turnover ratio measures most likely have management or production
how efficiently a firm uses its assets to problems.
5-Risk Measurement Ratio
S.No. 2010 2011 2012 2013 2014 Mean
1 Capital Adequacy Ratio 17.44 16.22 16.52 16.8 16.07 16.61
2 Advances / Loans Funds (%) 77.24 79.34 79.19 -- 82.33 79.53
3 Investment Deposit Ratio 35.05 38.51 36.99 34.45 37.85 36.57
4 Financial Charges Coverage Ratio 0.66 0.63 0.63 0.88 0.63 0.69
Capital Adequacy Ratio
1
2
3
4
5
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Advances / Loans Funds(%)
2010
2011
2012
2013
2014
Investment Deposit Ratio
2010
2011
2012
2013
2014
Financial Charges Coverage Ratio
2010
2011
2012
2013
2014
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Inference
Capital Adequacy Ratio (CAR), also Advance to loan funds used for assessing a
known as Capital to Risk Weighted Assets bank's liquidity by dividing the banks total
Ratio (CRAR), is the measure of a bank's loans by its total deposits. In HDCF bank this
capital and is expressed as a percentage of a ratio is constant since last 5 years.
bank's risk weighted credit exposures. This
ratio is used to protect depositors and Investment Deposit Ratio of HDFC bank
promote the stability and efficiency of has been constant for the last 5 years which
financial systems around the world. shows that bank can manage its liquidity in
an efficient manner.
Two types of capital are measured: tier one
capital, which can absorb losses without a Finance charge coverage ratio: The fixed
bank being required to cease trading, and tier charge coverage ratio is financial that
two capital, which can absorb losses in the measures a firm's ability to pay all of its fixed
event of a winding-up and so provides a charges or expenses with its income before
lesser degree of protection to depositors. interest and income taxes. The ratio
Currently, RBI mandates minimum CRAR measures how many times a firm can pay its
of 9%, but the Government of India has fixed costs with its income before interest
mandated total CRAR of 12%, with 8% and taxes. In other words, it shows how many
Tier I capital and in case of HDFC bank the times greater the firm's income is compared
CRAR from last 5 years is above in with its fixed costs.
comparison with legal mandates by RBI and
GOI.
6-Investor Analysis Ratios
S.No. Particulars 2010 2011 2012 2013 2014 Mean

1 Dividend Per Share 12 16.5 4.3 5.5 6.85 9.03
2 Operating Profit Per Share (Rs) 106.25 83.56 18.11 21.97 29.65 51.91
3 Net Operating Profit Per Share (Rs) 436.03 428.36 116.28 147.37 171.47 259.90
4 Earnings Per Share 64.42 84.4 22.02 28.27 35.34 46.89
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Earnings Per Share
Net Operating Profit Per Share

(Rs)
Operating Profit Per Share (Rs)
Dividend Per Share
Inference: Investor analysis ratios are the

same as any profitability ratio. Higher EPS, Findings & Conclusion
DPS,OPS AND NOPS are always better than On the basis of PELARI Analysis we can
say:
a lower ratio because this means the company
is more profitable and the company has more  Bank’s operational efficiency is good
profits to distribute to its shareholders.
and healthy.
Although many investors don't pay much  The bank uses its assets in an
attention to the EPS and DPS, higher effective and profitable manner.
earnings per share ratio often make the stock  The bank has sufficient funds to pay
price of a company rise. Since so many things
off its current obligations as well as
can manipulate this ratio, investors tend to
look at it, but don't let it influence their contingency expenses.
decisions drastically.  The bank’s loan quality is good which
a good sign is for depositors and
In case of HDCF bank EPS, DPS, OPS, &
investors.
NOPS have decreasing trend from 2010 to
2012 but from 2013 all these ratios having  The bank is able to manage risk free
increasing trends i.e. DPS increase 4.3 in CRAR.
2012 to 6.85 in 2014 similarly EPS 22.02 in
2012 to 35.34 in 2014 which is a good sign
from investor point of view.
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 The bank has also shown a balanced 2- Dr. K. Sriharsha Reddy, “Relative
Performance of Commercial Banks in India
approach in dividend policy and also using Camel Approach”,The international
journal’s Research Journal of Economics
increasing trend since 2013. and Business Studies,Vol.1, No.4, Feburary
2014, ISSN:2251-1555, Professor & Head,
Department of Business Management,
Conclusion Matrusri Institute of PG Studies, Saidabad,
The analysis so far have been related to the Hyderabad.
financial performance of the bank without 3- Prof. Krupa R. Trivedi, Assistant Professor
& Research Scholar, Evening Commerce
looking other non-financial indicators such as College, Adajan, Surat “A Camel Model
Analysis of Scheduled Urban Co-operative
loan coverage, productivity, service quality
Bank in Surat City–A case study of Surat
and management quality. People’s Co-operative bank”, IOSR Journal
of Business and Management (IOSR-JBM)
e-ISSN: 2278-487X, p-ISSN: 2319-7668 PP
48-54, www.iosrjournals.org.
The bank’s performance has been evaluated
on the basis of profitability, efficiency, 4- Sushendra Kumar Misra* and Parvesh
Kumar Aspal, “A Camel Model Analysis of
liquidity, asset quality, risk measures and State Bank Group, World Journal of Social
investor assessment and with the help of Sciences,Vol. 3. No. 4. July 2013 Issue. Pp.
36 – 55.
PELARI Analysis we can conclude that the
5- CA. Ruchi Gupta,Faculty, Delhi Institute of
HDFC bank has played an important role for Advanced Studies, “An Analysis of Indian
Public Sector Banks Using Camel
investors as well as economy. These are areas Approach”, IOSR Journal of Business and
Management (IOSR-JBM) e-ISSN: 2278-
that the analysis focused on since it is of 487X, p-ISSN: 2319-7668. Volume 16, Issue
particular interest to shareholders and 1. Ver. IV (Jan. 2014), PP 94-102
www.iosrjournals.org.
prospective shareholders, employees,
management and the Central Bank. 6- Mishra Aswini Kumar, G. Sri Harsha, Shivi
Anand and Neil Rajesh Dhruva, “Analyzing
Soundness in Indian Banking: A CAMEL
Approach, Research Journal of
References Management Sciences, Vol. 1(3), 9-14,
1- Gilbert Sebe-Yeboah, Charles Mensah October (2012), ISSN 2319–1171.
(2014) “A Critical Analysis of Financial
performance of Agricultural and
Development bank, (ADB Ghana)”. 7- Vikas Tyagi, “A Study To Measures The
European Journal of Accounting, Auditing Financial Health of Selected Firms With
and Finance Research Vol.2, No.1, pp.1-23, Special Reference To Indian Logistic
March 2014 Agricultural Development Industry: AN APPLICATION OF ALTMAN’S
Bank, SME Dept., Box 159 Bolgatanga, Z SCORE”,Vol-4,No-4,2014,ISSN-2224-
Ghana: Department of Purchasing and 6096([Paper),ISSN 2225-
Supply, Accra Polytechnic, P. O. Box 561, 0581(Online),Industrial Engineering Letters
Accra-Ghana. (IISTE).
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Bridging Digital Divides in Education: Challenges of Integrating ICTs

in the Formal Learning Environments.
Janak Adhikari*
*School of Business, Bay of Plenty Polytechnic, Tauranga, New Zealand Janak.Adhikari@boppoly.ac.nz
Abstract technologies (ICTs) into the existing pedagogy

This paper investigates a ‘bring your own to transform the learning process (Anderson,
device’ (BYOD) initiative by a New Zealand 2009). This provides potentially valuable
School to integrate one-to-one ICTs into the resources for learners’ academic and social
learning process. Prior to embarking on this development (Demiraslan & Usluel, 2008).
initiative, similar past projects have been However, previous digital opportunities
studied and some persistent issues have been projects in New Zealand indicated that ICT
identified. Before starting with the detailed integration into the learning process has not
investigation of the BYOD project, a always met its objectives (Rivers & Rivers,
preliminary analysis of data from on-line 2004).
forums discussing this initiative was
The Digital Opportunities Project was an
conducted. From reviewing past initiatives and
initiative by the New Zealand government in
the public debate, we have been able to form
collaboration with participating schools and
general research questions for the study. A
associated businesses. This model was the
socio-cultural ecological approach to mobile
combination of four different projects
learning has been considered appropriate as a
conducted in different parts of the country. The
means of analysis for this study. This paper
digital opportunities projects were first
concludes with the findings of the baseline data
implemented during the 2002 and 2003
from the BYOD project.
academic years. The aim of these projects was
Author Keywords to assist in bridging the digital divide in low
decile schools (i.e. schools in areas of low
ICT integration, learning outcomes, digital
socio-economic status) by providing (a)
divide, one-to-one digital learning devices
material access to ICTs for students and
Introduction and Analysis of previous ICT teachers, (b) professional development training
integration initiatives in New Zealand
for teachers, and (c) infrastructure to promote
Recent trends in education emphasize the
collaboration between teachers and students
integration of information and communication
from different schools. However, despite good
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strategy and infrastructural support, evaluation of ICTs. According to Salomon (1993, p. 189),
of the digital opportunity model and its four “Introduction of ICTs redefines the whole
different projects showed that the overall goal activities and interpersonal relationships
of bridging the digital divide was not achieved inside and outside of the classroom”.
(Parr & Ward, 2004; Rivers & Rivers, 2004; Integration of ICTs into the learning process
Winter, 2004). has the potential of redefining the learning
activities in formal as well as in informal
Literature review
learning spaces. The formal learning space for
The Meaning of Equity learners includes the classroom and wider
From the analysis of the four different projects, school environment, while the informal
two major limitations of the digital learning space includes the everyday life world
opportunities model were identified. First, of the learner outside of the classroom and the
during the planning and implementation of the school. Learners’ activities and practices with
projects, the meaning of equity was understood one-to-one devices in both of these learning
only as a matter of material access and digital spaces can have a significant impact on their
skills. However, the outcome of the projects learning outcomes, so investigation of the ICT
indicated that equity in these two aspects may mediated learning process should include both
be a necessary first step, but is not sufficient. formal learning spaces like the classroom and
To address the issue of digital divides in informal learning spaces like the home.
learning, there must also be equity in learning In response to previous project outcomes, the
outcomes beyond just access and skills (Wei, Ministry of Education developed an ICT
Teo, Chan, & Tan, 2011). According to strategic framework for education in 2006. The
different researchers in the field, equity of goal of the ICT strategic framework was to
students’ learning outcomes depends on factors develop a more learner-centred service culture
such as (a) the attitude and motivation of where education agencies and organizations
students towards technology, (b) the nature of focus on the outcomes rather than the
technology usage by students and (c) students’ technology through improved connectivity
capability of meaning making (Jones & Issroff, (access to ICT infrastructure for education),
2007; Van Dijk, 2006; Wei et al., 2011). A content (digital content from variety of
second limitation was the lack of detailed sources), and confidence & capability (skills
forethought by planners and policy makers in needed to turn information into knowledge)
understanding how learning activities and (Ministry of Education, 2006). Based on the
environments are affected by the introduction objectives of the ICT strategic framework,
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there are currently eleven different digital can interpret this change in focus from material
opportunities projects on-going within New access to digital skills in ICT implementation
Zealand, aiming to contribute towards bridging strategy progressive in addressing the
digital divides. However, it has been found that continuously advancing and changing nature of
even current digital opportunities projects are digital divides in learning.
unsuccessful in fully embracing the vision and
Persistent issues in the digital divide
goals of the ICT strategic framework for
education and fail to take into account all the Despite progress in dealing with the changing
lessons learned from the previous initiatives. nature of digital divides, results and outcomes
Despite the experience from past projects, all of of past and current initiatives show that not
the current projects are still focusing either on every aspect of these divides has yet been taken
the material access or the digital capability into account. Ensuring equalised material
aspects, which is similar to the previous digital access and digital skills are necessary measures
opportunities pilot projects. towards bridging the digital divide in the
learning process, but further divides still exist.
The overall objectives of past and current
There are still some unanswered questions
digital opportunities projects are similar,
around complete digital inclusion for every
bridging digital divides in learning, but
learner in the context of ICT mediated learning
focusing differently on material access and
processes C.
digital skills. The digital opportunities pilot
projects aimed to address both material access According to recent research, as the adoption
and digital skills aspects, but did not stages of ICTs advance there arise further levels
extensively address digital skills. Current of digital divides in society (Wei et al., 2011)
projects have been more focused on the digital as shown in Figure 1.
skills of the teacher and student, because they
have been designed and deployed according to
the ITC strategic framework which is based on
the outcomes of past pilot projects. Initial
projects put material access at the centre of the
ICT implementation, while the strategic
framework has been designed to focus on
digital skills and professional development. We
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Findings from past and current digital phenomenon of digital divides in the context of
opportunity projects shows that equitable ICT mediated learning processes. The BYOD
material access to ICTs and digital capability project has given us opportunity and
are necessary first steps, but this alone is not appropriate context to investigate the issues of
sufficient for achieving digital inclusion for digital divides in learning outcomes.
every learner. Therefore, there is a need to
From the analysis of the past and current digital
extend the digital divide research in the context
opportunities projects, we have identified some
of ICT integration in learning towards
of the potential factors beyond access and
additional fields of enquiry beyond just access
capability that might affect the process of
and skills. For that reason, an additional field of
learning, and impact on the equality of learning
enquiry - the digital outcome divide - has been
outcomes either positively or negatively. These
identified based on the relevant literature and
factors are:
the evaluation of various ICT initiatives in New
1. Learner Dependent Factors (attitude
Zealand. In the specific context of our study,
and motivation of students towards
which is focused on education, we have termed
technology, nature of technology usage
this the learning outcome divide. Figure 2
by student, students’ capability of
shows the three level digital divide framework
meaning making).
applied to the context of our study. This third
2. Learners’ activities with one-to-one
level of enquiry aims to investigate different
devices in classroom and school
factors of digital divides in learning which are
environments.
not addressed by material access and digital
3. Learners’ activities with one-to-one
capability aspects. This also aims to explore
devices in everyday life and at home.
how these factors could impact on the
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Digital Capability Divide
Digital Access Divide

* Digital Literacy Learning Outcome Divide
* Socio-economic Status * Digital Skills
* Ethnicity * Education * Attitude and Motivation

* Geographical Region * Nature of ICT usage
* Capability of meaning
making
* Activities in formal or
informal learning spaces
Digital
Divides in the
Learning
Process
Figure 1: Three levels of digital divide in educational research.

Studies on how the learning outcomes could be makes this initiative different from most others,
affected in the context of ICT mediated is that the parents were told they must cover the
learning and how this may impact the digital full cost of the required digital learning devices
divide in learning are not widely available in for their children, whereas similar projects in
the literature. Therefore those factors which the past (like the digital opportunities projects)
have been identified need to be investigated in have provided devices through the schools.
a relevant context. The bring your own device
The school’s decision resulted in a high profile
(BYOD) project provides a relevant context for
news story in the New Zealand Herald, a
us to investigate the various issues which
national newspaper, triggered by a complaint
previous projects have failed to answer.
from a parent about being asked to buy a digital
Preliminary analysis of BYOD project device for their child. This set off a significant
public and media response, leading to news
In 2011, a New Zealand school decided to fully
stories on TV and radio, and online debates on
integrate ICT into the learning process in the
various news sites and forums. This led us to
form of one-to-one portable digital devices for
focus our initial research on the public debate,
all students in a cohort. The school informed all
in an effort to identify important themes and
parents and students that they were expected to
concepts that could inform our research
bring a 1 to 1 digital learning device (preferably
questions for the whole study.
an iPad2) into the classroom in year 9 (students
aged 13-14) for the 2012 academic year. The We therefore collected data from as many
most controversial and unique aspect, which relevant public forums as we could identify,
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then qualitatively coded this data and analysed terms of device ownership. More relevant to
it using NVivo 9. Although many of the our research, more than 20% of the contributors
contributions to the debate were not considered expressed their concerns that the classroom
because of the very general nature of the may become digitally divided. Although some
comments or, in many cases, because the students may enjoy the benefits of a device,
comments were simply offensive, we have been others may regard it as a status symbol within
able to analyse more than 500 responses. the classroom, and students who do not have
Analysis of the debate highlighted some of the the recommended device, or any device at all,
possible challenges for the BYOD project as could possibly feel disadvantaged, which could
shown by the themes summarized in Fig. 3. result in unequal learning outcomes. About
20% of the contributors expressed concerns
40%
about meaningful use of the technology by the
students. Some contributors who introduced
themselves as parents said that even if they
Responses
20% could afford the device they were more

concerned about the unsupervised access to
online resources which their children will be
exposed to via the internet, as some of the
0%
resources might not be useful or may even be
harmful.
From the analysis of the digital opportunities

Potential Challenges Raised by Respondents
project and findings of the analysis of the
public response data we have been able to form
Figure 2: Analysis of the Public Debate over
some general research questions for the study.
BYOD Project
The main research question posed for our study
Around 40% of the responses were concerns
is: How does one-to-one integration of ICTs
regarding the potential for loss, theft and
into formal and informal learning spaces
damage of the device, however our interests
impact on digital divides? To answer this
were not focused on physical security but on
question, following two sub-questions are
aspects of learning. Moreover, 1 year into the
asked:
trial, only 2 devices had been damaged and
none had been lost or stolen. Another widely 1. Which factors could impact either
expressed view was related to inequality in positively or negatively on equality of
O 19
learning outcomes (including  Agency: Agency in the framework refers to

creativity)? the capacity of the individual to act and
2. How can positive or negative impacts interact within educational and
on learning outcomes be increased or sociocultural settings to make their own
reduced respectively (based on the free choices. In our study, agency is
nature of technology usage)? appropriate to analyse how the learner
adapts or appropriates technologies into
A socio-cultural ecological model as a means
their learning processes based on the
of analysis
capacity and expertise they have. It can be
There are many theories and frameworks that used to analyse the learner dependent
have been used as a means of analysis to study factors like attitude and motivation of
technology mediated learning processes, but students towards technology, the nature of
the socio-cultural ecological approach to their technology usage, and their capability
mobile learning has been deemed appropriate of meaning making.
for this particular study. This framework has
been developed in response to the perceived
 Cultural Practices: Refers to the media
need for a coherent theoretical framework to
use inside and outside of educational
address the limitations in existing theories to
institutions and media use in everyday life.
investigate the learning process within the
In our study, cultural practice is appropriate
formal and informal learning spaces mediated
to investigate learners’ ICT usage within
by one-to-one ICTs. Three main components
different learning spaces and analysing and
(Agency, Cultural Practices, and Structures)
linking their learning activities from both
characterise the ecological approach to learning
formal and informal learning spaces.
with mobile learning technologies (Cook,
Pachler, & Bachmair, 2011). This framework
 Structures: Structure is something which
sees learning through mobile devices in and
governs learners in and around different
around different learning spaces and is
learning spaces. This can be appropriate to
governed by a triangular relationship between
analyse the curricular frame of the school
socio-cultural structures, cultural practices, and
and the social norms of society which
the agency of learners, represented in the three
govern the activities of the learner.
domains in Fig. 4 (Pachler, Bachmair, Cook, &
Kress, 2010).
O 20
which has been selected is unique in New

Zealand and is representative of the research
Structures
problem we are investigating.
Collection of baseline data

Cultural
Agency The baseline data collection has been
Practices
conducted through classroom observations,
online surveys and personal interviews with
Figure 3: Socio-cultural ecological approach students, teachers and parents. The online
to mobile learning (Pachler et al., 2010). surveys and interviews with students focused
on the level of access to ICTs, learner
Research Method
dependent factors like attitude and motivation
This study has been divided into two different
of students towards technology, the nature of
phases and each phase of the study is
their technology usage and their capability of
employing different research methods. For the
meaning making along with the learning
first phase, described in this paper, we are
activities in formal and informal spaces. Online
employing a longitudinal case study method.
surveys and interviews with teachers and
This is particularly suited to learning in detail
parents were intended to assess their attitudes
through an in-depth study (Dubé & Paré, 2003).
towards technologies, level of skills, and their
Case studies are defined in various ways and a
role in the students’ learning process.
standard template does not exist, however in
general a case study examines a phenomenon in The baseline data collection received a mixed
its natural setting, employing multiple methods rate of participation from different
of data collection to gather information from stakeholders. The student and teacher
one or more entities. The boundaries of the participation rate was significantly higher than
phenomenon are not clearly evident at the that of the parents. A total of 200 students in
outset of the research and no experimental year 9 were invited to participate in the online
control or manipulation is used (Benbasat, survey via an invitation email with a link to the
Goldstein, & Mead, 1987; Dubé & Paré, 2003; on-line survey link, forwarded through the
Yin, 2003). Our study is following a single case school. A total of 56 students participated and
with repeated investigation over a period of 46 completed the survey. One-to-one
time. According to Yin (2003), a single case interviews have been conducted with ten
design is appropriate when it represents a students based on the devices they are using for
unique, revelatory or critical case. The case learning in the classroom. All the teachers in
O 21
the year group participated and completed the 1. Material Access to ICTs
survey. For one-to-one interviews, nine Survey data showed that almost every student
teachers were selected from three specific in the cohort studied has access to computers
subjects (mathematics, social science, and and the internet at home. However, despite the
physical education). The participation rate of online survey indicating 100% material access,
parents was unfortunately very low. There were one-to-one interviews with students revealed
only four responses to the online survey and some differences in the level of home access to
seven face to face interviews. internet and computers. Some learners do not
Results and Findings from the Baseline data have internet access at home even if they have
a one-to-one device for learning. One teacher,
The baseline stage of data collection is now
interviewed on limited access to ICTs for some
complete, through classroom observation,
students, said, “Something that is problem is
online surveys and one-to-one interviews with
internet access at home, or broadband access.
students, teachers and parents. Some important
Because children are saying honestly that ‘I
findings have emerged, which provide us with
cannot do this at home’. I have one bright
insights into different aspects of the study.
student in my class who said she doesn't have
Based on the nature of the issues related to the
internet in her home or the device either”.
different aspects of the digital divide research,
findings from baseline data have been In school, some students arrived without any
categorised into two separate groups. The first kind of one-to-one device. The school has tried
group of findings relates to material access to to solve this issue, to bridge the gap of material
ICTs and aspects of digital skills. The second access inside school, by providing notebook
group of findings are related to the additional computers to those who do not have any
field of enquiry, the learning outcome divide. learning devices to use during school time, but
they cannot take these home. Despite the
Findings related to material access and digital
school’s efforts to facilitate one-to-one learning
skills
devices during school time, a significant
Results of the preliminary investigation of the
number of students in year 9 still do not have
BYOD project have raised some concerns
full access to ICTs in their everyday life. These
relevant to the study. We have assessed the
factors combined show that quite a number of
issues of material access and skills through the
students have limited ICT access opportunities,
online surveys and personal interviews.
as shown in Figure 5.
O 22
70
60
Percentage of Student
50
40
Full Access
30
20 Limited Access
10
0
Level of Access to ICTs
Figure 4: Students' level of access to ICTs in

schools and everyday life.
The survey response rate was only around 30% are borrowing computers from the school. It is
and interviews were conducted with only 5% of worth noting that the original estimate made by
the learners. Therefore we cannot state with any the school was that 16 school netbooks would
certainty that the level of limited access to ICTs be required.
revealed in our data applies across the whole
2. Differences in Digital Skills
year group. However, in the context of an ICT
mediated learning environment, even a small The responses from the online survey of
difference in access to ICTs and digital students indicated an inequality of digital skills.
capability may create unequal learning Only 13% of the students have advanced levels
opportunities for learners and eventually may of ICT skill. The data further shows that 39%
lead to unequal learning outcomes. Therefore, are competent, 35% are intermediate and 10%
a number of measures have been taken by the have only basic skills. Also 2% of students
school to reduce this gap. In addition to loaning were found to be beginners in using ICTs as
computers to students, the school provides shown in Figure 6. This disparity in the digital
assistance on easy payment options for the skills among students could become a barrier
parents to get one-to-one devices for their for some students in making meaningful and
children, and is raising awareness about the efficient use of the one-to-one ICTs in their
benefits of digital technologies in education to learning process, even if they have full access.
the parents. As a result of these measures, the

issue of material access to ICTs is now
decreasing. According to the school, at the start
of the 2012 academic year there were a total of
6 students in year 9 who were borrowing school
notebook computers, but now only 3 students
O 23
sufficient digital skills (capability). Although
50 15% is not a very big proportion, for the

successful integration of ICTs and bridging the
40
digital divides into learning, this could be a
Percentage of Student
30 Competent barrier.
Intermediate
Advanced The data shows that issues related to material

20
Basic
access and digital skills still persist in the
Begineer
10 context of the BYOD project, but it is also true
that these differences in access and skills are
0
Level of Digital Skills reducing all the time and are now at a very
small scale. It should also be acknowledged
Figure 5: Students' level of digital skills. that achieving full material access and
equalized digital skills to every learner is well-
The successful implementation of the BYOD
nigh impossible. Many factors contribute to
project depends on the digital skills of the
undermine this objective, therefore some level
students. A lack of ability to use one-to-one
of access and capability issues will always be
devices for learning could also affect the
there. Particularly, in the context of the BYOD
students’ motivation towards ICT mediated
project, it cannot be denied that digital divides
learning and ultimately could impact on their
based on material access and digital capability
learning outcomes.
still persist, but at a relatively low level, not
The data also revealed that the students were least because various measures have been taken
not the only ones having the problem of digital by the school (e.g. providing notebooks for
skills, since a number of skills and capability students in class) and teachers to minimize the
issues were also evident from the teachers’ gap or reduce the impacts of the gap on
survey. Only around 65% of the teachers students’ learning outcomes and experiences.
reported they have competent digital skills. The
Findings related to aspects beyond material
rest said they have either intermediate or basic
access and digital skills
digital skills. This variation in the digital skills
of teachers may emerge as one of the Issues related to the access and digital
challenges for teachers in successfully capability have been analyzed in the context of
integrating one-to-one devices into their the BYOD project as a part of our investigation.
instructional activities. In another question, However, the focus of our study is to extend the
15% of teachers reported that they don’t have field of enquiry in the digital divide in learning
O 24
towards the aspects beyond access to ICTs and with four parameters to analyse the results and
digital skills and explore learning outcomes. findings from the data, which allows us to
For this purpose we needed a suitable analysis describe mobile learning practices according to
framework. the conceptual framework adapted for this
study. This analysis scheme contains a set of
The socio-cultural ecological approach to
four didactic parameters defined by Pachler,
mobile learning framework adopted for this
Bachmair, Cook & Kress (2010) as shown in
study understands learning as an educational
Table 1. Each of the four parameters in this
response to on-going socio-cultural
analysis scheme has two poles which represent
transformation with an emphasis on
the students’ practices of media use in their
assimilation of cultural practices and practices
everyday life and in the school environment
of media use in everyday life into schools and
and also attempts to link opposing learning and
their cultural practices of teaching and learning.
media practices.
Therefore, we have chosen an analysis scheme
Table 1: Didactic Parameters for Systematic Analysis of Learning with Mobile Devices (Pachler et al.,
2010)
Parameter A: Learning Sets

Pole : practices of school Pole : practices of mobile media
Parameter B: Relationship to the object of learning
Pole: mimetic reproduction Pole: personal reconstruction
Parameter C: Institutional emphasis on expertise
Pole: school curriculum Pole: personal expertise
Parameter D: Modes of Representation
Pole: discrete (mono media, mono modal) Pole: convergent
O 25
These parameters are intended as a tool and take place either in formal learning spaces
identify points of contact between the cultural (inside school or classroom) or informal
practices of learning at school and everyday life learning spaces (home or outside school).
and the agency of the learner to bring them into Therefore, learning may span both established
a meaningful relationship conceptualised as school practices and practices in everyday life.
assimilation. This analysis scheme provides us Learning taking place in either formal or
with well-defined parameters along with two informal learning spaces is equally important.
separate poles for each of the parameters which
Data from the BYOD project clearly shows that
are suitable for us to frame our data.
learner’s usage of one-to-one devices in school
The results from the analysis of the data show and everyday life is dominated by activities
that despite the school’s decision to integrate other than learning. According to the responses
one-to-one devices into the learning process, to the online survey, around 41% of students
the methods of teaching and learning in school spend most of their time on practices related to
have not necessarily adapted as quickly. (formal) educational activities, but the majority
Analysis of data has identified some limitations of students spend most of their time on
in the current practices in the ICT mediated (informal) activities like social
teaching and learning process. These media/communication, games, entertainment
limitations could impact on the learning and many other activities including fitness,
outcomes of students and also persist digital writing and music composing as shown in
divides. Key findings from analysis of data Figure 7.
using a systematic analysis scheme using the
50
four parameters are as follows:
Percentage of students
40 Educational
1. Learning Sets: Everyday life practices in
Social
the classroom 30 Networking
Gaming
With regard to the parameter A: learning set, it 20
includes all attendant practices and activities as Entertainmen
10 t
well as every constituent part of the learning Others
process such as learner, teacher, one-to-one 0

Type of Usage
devices, and learning environment (Pachler et
al., 2010). In the context of integrating one-to-
Figure 6: Time spent by students in different
one digital devices, the process of learning can
activities.
O 26
In contrast, the methods and practices of using (2002, p. 1) says, “students can utilise mobile
one-to-one devices in classroom learning by technologies that have the potential to support
teachers has been unable to match the format of learning anytime anywhere, but also to disrupt
the practices of one-to-one devices prevalent in the carefully managed environment of the
the convergent media world which students are classroom.” A small level of this type of
engaged in their everyday life. This may disruption has been there since the very first
generate a gap between the teachers and day of the BYOD project. However, it is
students in terms of the nature of using one-to- important to note that classroom observations
one devices for learning. In some cases, it has over the school year have shown students
been found that students are not motivated becoming more and more digitally capable. The
towards the classroom learning activities, challenge for the school is to direct these
which could possibly generate a conflict of towards learning activities in the classroom.
interest between the teachers and the students
inside the classroom. The school has prepared It has been already established that assimilation
a strategy to deal with such conflicts of interest of formal and informal practices of mobile
by applying certain rules and regulation of media is an important step to enhance the
using one-to-one devices inside the classroom. educational environment (Pachler et al., 2010)
Despite this, it is challenging for teachers. One but current school curricular practices can be
teacher shared their experience on this issue, detached from how students use one-to-one
stating “They all now have got command over devices in their everyday life. The technology
their devices and sometimes it’s very difficult to mediated learning process should embody the
say 'this is not what you are meant to be doing, principles of openness and collaboration to
turn that off”. One of the students from year 9 enhance educational environment (Engelhard
confirmed this, saying, “The real difficulty I & Kyeong-Ju Seo, 2012). One of the ways to
suppose is the fact that a lot of people play do that is to formalize the informal by bringing
games during classroom learning, I think the students’ practices of mobile media and their
fact is that the games are so easy to get and so usage patterns from everyday life into school
easy to swap between your work when teachers practices. Few teachers have so far brought
come around”. such practices into the classroom learning
activities, but during the classroom observation
Various authors have suggested that the
we have seen two very innovative attempts.
introduction of one-to-one devices in learning
One teacher in Maths has been experimenting
could provide both opportunities and
with ‘Google Drive’ and also designed several
challenges for classroom education. Sharples
O 27
classroom activities based on that. Google The socio-cultural ecological approach

Drive combines different tools which allow supports these curricular aims and argues that
teachers and students to collaborate, create, and learning mediated by digital technologies
publish information on a cloud based should not only apply the functionality of
environment. It also provides free storage space digital devices to current instructional
up to 5 GB which allows students to access practices. Instead a central concern must be to
their information and materials from any device understand how learners meaningfully engage
and any location. Another teacher in Digital with their digital devices and the surrounding
Design has created a group in Facebook aiming environment to create spontaneous sites of
to share small videos and short information on learning (Sharples, 2007). In the context of the
different topics. The teacher invited students to ICT mediated learning process, collaborative
join the group and encouraged them to knowledge building is one of the effective ways
communicate with each other on the social to achieve user generated context and content
media platform, not only inside the classroom and support active ‘passion-based’ learning
and school but also while outside school. (Brown & Adler, 2008; Wunsch-Vincent &
Although only a few such initiatives have been Vickery, 2007).
found in school so far, it certainly indicates that
Prior to the roll out of the BYOD project, every
teachers are now trying to identify the methods
teacher had been provided with opportunities to
and tools to motivate students to participate in
attend appropriate training. The school has also
learning, and embracing them in their
invited experts on technology mediated
instructional practices. By doing this, the
learning design into the school. All the teachers
attitude and motivation of students into ICT
have been encouraged to consult with the
mediated learning process could be enhanced.
expert and discuss their plans to integrate one-
2. Relationship to the object of learning: to-one devices into their classroom instruction
Methods of Instruction process. Despite the school’s efforts in the
professional development of teachers to
The objective of the BYOD project is to
prepare them to make maximum use of one-to-
transform the way students learn, rather than
one devices, some teachers have found it
requiring learners to passively repeat and
challenging to integrate devices into the
memorize objectified knowledge. It aims to
classroom. During classroom observation
facilitate active and collaborative learning
sessions, many teachers have been continuing
opportunities for every learner to enhance their
with their old methods of teaching and using
learning outcomes and learning experience.
one-to-one devices as a medium only to store
O 28
and transfer the learning contents. Regarding improve their learning outcomes as well as
this, one student in an interview said “A lot of experience.
teachers still do teacher to classroom learning
Two possible reasons have been identified for
rather than one-to-one device learning. The
the continuation of old methods of instructional
teacher still will teach as they would otherwise
practice by teachers in the context of the BYOD
other than the one-to-one devices”. However,
project. First, although the majority of teachers
the teachers who are on the forefront of
have either advanced or competent levels of
innovative instructional practices are guiding
digital skills, a significant number of teachers
other teachers in weekly sessions where
only have an intermediate or basic level of
everyone shares his/her experiences and tells
digital skills as shown in Figure 8.
others about their accomplishments. One
teacher being interviewed stated “Tuesday 60
night we are basically expected to be there for
Percentage of Teachers 50
a sort of more formal gathering to learn and
share things that you know. So, yes there is a 40
lot of support there”. Basic
30 Intermediate
Applying parameter B: relationship to the Competent

20 Advanced
objective of learning to the BYOD project, the
continuation of old ways of teaching and 10
learning even by very few teachers might
0
continue to promote mimetic reproduction of
Level of Digital Skills
knowledge in students. For students to be able
to reconstruct knowledge in the learning
Figure 7: Teachers’ Level of Digital Skills
process, the method of instruction should
Therefore, it may be challenging for those
enable the learners to participate in anytime,
teachers with intermediate or basic digital skills
anywhere learning with ability to share,
to find innovative ways to integrate one-to-one
publish, and collaborate with teachers and
devices into their classroom teaching and also
students irrespective of the learning spaces they
to design and deliver their courses in that way.
are in (Crow, 2010). The collaborative learning
Second, a majority of teachers interviewed said
environment could be created with the help of
that the increase in work load is one of the
wide range of convergent digital media tools
major challenges for them in the context of
and applications by including them in the
integrating one-to-one devices in their teaching
instructional activities. That could possibly
O 29
and learning. However, during interviews, applications and tools, they get opportunities to
some teachers were open towards putting extra create, share, and publish the contents in a
time into developing and planning courses to matter of minutes and also feel empowered, so
successfully integrate one-to-one devices into it is important to question if schools and
classroom learning activities. teachers are keeping up with the usage of
digital technologies (Collis & Moonen, 2008;
To bridge the gap between mimetic
Engelhard & Kyeong-Ju Seo, 2012). Use of
reproduction and personal reconstruction of
convergent digital media and web 2.0 tools is
knowledge, teachers might usefully consider
growing exponentially in the everyday life of
the use of online social media and web 2.0 tools
the young learner but schools are lagging
in their instructional strategies to create a
behind in integrating those technologies into
participatory and collaborative learning
schools practices.
environment. This can gradually reduce the
teacher’s role in the learning process and Applying parameter C: Institutional emphasis
increase the ability of learners to create their on expertise into the BYOD project, the there is
own learning context and contents. This scope for school in recognising personal
strategy of designing classroom learning expertise of learners’ and including it in the
activities may help students to generate the school curriculum. Current use of the online
learning context and contents needed to learning platform (Ultranet) in school may not
reconstruct the knowledge received from be supporting the objective of transforming
teachers and other sources. learning process by integrating one-to-one
digital devices. Ultranet’s functionality can be
3. Institutional emphasis on expertise
described as covering three distinct areas, what
Literature shows that learners are making more they call the ‘three spaces’ (Ultranet, 2012):
and more use of technology (Engelhard &
A. ClassSpace: This is essentially the
Kyeong-Ju Seo, 2012). Another thing that has
heart of the system, providing
been observed from the BYOD project is that
individual virtual classroom spaces for
young learners are very creative in terms of
students and teachers to interact - like
using one-to-one devices in different activities
the physical classroom, but made
and they can learn new things very quickly. Our
available online. Here is where anyone
data shows that learners’ usage of one-to-one
can find collaborative learning,
devices includes more and more use of online
resource sharing, online task and
social media, and web 2.0 tools for everyday as
activity management.
well as learning activities. By using these
O 30
B. uSpace: This is the personal learning and it has been designed in such a way that this
area of Ultranet, where students will could utilise practices of mobile media from
find the social learning network with students’ everyday life for learning. The
ePortfolios integrated. They can also teachers who are innovative in learning design
share any media and create their own are making use of external tools and media like
blog. Facebook and Google to accomplish the task it
C. WebSpace: This is the public facing is very important to acknowledge here that the
aspect of Ultranet, and where a lot of capabilities of other external tools and media
schools set up their main website pages used by teacher can be provided to students and
to publish information about teachers through the school’s online learning
themselves and news to the public. platform. Given the school’s decision to
integrate one-to-one devices into learning,
During their implementation of the Ultranet
earlier policies about implementation of
learning platform, the school decided to disable
Ultranet may need to be reappraised. In the one
some of its features and functionality. While
hand the school is integrating one-to-one
these policy decisions have been made for good
devices into learning to promote collaborative
reason, they nevertheless pose a limitation for
and active learning, whereas on the other hand
students and teachers on collaboration and
reduced features in Ultranet might be limiting
communication on the learning platform. This
the students and teachers ability to participate
could potentially disadvantage students in the
and collaborate via their online learning
context of one-to-one device mediated learning
platform. Some of the other features have also
process.
been disabled from Ultranet including features
4. Modes of representation: like online homework submission. Despite
One of the major parts of Ultranet, uSpace, has having the capability of homework submission
been designed to improve and encourage the in school’s Ultranet, majority (in fact all) of the
students’ participation in learning activities by teachers are either using email or using some
providing tools and applications matching third party cloud based services e.g. drop box
students’ format of everyday life digital media for homework submission. . Only very basic
usage. The uSpace provides a personal learning features like resource sharing and media
area for every student that contains safe social publishing are currently included in the online
networking, blogs, media sharing and learning platform, and that only from the
ePortfolios. These tools could enable every teachers’ perspective. Thus we see discrete use
student to collaborate with teachers and peers of different tools for different purposes, where
O 31
an existing convergent platform might provide administrators, and teachers about different
a better alternative. aspects which need to be addressed to conduct
successful integration of ICTs into the learning
Conclusion
process.
When ICTs are integrated into the learning
process in the form of one-to-one digital References
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technology for conversational learning.
International Journal of Continuing
O 33
COMPARISON OF CONCENTRATION LEVEL

AND STABILITY OF MARKET SHARE ACROSS INDUSTRIES
Anjali Bansal*,
Dr. Raju Ganesh Sunder**
* Lecture in Economics, UPES
** UPES
Abstract Keywords
This paper on ‘Comparison of
Concentration level, HHI, Market share
Concentration Level and Stability of
stability and Correlation Coefficient
Market Share Across industries’ gives
insight about the concentration level and Introduction
market share stability of 43 industries for In recent years usage of Competition law
the period of five years 2008-09 to 2012-13. has grown at phenomenal rate in response
Firstly Herfindahl Hirschman Index (HHI) to the enormous changes in the economic
of all 43 industries gets computed to behaviour of the market. Competition law
investigate about the concentration level is concerned with applying legal rules and
and then ranking of industries gets prepared standard to address market imperfections
on the basis of HHI of 2012-13. Secondly and to preserve, promote and sometimes
average standard deviation is used to know restore market conditions conducive to
about the variability of the market share and competition. In other words we can say that
again ranking of industries on this basis is it is law which is used to protect the
imputed. Thirdly change in concentration competition.1 In India competition Act was
level of industries gets calculated using % finally adopted in 2002 and it’s come into
change in HHI. Fourthly correlation effect on 20th May 2009. Before the passing
coefficient is used to find the relation of the Competition Act, the Monopolies and
between concentration and stability. Finally Restrictive Trade Policies Act, 1969
comparison of industries is shown on these (MRTP Act) was in operation. The MRTP
two variables. Act dealt with the concept of monopolistic
and restrictive trade practices and
subsequently with the unfair trade
practices. The MRTP Act was designed to
1
EC and UK Competition law Commentary, Cases
and Materials by Maher M. Dabbah Pg 6
O 34
avoid economic concentration of the power to look at the stability of market share also
in the Indian economy. The need for to evaluate the issue properly.
Competition Act had arisen because the
Anti-competitive Agreements:
MRTP Act had become obsolete in certain
“People of the same trade seldom meet
areas like it protects development in light of
together, even for merriment and diversion,
international openness in business,
but the conversation ends in a conspiracy
technological advancement, innovations,
against the public, or in some contrivance
etc.
to raise prices.”3
Therefore this paper is an attempt to study
This statement of Adam Smith makes it
the various measures which being
abundantly clear for a need to have a proper
employed during analysis of any agreement
regulatory mechanism for prevention of
that whether the particular agreement is
anti-competitive agreement which not only
anticompetitive or not. The first and
affect the market economy leading to
foremost measure we need is that of Market
monopolistic approach but also victimizes
share of industry. Market share gives the
the consumers and thereby cause harm to
snapshot of the industry that how the
the entire economy creating hindrance to
particular industry is being captured by
the competition in the market. The
various firms. Second we need to look after
anticompetitive agreements are agreements
the concentration level which reflects how
between firms or enterprises that restrict,
the market is limited by few large players.
prevent and unfavourably affect
Thus through this work commission can
competition, which ultimately increase the
have user-friendliness and beforehand
market position or share of the parties and
information regarding the stability of
may also cause disadvantage to the
market share and nature of concentration of
consumer as the products and services may
various industries. Generally after the
be available at a higher cost than are
introduction of HHI 2 as a concentration
available in a competitive market and also
measure antitrust division just look at the
may be of a lower quality. Thus it may be
HHI index to inculcate about the merger
predominantly important to protect,
issues. But this measure solely does not
consumers against cartels, monopoly
suffice the problem. Additionally, we need
abuses, and the creation of new monopolies
2 3
Herfindahl Hirschman Index Smith Adam, An Inquiry into the Nature and
Causes of the Wealth of Nations, London
Publication (1776) Pg 88
O 35
through mergers. In order to check these (iii) Analysis of cartels

activities, primarily we need to look after
Thus this study will provide guiding light in
market share stabilities of existing firms.
this arena. It gives the concentration level
Then definition of the relevant market of 42 industries on the basis of HHI and
allows the assessment to include an analysis their market share stability through which
of market shares and market concentration. we can depict that what’s the nature of
Therefore a vast study requires to be done concentration in respective industries and
on this subject. how the change in concentration takes place
from 2008 -2013.
Objective
The objectives of this research are: Literature review
(i) To rank different A number of important studies of industrial
markets/sectors taken in study concentration have been conducted over
according to their HHI last three decades, covering The United
(concentration level). States, The United Kingdom, Canada and
(ii) To rank different Japan while less extensive studies have
markets/sectors taken in study been made for Sweden, France, Italy and
4
on the basis of market share India. Therefore this study has been
stability. undertaken to give brief overview of some
(iii) To analyse the dynamics in each industries regarding their concentration
sector with respect to Change in level and stability of market share.
HHI
Most of the studies available have focused
(iv) To study the correlation HHI
primarily in measuring and analysing
and market share stability
concentration of manufacturing sectors in a
Scope of the study variety of ways. In studies of
HHI and Market Share Stability are the manufacturing, concentration has been
tools which are used by Antitrust Division found to be inversely related to size of
for: industry. The concentration also shows a
(i) Mergers significant direct relation to average firm
(ii) Analysis of Dominance
4
Bibliography And Bain 1966, page no. 183-200
O 36
size but no significant relation to inequality Weiss (1965)5 has argued that the instability
of firm size within an industry. of market shares is not a good measure of
the degree of competition. His reason being
Economists have devoted comparatively
that high instability now is apt to mean high
little attention to the theory and the
concentration later. i.e., instability of shares
measurement of temporal changes in the
among the smaller-scale firms in an
market occupancy ratios of the largest firms
industry can lead to an increase of
in industries, although this is regarded as a
concentration over time.
highly significant parameter by
businessmen and may be a useful gauge of John M. Vernon (1971)6 argued that since
the vigour of competition. Low variance of most therapeutic markets in I968 were
market shares has sometimes been taken already quite concentrated, Weiss (1965)'
per se as evidence of monopoly, and high interpretation of market share instability
variance as proof of competition would not seem to apply. Rather, the
interpretation of share instability as an
Neil H. Jacoby (1964)9, a consistently small
indicator of the lack of 'mutual
number of firms, a consistently high
interdependence recognized' would appear
concentration of industry output, and a
to be more appropriate. Hence, for this
temporal invariance in the market shares of
study, we do not agree with Weiss' view
individual firms do not per se constitute
that the two concepts of 'competitiveness' -
proof of monopolistic behaviour. Yet if an
concentration and market share instability-
industry exhibited these characteristics,
are basically inconsistent. In fact, we shall
especially in combination, it would be
propose later a combined concentration-
thought that there was an increased
market share instability measure as an
probability of collusion by its dominant
index of the likelihood of competitive
members, or of a mutual recognition of
behaviour.
their interdependence, resulting in an
oligopolistic coordination of pricing and Davies (1979), analyzed the sensitivity of
production policies adverse to the interest HHI into two compound parts: the number
of consumers. of banks in the market and the inequality in
5 6
Weiss, L. W. (1989). Concentration and Concentration, Promotion, and Market Share
price. Cambridge, Mass. : MIT Press. Stability in the Pharmaceutical Industry Author(s):
John M. Vernon Source: The Journal of Industrial
Economics, Vol. 19, No. 3 (Jul., 1971), pp. 246-266
O 37
market shares among the different banks. United States, HHI plays a significant in the
He found that the index becomes less enforcement process of antitrust law in
sensitive to changes in the number of banks, banking sector.
to the larger number of banks in the
Recently, Maasoumi and Slottje (2002)
industry. HHI can be written as an
have argued that common economic
increasing function of the population
phenomena like mergers between a strong
variance of market shares.
and a weak bank or entries and exits only
Gilbert (1984), for banking sector, the change certain parts of the distribution of
relationship between market concentration market share. – Often the tails only. Indices
and competitiveness has been examined in which based on HHI and inequality may
detail for many countries and the results miss such changes.
indicated that a high concentration tends to
Scholarly debate now focuses on two
reduce competitiveness in this sector.
issues, namely whether concentration also
Nathan and Neavel (1989), to analyze makes a significant difference (and if so,
competitiveness in any sector, an in-depth under what circumstances), and whether the
analysis of the structure of the market is correlation between market share and
essential. While highly concentrated profitability represents only the greater
markets do not necessarily imply lack of efficiency and cost savings of firms with
competitive behaviour, it is generally high market shares, or, as some evidence
agreed that market concentration is one of suggests, also may reflect an element of
the most important determinants of pricing discretion at least where products
competitiveness. are differentiated. An interesting recent
study found evidence that concentration
Rhoades (1995), the significance of
acts only as a proxy for high individual-firm
concentration ratios comes due to their
market shares." If this is correct, it could
ability to capture structural features of the
suggest that substantially more attention
market. Concentration ratios are also able to
should be given to market shares than to
reflect changes in concentration as a result
concentration, whether measured by CR's
of the bank’s entry into Market
or by the HHI7
concentration in banking sector. In the
7 firms with relatively large market shares

. If concentration by itself is of less concern than
high market shares, particularly of leading firms, occasionally should be permitted in order to allow
this also supports the suggestion that mergers of more effective competition for leading firms. See
O 38
Theoretically, higher concentration may basic characteristics of the variables used in

either increase or decrease the probability the analysis. Inferential statistics
of a firm leaving the market as a result of technique is used to inference about the
distress. However, anecdotal evidence, and results by using different ways of
common sense, indicates that the market inferential statistics like rank correlation
disruption generated by such an event and Correlation coefficient matrix analysis
would be more severe in concentrated which finds any strength of association
markets. between HHI index and market share
stability.
We find that market concentration has not
followed a universal upward trend: Descriptive research technique
concentration has increased in some Descriptive statistics is the discipline of
markets and fallen in others. Markets have quantitatively describing the patterns and
become more interdependent, it seems, as general trends of a dataset and summarize it
the same small set of financial firms has in single value. It enables a reader to
become more dominant across multiple quickly understand and interpret the set of
markets. We argue that the risk or severity data that has been collected. Here,
of financial instability depends not just on descriptive statistics provide a historical
concentration, but also on whether other account of variables behaviour and convey
firms can promptly substitute for an some future aspects of the distribution of
existing firm.8 dataset. We used mean (measure of central
tendency) and standard deviation (measure
of dispersion) as the measuring tool.
With a view to accomplish the pre
determined set of objectives of our Standard Deviation: it measures the amount
research, different set of techniques and of variation and dispersion from the mean.
tests have been adopted. First and foremost, A low standard deviation indicates
to fulfil the research objectives, descriptive expected value is very close to the actual
statistics technique like mean and standard value i.e. less volatility. A high standard
deviation are carried to show the nature and deviation indicates that expected value is
P. Pautler, supra note 103, at 60; Ordover, Sykes ANALYSIS 449, 495-97 (S. Salop ed. 1981). But
and Willig, supra note 23, at 1870-71; Porter, see 4 P. AREEDA & D. TURNER, supra note 4, at
Strategic Interaction: Some Lessons From Industry 912b
8
Historiesfor Theory andAntitrust Policy, in Trends in financial market concentration and their
STRATEGY, PREDATION, AND ANTITRUST implication for market stability(Nicola Cetorelli)
O 39
far from the actual value i.e. less stability. between the variables can be described by a
In the study average standard deviation is monotonic function.
used as a tool to calculate the degree of
Correlation Coefficient: It is obtained by
stability in market share across industries.
dividing the covariance of the two variables
Formula used to calculate the standard
by the product of their standard deviation.
deviation is:
Here correlation coefficient is obtained
1 2 between the HHI index and the market
S = √𝑛−1 ∑(𝑋 − 𝑋)
share stability. The formula used here is:
Where; X is the market share of individual ∑(𝑋−𝑋)(𝑌−𝑌)

Correlation coefficient =
firm in respective industry 2 2
√∑(𝑋−𝑋) ∑(𝑌−𝑌)
𝑋 is the mean of market share in respective Correlation coefficient lies between -1 to 1.

industry If it is 1 then there exists perfect positive
n is number of firms correlation between the two variables. If it
is close to 1 then there exists high positive
correlation. If it is close to 0 then there
Inferential Research exists low correlation. If the value is o then
Inferential statistics is defined as the branch there exists no correlation between the
of statistics that is used to make inferences/ variables.
valid judgments about the characteristics of
The researcher has also used the books
variables taken as sample data. These
available in the Library of the Commission
statistics are ways of analyzing data that
and information gathered through web
allow the researcher to make conclusions
browsing. The study mainly employed a
about findings of the study. Here rank
mix of qualitative and quantitative research
correlation and correlation coefficient has
approaches to precede the study.
been used to achieve the objective.
Data: in the study market share of 42
Rank correlation: It is the study of
different industries get employed over the
relationship between rankings of different
time period of five years i.e. form 2006-07
variables or different rankings of the same
to 2010-11. Further all the data get
variable. In this Spearman’s rank
investigated systematically using MS-
correlation coefficient is used as a measure
excel.
which signifies how well the relationship
O 40
Data Source: The entire data has been traditionally summarized by the
collected from the CMIE industry outlook concentration ratios. The most common
database. This database has updated its concentration ratios are the CR4 and the
market share till 2011. The intensive CR8, which means the market share of the
analysis has been done to obtain the desired four and the eight largest firms.
objectives. Concentration ratios are usually used to
show the extent of market control of the
Definitions and Characteristics
Industrial Concentration: Industrial largest firms in the industry and to illustrate
concentration refers to the structural the degree to which an industry is perfectly
characteristics of business sector. It is the competitive, monopolistic or oligopolistic.
degree to which production in an industry These two common ratios are comparable
or in a economy as a whole is dominated by from industry to industry.
a few large firms. Traditionally 1) The Four Firm: Concentration Ratio
concentration assumed to be a symptom of measures the total market share of
‘market failure’ as it depicts that only few the four largest firms in an industry.
firms captured the major shares of market 2) The Eight Firm: Concentration
leaving less opportunities for other firms to Ratio measures the total market
grow and perform. On contrast at present share of the eight largest firms in an
concentration seems as an indicator of industry.
superior economic performance. In the
early 1970s, Yale Brozen 9
, a key Concentration Level
Theoretically concentration ratios range
contributor to the new thinking, called the
from 0% to 100%. The level ranges from
profession’s about-face on this issue “a
unconcentrated, low or medium
revolution in economics.”
concentration to total concentration.
The Measurement of Industrial Unconcentrated/ Zero concentration: 0%
concentration means perfect competition or at the very
Concentration Ratio: It is a measure of the
least monopolistic competition. For
total output produced in an industry by a
Example: CR4 i.e. four largest firm would
given number of firms in the
industry.Industrial concentration was
9
Brozen, Yale. Concentration, Mergers, and Public
Policy. New York: Macmillan, 1982.
O 41
not have any significant market share in the Example: Tobacco cigarettes
industry. industry, iodised salt industry,
etc.
Low concentration: In this it varies from
0% to 50%. It means that the industry (iii) Barrier to Entry: Industrial
ranges from perfect competition to concentration is also promoted
oligopoly. by barriers to entry, which make
it difficult for new firms to
Medium Concentration: Here the ratio
displaced established firms.
varies from 50% to 80%. Industry in this
Here Barriers to entry are
range is like an oligopoly.
erected by government-
High/Total Concentration: Here the ratio conferred privileges such as
varies from 80% to 100%. Industry in this patents, copyrights and
range is tending toward monopoly. trademarks, etc. existing firms
may possess other advantages
Causes and Consequences of Industrial
Concentration over newcomers, including low
On the basis of evidence being collected so costs and brand loyalty, which
far the prime cause of concentration make entry more difficult.
emerged out is:
These are the traditionally employed
(i) Technological factors: Some concentration measures which posses
industries are more number of limitations.
concentrated than others
Limitations with CR4 and CR8 ratios
because of technical properties are
of their production technologies  The definition of the concentration
or unique characteristics of the ratio of four and eight firms does not
market they serve use the market shares of all the firms
in the industry.
(ii) Economies of Scale: Industries
for which scale economies are  It does not provide the distribution
important are expected to be of firm size.
more concentrated than others
 A concentration ratio does not
in which costs do not fall as
provide a lot of detail about
rapidly as output expands. For
competitiveness of the industry.
O 42
 The concentration ratios just technology management. The Herfindahl

provide a sign of the oligopolistic Hirschman Index (HHI) measures the
nature of an industry and indicate competitiveness of a particular industry by
the degree of competition. calculating the extent to which market
output is concentrated among the industry’s
Example:
firms. It is calculated by taking the sum of
Suppose that an industry contains ten firms
the squares of the market shares of the
that individually account for 25, 15, 12, 10,
existing firms within the industry, where
10, 8, 7, 5, 5, and 3 percent of total sales.
the market shares are expressed as
The four-firm concentration ratio for this
fractions.
industry is 25 + 15 + 12 + 10 = 62, meaning
that the top four firms account for 62 H = ∑𝑁
𝑖=1 𝑆𝑖
2
percent of the industry’s sales. It signifies

Where; Si = each firm’s market share
that major % of sales in industry is being
captured by the top four firms and results i = firm in a given industry
that the industry in question is concentrated.
The result is proportional to the average
The concentration ratios fail to signify other
market share, weighted by market share.
details regarding competition and degree of
The HHI can also provide useful insight
oligopoly and monopoly. Therefore after
into a company’s prioritization strategy
dealing with such ratios and their
when it looks to enter into a new market or
limitations, In 1982, new federal merger
to grow their existing market share. If we
guidelines were issued, the Herfindahl-
continue with the given example, to
Hirschman Index (HHI) became the
calculate HHI we need to take the square
standard measure of industrial
root of market share of all 10 firms in the
concentration.
industry- 252 + 152 + 122 + 102 + 102 + 82 +
The Herfindahl index (HHI) 72 + 52 + 52 + 32 = 1,366.
It is a measure of the size of firms in relation
to the industry and an indicator of the In general the fewer the firms and the more
amount of competition among them. unequal the distribution of market shares
Named after economists Orris C. among them the larger will be the HHI. For
Herfindahl and Albert O. Hirschman, it is Example: Two four firm industries, one
an economic concept widely applied in containing equalized firms each accounting
competition law, antitrust and also for 25% of market share and other with
O 43
market shares of 9o%, 1%, 1%, 1%. Here (iii) A third attribute of the HHI,
four firm concentration ratio accounts same demonstrated in 1969 by Morris
100% in both industries but very different Adelman, is that any HHI can be
HHIs. HHI for first industry is: 252 + 252 + interpreted as a "numbers
252+ 252 = 2500. HHI for second industry equivalent." This means that
is: 902+ 12 + 12+12= 8103. An industry one can readily compute the
controlled by a single firm has an HHI of number of firms with equal
1002 = 10,000 while the HHI for an industry market shares that would be
populated by very large number of very necessary to produce any given
small firms would approach HHI with HHI. This is done by
minimum value of 0. multiplying the HHI by 0.0001
and taking the reciprocal of that
Properties of HHI
(i) First, the HHI is highly product
responsive to asymmetry of Advantages of HHI over Concentration

market shares. This sensitivity, ratios:
however, carries with it a The HHI has two distinct advantages over
serious drawback: small errors the concentration ratios:
in estimating the leading firms' (i) It uses information about the

market shares can produce large relative sizes of all of an
differences in the HHI. existing firms and not some
(ii) A second important property of arbitrary subset of the leading
the HHI is that it reflects the companies.
shares of every firm in the
market. There is no need for an (ii) It weights the market shares of
a priori determination of how the largest enterprises more
many firms are significant in heavily.
measuring market Concentration thresholds are laid out in the

concentration; such a Justice Department’s merger guidelines,
determination, is inevitably first promulgated in 1968, revised
somewhat arbitrary, and must substantially in 1982, and amended several
be made before computing a time since. The guidelines proposed the
Concentration Ratio.
O 44
following limits for the nature of characteristics but not on basis

concentration: of economic characteristics.
(i) If HHI remains below 1,000 the (iii) The scope of industrial
market is low concentrated/ categories usually affects the
unconcentrated height of concentration indexes.
The more narrowly industries
(ii) If HHI remains between 1,000
are defined the higher
to 1,800, the market is
concentration indexes are likely
moderately concentrated
to be.
(iii) If HHI increases above 1,800
(iv) Statistics are usually compiled
the market is highly
on a national basis whereas
concentrated.
relevant market areas are
Given the current state of economic theory sometimes smaller or larger,
one could briefly expect that the higher the differing from one industry to
concentration, the more likely industry will another.
behave monopolistically and lower the
Therefore for these entire reasons one
concentration the more likely it will behave
cannot directly conclude that what is the
competitively. But there posses some
degree of monopoly in the particular
limitations and difficulties with these broad
industry. Therefore the concept of relevant
conclusions:
market gets widely used by the antitrust
(i) Two industries have the same divisions.
HHI index cannot necessarily
Findings of the study:
shows that the other
In the study 43 industries get selected on the
characteristics of industries is
basis of availability of data. Then using
also same. The number of firms,
HHI index we calculate the concentration
partial concentration ratios and
level of the industries. Further average
inequalities of firm size may
standard deviation has been adopted as a
differ in many possible ways.
tool to calculate the market share stability.
(ii) Establishments and products are Again rank the industries on the basis of
grouped together mainly on the market share stability. At last compare the
basis of technological rank of industries which we obtain from the
O 45
HHI and market share stability. finally scooters - 2
calculate the correlation coefficient 3 wheelers highly

7 automobile 3011.9 concentrated
between the HHI and market share stability.
3 highly
1) Concentration level of the 6 Alcohol Beer 2935.5 concentrated

3 highly
industries: Here we have taken
5 Soaps 2911.5 concentrated
market share of five firms in every
3 construction highly
industry and then computed the HHI 4 machinery 2650.5 concentrated
using the formula. Thereby Rank 3 highly
the industries on the basis of HHI. 3 Biscuits 2428.8 concentrated
3 computer and its highly
Rank is shown form highest
2 peripheral 2412.2 concentrated
concentrated industry to low
3 highly
concentrated industry. 1 tractors 2400.3 concentrated
(a) Highly concentrated industries: primary
Table 1: Rank of Industries on Basis of 3 aluminium highly
HHI (2012-13) 0 production 2396.6 concentrated
R Industries on basis HHI Nature of 2 copper and copper highly
a of HHI concentration 9 products 2307.4 concentrated
n 2 paints and highly
k 8 varnishes 2211.2 concentrated
4 Tobacco Product highly 2 highly
3 cigarettes 6955.1 concentrated 7 courier services 2040.5 concentrated
4 highly 2 Airline passenger highly
2 Iodised salt 6515.8 concentrated 6 service 2009.8 concentrated
medium and 2 highly
4 heavy commercial highly 5 lift and escalators 1837.9 concentrated
1 vehicles 4094.7 concentrated Source: Computed
motorcycles- 2
4 wheelers highly Among 42 selected industries 19
0 automobile 3476.7 concentrated industries is emerged out as a highly
3 highly concentrated industries. The top two
9 hair oil 3463 concentrated
concentrated industries are tobacco
3 3 wheelers highly
cigarettes industry, iodised salt industry
8 automobile 3347.5 concentrated
having HHI of around 6000. The least
highly concentrated industries are
airline passenger service industry and
O 46
lift and escalators industry ranging HHI cellular
around 1800 to 2000. The nature of the mobile phone moderately

17 services 1184.6 concentrated
industries being highly concentrated
Source: Computed
and this can lead to competition issue.
Here we can see that concentration does Out of 42 industries, there are 8 moderately
not depend on the technical factors like concentrated industries. Among all
economies of scale, production moderated concentrated industries the
complexities, etc. otherwise the highly moderated concentrated industries is
industries which emerged as an highly Dry cell batteries industry having HHI of
concentrated like tobacco cigarettes, approximately 1757. Ice cream industry,
iodised salt and hair oil will turned into synthetic detergents and Scourers industry
less concentrated and vice versa. are moderately concentrated in the range of
1300-1370.
(b) Moderately concentrated
industries: (c) Low concentrated industries:
Table 3: Rank of Industries on the basis of
Table 2: Rank of Industries on Basis of HHI (2012-13)
HHI (2012-13)
Ra industries on Nature of
Ra Industries on HHI Nature of
nk basis of HHI HHI concentration
nk basis of HHI concentration
Gems and
Dry cell moderately
Jewellery low
24 Batteries 1757.8 concentrated
16 (retailing) 829.5 concentrated
Internet moderately
Housing
23 services 1644.7 concentrated
construction low
moderately
15 co. 782.9 concentrated
22 Refrigerators 1418.8 concentrated
Phosphatic low
Country moderately
14 Fertilizers 778.1 concentrated
21 Liquor 1392.4 concentrated
low
moderately
13 IT software 757.3 concentrated
20 ice creams 1373.5 concentrated
Milk powder
Synthetic ,
and
Detergents moderately
condensed low
19 and scourers 1311 concentrated
12 milk 728.7 concentrated
Automobile moderately
low
18 tyres 1249.4 concentrated
11 Tea 646.9 concentrated
O 47
Fertilizer 2) Stability of market share of

industry low industries: Here we have rank the
10 Urea 620 concentrated
industries on the basis of market
Butter ghee
and fats from low
share stability. Regarding stability,
9 milk 595.3 concentrated we have calculated standard
Aluminium low deviation of market shares for each
8 products 568.1 concentrated firm in an industry over a period of
low
2008-0 to 2012-13 and then taken
7 Rice 539.1 concentrated
an average of standard deviations of
Diamonds ( low
6 retailing) 480.6 concentrated all companies in the industry.
cement low Thereby assigned rank to the
5 industry 466.2 concentrated industries from most stable to less
low
stable.
4 coffee 420.3 concentrated
(a) Stable industries:
finished
steel low Table 4: Rank of Industries on Basis of
3 production 413 concentrated Market Share Stability
Air
Stability
conditioning low
of
2 equipment 323.1 concentrated
Rank on basis Market Market
Readymade
Rank of market share Share Share
garments
1 IT software 0.433 stable
Apparels ( low
2 tea 0.438 stable
1 retailing) 110.8 concentrated
Tobacco
Source: Computed Product
3 cigarettes 0.452 stable
Total of 16 industries are low concentrated.
finished steel
Readymade garment industry is most 4 production 0.701 stable
fragmented industry having an HHI of 110. copper and
Other industries like air conditioning copper
equipment, coffee, cement, tea are also less 5 products 0.731 stable
paints and
concentrated but their concentration level is
6 varnishes 0.867 stable
in the range of 330 to 650. Other industries
7 Soaps 0.932 stable
are also less concentrated with an HHI of cement
below 1000. 8 industry 0.989 stable
O 48
Readymade Milk powder

garments and condensed
Apparels ( 28 milk 2.29 stable
9 retailing) 1.007 stable Butter ghee
Synthetic , and fats from
Detergents and 29 milk 2.842 stable
10 scourers 1.086 stable Housing
Fertilizer construction
11 industry Urea 1.204 stable 30 co. 3.266 stable
aluminium Internet
12 products 1.294 stable 31 services 3.519 stable
13 Biscuits 1.306 stable primary
Air aluminium
conditioning 32 production 3.631 stable
14 Equipment 1.352 stable motorcycles- 2
Automobile wheelers
15 tyres 1.366 stable 33 automobile 3.7 stable
16 Rice 1.538 stable 34 Refrigerators 3.72 stable
Diamonds ( scooters - 2
17 retailing) 1.558 stable wheelers
18 coffee 1.564 stable 35 automobile 3.783 stable
Gems and Dry cell
Jewellery 36 Batteries 3.922 stable
19 (retailing) 1.578 stable computer and
courier 37 its peripheral 3.94 stable
20 services 1.598 stable Airline
medium and passenger
heavy 38 service 4.419 stable
commercial Source: Computed
21 vehicles 1.616 stable
22 Iodised salt 1.619 stable Out of 43 industries, 38 are stable in
23 Alcohol Beer 2.025 stable their market share. We can see that
cellular mobile industries being highly
24 phone services 2.082 stable
concentrated or low concentrated
Phosphatic
their market share remains almost
25 Fertilizers 2.11 stable
26 ice creams 2.223 stable stable. Suppose we take readymade
27 tractors 2.245 stable garment industry, this is most
fragmented industry with large
O 49
number of firms still this industry Three wheelers automobile industry

shows stability in their market share is one the most concentrated
i.e. this is the industry which are not industry. Simultaneously this
lined by few players. industry is less stable industry with
deviation of around 5.6.
If we consider tobacco cigarettes
industry then we see that it is most Out of 43 industries only 5
concentrated industry with most industries showing less stable
stable market share. Therefore this market share but the volatility is not
industry might represent some greater than 6.
collusive agreement among the
3) Change in concentration level of
leading firms which can give rise to
industries: Here to see the change in
competition issue. in order to fully
concentration level of industries we
understand the characteristics of an
have computed % change in HHI
industry, Structure-Conduct-
from 2006-07 to 2010-11. Then list
Performance (SCP) analysis need to
the industries on the basis of
be done.
increasing HHI and decreasing
Less stable industries: HHI.
(a) Increasing HHI industry:
Table 5: Rank of Less Stable Industries
lift and 5.22 less Table 6: Increasing HHI Industry (%
39 escalators 9 stable
change in HHI)
Rank %
Country 5.38 less
of HHI change
40 Liquor 6 stable
list of sector in HHI
3 wheelers 5.58 less 38 3 wheelers automobile 229.64
41 automobile 2 stable 26 Airline passenger service 162.95

34 construction machinery 150.28
5.58 less 31 tractors 91.33
42 hair oil 3 stable
5 cement industry 49.32
constructio 40 motorcycles- 2 wheelers
n 5.80 less automobile 48.93
43 machinery 6 stable 12 Milk powder and condensed

milk 47.51
Source: Computed 25 Phosphatic Fertilizers 44.76
O 50
37 computer and its peripheral 41.38 24 Dry cell Batteries -23.6

42 Iodised salt 37.4 25 lift and escalators -18.311
20 ice creams 36.87 6 Diamonds ( retailing) -17.62
36 Alcohol Beer 35.1 19 Synthetic , Detergents and
23 Internet services 34.07 scourers -17.4
10 Fertilizer industry Urea 22.4 17 cellular mobile phone
21 Country Liquor 19.52 services -15.24
7 Rice 19.29 27 courier services -12.69
13 IT software 18.81 41 medium and heavy
16 Gems and Jewellery (retailing) 18.26 commercial vehicles -12.36
39 hair oil 16.4 30 primary aluminium
28 paints and varnishes 13.5 production -11.72
1 Readymade garments Apparels ( 11 tea -9.6
retailing) 11.91 35 Soaps -9.5
18 Automobile tyres 7.51 15 Housing construction co. -8.56
4 coffee -7.23
9 Butter ghee and fats from milk 4.4 29 copper and copper
Source: Computed products -4.03

33 Biscuits -2.005
43 Tobacco Product
(b) Decreasing HHI industry: cigarettes -1.09

Source: Computed
Table 7: Decreasing HHI industry (%

change in HHI)
Rank
on % change
HHI list of sectors in HHI
8 aluminium products -48.11
2 Air conditioning
Equipment -35.63
3 finished steel production -26.66
37 scooters - 2 wheelers
automobile -26.56
22 Refrigerators -25.77
O 51
The HHI and market share stability shows

the high positive correlation. It means that if
increasing HHI industry the market share stability of industries
increases it lead to increase in the
increasing HHI
industry concentration level of industries. If market
250
share shoes downward trend then HHI also
200
150 shows declining trend. But this high positive
100
correlation between HHI and market share
50
0 stability cannot universally be applied in
3 wheelers…
Automobile…
Milk…
Internet…
Rice
hair oil
tractors
Iodised salt
analysing the structure of the industries.
Comparative statics of top 10 concentrated
Figure 1: Increasing HHI Industry industry on basis of stable market share:
Aluminium products and air conditioning Table 9: Comparison of Top 10

equipment industries are representing most concentrated industries with Market Share
Stability
downward change in their concentration
Industries HHI Market share
level. They are among low concentrated
Tobacco Product
industries with almost stable market share. cigarettes 6955.1 0.452
Thus this major change in HHI represent Iodised salt 6515.8 1.619
that market share is changing among medium and heavy
leading firms only. commercial vehicles 4094.7 1.616

motorcycles- 2
4) Correlation Coefficient: wheelers automobile 3476.7 3.7
hair oil 3463 5.583
Table 8: Correlation Between HHI and 3 wheelers
Market Share Stability automobile 3347.5 5.582
Variables Market share HHI scooters - 2 wheelers
stability automobile 3011.9 3.783
Market share 1 Alcohol Beer 2935.5 2.025
stability Soaps 2911.5 0.932
HHI 0.933524 1 construction
Source: Computed machinery 2650.5 5.806
Source: Computed
The correlation coefficient signifies the
degree of relation between the two variables.
O 52
In the table we have compared

highly concentrated industries with
market share stability. The tobacco
cigarettes industry which is shows
most concentrated industry has
most stable market share also.
Likewise other industries like
iodised salt, medium and heavy
commercial vehicles industry are
also highly concentrated industries
Figure 2: Comparison of industries on
and they have relatively stable Basis of HHI and Market Share Stability
market share as compared to Interpretation of the study:
industries like hair oil and 3 1) Hair oil industry is highly
wheelers automobile industry. concentrated comparatively less
Therefore this comparative relation stable than other industries. Here
is shown through bar graph below: HHI is significantly increasing
means that hair oil industry is
(a)
becoming more concentrated which
reveals that few firms are capturing
Market share stability the major market share in the
7
industry.
6
2) Soap industry is highly concentrated
5
with stable market share and
4
marginal change in HHI. It means
3
2
that the share of few leading firms is
1
not changing much.
Market
0 share 3) Iodised salt is one of the highly
scooters - 2 wheelers…
medium and heavy…
motorcycles- 2 wheelers…
hair oil
Saops
Alcohol Beer
3 wheelers automobile
Iodised salt
construction machinary
Tobacco Product cigrattes
stability concentrated industry with

comparatively less stable market
share than biscuit industry. Here the
concentration level is also revealing
significant increase in the HHI i.e.
major players are capturing more
O 53
and more market share. Here TATA 7) 2 wheelers automobile industry –

CHEMICALS occupies almost 66% motorcycles and scooters both are
market share in 2006-07 and it highly concentrated industry with
continuously rising and it end up stable market share. As per
with occupying approximately 78% concentration level, motorcycle
market share till 2011. industry shows significant increase
4) Biscuit industry is highly in HHI which means that top players
concentrated market with stable is capturing the market whereas
market share. Here change in scooter industry represent significant
concentration is also marginal which decrease in HHI. This is because in
represent that the existing major this industry some new firms entered
players are capturing the biscuit the market.
market in the five year period of 8) Three wheelers automobile industry
study. is highly concentrated industry with
5) Alcohol Beer is highly concentrated less stable market share. In this
market with almost stable market industry change in concentration
share. The change in concentration level is also significantly high with
level is quiet significant and it approx. 230% change.
increases by 35%. It means that the 9) Tractor is highly concentrated
market gets captured by few large industry with almost stable market
firms and this is very much evident share. Here % change in HHI is
from the market share of United significantly high. This is because
Breweries Ltd., as it market share get Mahindra and Mahindra ltd. Increase
increased by 13% in five years. their market share from 26% in 2006
6) Tobacco cigarette industry is highest to 42% in 2011.
concentrated industry with stable 10) Construction machinery industry is
market share. Concentration level of highly concentrated industry with
this industry is also not changing less stable market share and change
here. It means that few large firms is concentration level is also
which existed in the industry is significantly high with
capturing the major portion of approximately 150% change in
market share. market share. This is because
Techpro System Ltd. Suddenly
O 54
captured around 50% of market that major players of the industry are
share in 2011 in comparison of 14% losing their market share.
market share in 2006. 15) Country liquor is moderately
11) Paint and varnishes industry is concentrated industry with quiet
highly concentrated industry with unstable market share. Here change
stable market share. In this industry in HHI shows significant increase in
concentration level is significantly concentration level but change in
increases but it get distributed concentration is less than the change
among top 3 leading firms. in concentration in alcohol beer. It
12) Primary aluminium production means that though the industry is
industry and copper and copper concentrated but not as much that of
product industry are highly alcohol beer.
concentrated industry. Primary 16) Dry cell battery industry is
aluminium production has almost moderately concentrated with almost
stable market share with no change stable market share. Here the HHI is
in concentration level in five year significantly decreasing means that
period whereas copper and copper market share of top leading firms is
product industry has stable market reducing.
share and shows significant decrease 17) Refrigerator industry is moderately
in concentration level. concentrated industry with
13) Lift and escalator industry is slight comparatively less stable market
more concentrated than moderately shares than that of air conditioning
concentrated industry. It has less equipment industry. This industry
stable market share with significant also shows that of declining
decline in concentration level i.e. top concentration level like that of air
existing firm is losing their market conditioning equipment industry.
share. 18) Automobile tyre industry is
14) Synthetic detergents and scourers moderately concentrated industry
industry is moderately concentrated with stable market share. This
with almost stable market share but industry shows significant increase
the concentration level is in concentration level but this
significantly decreases which mean increase is not very high.
Readymade garment industry is top
O 55
most unconcentrated industry in the share is largely distributed among

list. It is showing stable market share number of existing firms. Here
i.e. existed top firms are change in HHI is also marginal
continuously maintaining their which shows that concentration level
market share and hold tight the is not changing much and no major
market. changes in market share of firms
19) It software industry is occur in the five year.
unconcentrated industry with most 23) Tea industry almost represent the
stable market share, but here the same trend that of coffee industry. It
concentration level is significantly is comparatively more stable
increasing. This is because some industry than coffee.
leading firms are capturing more 24) Rice is unconcentrated industry with
market share. almost stable market share. It shows
20) Air conditioning equipment industry significant increase in HHI which
is one of the most unconcentrated means that market share of single,
industry, rank 2 in the list. It has few or all top firms are increasing.
stable market share. Here the HHI 25) Milk powder and condensed milk
shows significant decline in product industry, butter ghee and fats
concentration level over the five year product industry and ice-cream
which means that top leading firma industry all three industries are
losing their market share. unconcentrated with almost more or
21) Finished steel industry and like stable market share. Only butter
aluminium product industry is ghee and fat industry is remain
unconcentrated industry with stable unchanged in concentration level
market share. Both industries is and rest two shows significant
showing significantly declining increase in the HHI which means
trend in concentration level i.e. HHI that the market is being more
is declining. captured by the large firms.
22) Coffee is unconcentrated industry 26) Diamond and Gems and jewellery
with almost stable market share. It industry, both are unconcentrated
means that there is no firm in the market with almost same level of
market which enjoys the major stability in their market share. In
share. The whole industry market concentration level diamond
O 56
industry showing declining trend This study simply provides the bird’s eye
which means that top firms are view of industries on the basis of HHI index
losing out in the market whereas and market share stability and the
gems and jewellery industry shows correlation between the two. Through this
increasing trend which means that study we come to know that there is high
top firms are more meticulously positive correlation between the HHI and
acting in the market. the market share stability. But we cannot
27) Housing construction industry is generalise this relationship between the
unconcentrated industry with almost two. High concentration occurs with the
stable market share. It shows variety of market structures. There is
significant declining trend in possibility that industry with few producers
concentration level but the declining account for substantially industry output
trend is not much larger. and another possibility that industry have
28) Cement industry is unconcentrated number of intermediate size firms which
industry with stable market share. account for significant proportion of output.
This industry shows significant But the important question here is that,
increase in concentration level by what is the relation between stability in
almost 50%. market shares and type of size distribution
of the industry. There is evidence which
Conclusion and Suggestions shows that highly concentrated industries
The fundamental public policy question can have more volatile market share and
posed by industrial concentration is that: vice versa. Here we also came to know that
Are concentrated industries less the technical complexities and production
competitive than unconcentrated process does not affect the concentration
industries? The answer of this question level of industries rather economic
requires lot of regressive analysis. One characteristics dominantly affect the
cannot answer this question by just using concentration level. Thus in short we can
the market share and HHI of industries. As say that it is not necessary that industrial
these tools are the necessary but not the concentration per se is always worrisome in
sufficient measures to conclude about the consideration with competition issue.
competitiveness. These are measures which
are used to just see the concentration level
and stability in market share of industries.
O 57
Rather in order to reach the conclusion SCP 2) Smith Adam, An Inquiry into the Nature
and Causes of the Wealth of Nations,
(structural, conduct and performance) of
London Publication (1776) Pg 88.
the industries also need to be undertaken.
3) Bibliography and Bain 1966, page No.
183-200.
Scope for future Research 4) Concentration, Promotion, and Market
This study deals only with the Share Stability in the Pharmaceutical
concentration level and the market share Industry Author(s): John M. Vernon
Source: The Journal of Industrial
stability of the industries from the period
Economics, Vol. 19, No. 3 (Jul., 1971), pp.
2008-09 to 2012-13. This study provide
246-266.
base to further studies in concluding that 5) Michael Gort, 'Analysis of Stability and
which concentrated industries are Change in Market Shares', journal of
competitive and which industries are not Political Economy, Vol. LXXI, No. I
(February I963), p. 5I.
competitive. As in U.S. there is list
6) G.J. Stigler’s: Introduction to Business
available of most concentrated industries
Concentration and price Policy.
and less concentrated industries, likewise 7) The Relative Stability of Market Shares: A
we can also maintain this type of Theory and Evidence from Several
information by analysing the concentration Industries Author(s): Neil H. Jacoby

Source: The Journal of Industrial
level of industries of long years back till
Economics, Vol. 12, No. 2 (Mar., 1964), pp.
present years. This study gives the nature of
83-107. Retrived from:
concentration level of particular industries http://www.jstor.org/stable/2097714.
in particular time period. Likewise other 8) The New Merger Guidelines and the
studies can be conducted to study the nature Herfindahl-Hirschman Index Stephen

Calkinst.
of concentration level of industries in
9) R. Posner & f. Easterbrook, antitrust 457-
different time period. And then comparison
64 (2d ed. 1981); l. Sullivan, Handbook of
can be done to see that which factors are the law of antitrust 620 (1977
influencing the concentration level. Thus 10) Centre on Regulation and Competition
the reasons for structural breaks in the WORKING PAPER SERIES Paper No. 52,
stochastic market structure: Concentration
economy can be analysed.
measures and Motion picture antitrust,
Reference Arthur devany, University of California,

USA and Cassey lee Hong kim University
1) EC and UK Competition law Commentary,
of Malaya, Malaysia July 2003
Cases and Materials by Maher M. Dabbah
11) Industrial Efficiency in Six Nations:
Pg. 6.
Richard E. Caves.
O 58
12) Concentration, Controls and Performance 13) Wikipedia, free encyclopedia for Industrial
in Twenty-Nine Manufacturing Industries Concentration, Herfindhal Index,
in India P.G. Apte and R. Vaidyanathan. Competition.
Indian Economic Review, Vol XVII 14) http://industryoutlook.cmie.com/
O 59
Energy, Infrastructure, Transportation
Simplified Stress Analysis Method for Fibre-Reinforced Plastic (FRP)

Piping
Mohan Kumar N V*, Ashok Kumar B**, Shefali Bheda***
* Associate Design Engineer, Piping department, Fluor Daniel India Pvt. Ltd.
** Associate Design Engineer, Piping department, Fluor Daniel India Pvt. Ltd.
*** Associate Design Engineer, Piping department, Fluor Daniel India Pvt. Ltd
One of the major producers of resins began a Fibre Reinforced Pipes (FRP) products being
study in an attempt to understand the cause of the suppliers product. The mechanical
these frequent failures of FRP in 1970. A properties and design parameters varies from
study led engineers to believe that by vendor to vendor. So it is utmost important
restraining the pipe in the axial direction and that before you proceed for stress analysis of
by guiding the pipe to reduce bending, the such systems you must finalize the
failures could be eliminated. Almost all span GRP/FRP/GRE vendor. Several parameters
calculations had been based on simple for stress analysis have to be taken from
bending stress instead of total stress resulting vendor. Stress analysis of FRP piping system
in extremely long support spans. The most is governed by ISO 14692 part 3. The FRP
important finding from this study was that material being orthotropic the stress values in
FRP piping could be successfully used when axial as well as hoop direction need to be
careful analysis of support, guide and anchor considered during analysis. The following
placement is considered. The responsibility of article will provide a guideline for stress
stress engineers is to insure that the piping analysis of FRP piping system in a very
system operates within allowable stresses simple format.
when the system is subjected to the most
Simplified Stress analysis method
severe operating condition.
Before Start modeling in Caesar II, one should
In this paper we explain simplified method of
get the following parameters as listed below
stress analysis for FRP pipe.
from FRP vendor
Key words FRP Mechanical properties:

FRP Piping, Stress analysis, Design envelope,  Axial elastic Modulus, Ea
FRP support design.  Hoop elastic Modulus, Eh
O 60
 Poisson Ratio, vhoop/axial Modeling in Caesar II:
 Poisson Ratio, vaxial /hoop  Enter Pipe OD and thickness from

vendor information.
 Thermal expansion coefficient, α
 Input T1, T2, P1, HP and fluid density
 Long term axial strength at 2:1 stress
ratio σal(2:1) from line list.
 Keep corrosion allowance as 0.
 Long term axial strength at 0:1 stress
ratio σal(0:1)  Change the material to FRP (Caesar
 Long term hoop strength at 2:1 stress Database Material Number 20) as shown
ratio σhl(2:1) in Fig. 1. It will fill few parameters from
 Qualified stress for joints, Bends, tees Qs Caesar database. Update those
parameters from vendor information.
 Bi-axial stress ratio for joints, bends,tees
[r]  Update FRP pipe density from vendor
 Hoop modulus to Axial modulus ratio, information sheet,.

Eh/Ea  Change the default code to ISO 14692.
Also get FRP pipe details indicating Outer  On the right side below the code, enter
diameter, thickness including elbow thickness the failure envelop data received from
& tee thickness vendor
Figure. 1: Typical Caesar II input spreadsheet for FRP Piping[3]
O 61
 Enter thermal factor=0.85 if pipe is Now Refer Fig. 2 and change the highlighted
carrying liquid, enter 0.8 if the pipe parts from available data.
carries gas.  Calculate the ratio of Shear Modulus
 After you have mentioned all the and Axial modulus from vendor data
highlighted fields proceed modelling and input in the location.
by providing dimensions from the Pipe support spacing shall be as Table 1 of
isometric/piping GA drawing. Add ISO-14692 part 3 as shown in figure 3
supports at proper location from
isometric drawing.
 The most important part in FRP piping
modeling is that the pipe thickness,
elbow thickness & tee thickness will
be different, hence all shall be modeled
properly from vendor data.
 Now click on environment button and
then on special execution parameter. It
will open the window as mentioned in
Figure 3 [1]
figure 2.
Figure 4
Also the valves used in FRP piping are steel,
Figure. 2: Typical Special Execution we can’t allow that weight to FRP piping so
Parameters Spreadsheet.[3] we generally provide support at the valve

Flanges as shown in figure 4.
O 62
2.3 Analysis of FRP piping in Caesar II: stresses in those situations we have to build
Preparation of the load cases for FRP piping the following load cases:
& interconnecting steel piping as shown in In this case no wind and seismic only hydro
figure 5 test
A. Operating case: When operation starts 4. W+P2 HYD
working fluid will flow through the piping at a The above cases are required for checking
temperature and pressure. So accordingly our stresses as per code ISO 14692 and also for
operating load cases will be as mentioned checking the hydro loads.
below: D. Expansion Case: Following load cases are
1. W+T1+P1 OPE for required for checking expansion stress range
maximum system temperature case case as per code ASME B31.3 if there is any steel
2. W+T2+P1 OPE interconnection piping connecting the FRP
for operating temperature piping.
The above cases are required for checking 5. L2-L5 EXP
stresses as per code ISO 14692 and also for 6. L3-L5 EXP
checking the operating loads. In the load case editor, the stress type for
B. Sustained Case: Sustained loads will exist operating load cases shall be changed to OCC
throughout the plant operation. Weight and to enable to enter the occasional load factor of
pressure are known as sustained loads. So our 1.24 in load case options as shown in Figure 6
sustained load case will be as follows: as per ISO-14692-3.
3. W+P1 SUS Also the occasional load factor for occasional
The above cases are required for checking cases shall be 1.33 as show in Figure 5 as per
stresses as per code ISO 14692 and also for ISO-14692-3 (refer clause 7.6.2.3).
checking the sustained loads.
C. Occasional Cases: Piping may be
subjected to occasional wind and
seismic forces and hydro test. So to check
O 63
Figure. 5: Typical Caesar II load case editor spreadsheet for FRP Piping
Figure. 6: Typical Caesar II load case options spreadsheet for FRP Piping
After preparing the load case, run the file to 1. Sustained, Operating, Occasional stresses
check the results, the following shall be shall be checked whether its below of code
checked allowable for FRP piping.
O 64
2. Sustained, Expansion, Occasional stresses Zone for all sustained, operating & occasional
shall be checked whether its below of code conditions.
allowable for interconnecting steel piping.
3. Sustained sagging shall be checked whether The values for Axial Stress & Hoop stress
its below 12.5 mm as per Code ISO 14692 taken from Caesar output as per below Figure
Part 3.[3] 7 for sustained conditions, similarly take the
4. Restraint summary shall be checked for any values for Operating & occasional conditions
liftoff or any uneven loadings. and the same shall be plotted in the Simplified
Design envelope for pipe joints, bend & tee
In addition to the above, we have to plot the (refer figure 9, 10) to ensure whether the
Design envelope for axial stress & hoop Stress stresses fall within the zone.
to check whether the same fall within the
Figure. 7 – Caesar output for stressed extended for Sustained Condition
O 65
forced generated by thermal expansion. Small

diameter piping will require more frequent
guiding and in some cases the use of guides
may be required at every support point
Location of anchors: Anchors can be
located at each change of direction in order to
divide the thermal expansion and allow the
system to operate at the lowest possible stress.
Figure 8: Simplified Design Envelope for Pipe
This increases service life and greatly reduces
joints
the susceptibility of failure due to dynamics.
In some cases, it may not be possible to fully
anchor portions of the system due to
structural limitations. When this occurs, the
amount of offset must be determined through
the use of the offset equation shown in the
Technical Section.
Fixing of anchors: FRP anchors are
Figure 9: Simplified Design Envelope for designed to lightly grip the pipe and are
Bend & Tee never to be allowed to clamp the pipe with
any excessive force. The anchor is fixed to
SUPPORT DESIGN TIPS [2] the pipe by applying shear collars, or FRP
Stress engineers should consider the following bands to the pipe on either side of the anchor.
design considerations to insure that all Except for very unusual cases, the collars are
supports are correctly used. applied in the field after the anchor has been
Location of supports: While providing rest installed. The collars are built up of layers
supportin the FRP piping, we should be of 1-1/2 oz. mat to a thickness that allows the
careful in support span as the span of FRP anchor to bear against the collar.
piping is very less compared to steel piping. Expansion: The thermal expansion of FRP
Hence refer the above indicated Span chart for is two to three times that of steel and
reference(Figure 3). requires special attention especially where a
Location of guides: Guides provides lateral fully anchored system is not used. Expansion
restraint to prevent buckling of the pipe due to joints and expansion loops are sometimes
O 66
specified but these add a weakness to the References

system. Expansion loops in addition to [1] GRP piping-Part 3: System Design, ISO-14692-3.
Petroleum and natural gas industries-Glass-reinforced
adding extra piping will add as many as four
plastics.
fittings and at least eight more joints. Each
[2] FRP Piping Design Manual, b y W i l l i a m F.
joint is an additional point of weakness. If Britt & W. Fred Britt, Published by
lack of structural restraint presents a problem Britt Engineering Inc., Birmingham, AL, January
where anchor loads might preclude the use of 1993.
the anchored system, there are several other

design methods that can be employed, but in
most cases the anchored system can be
incorporated. The descriptions of the other
design methods are beyond the scope of this
manual because these are special cases.
Conclusion
The Analysis approach presented in this
section will provide the stress engineer with
analytical tools and procedures that will insure
a successful piping system if reasonable care
and control is exercised when the pipe is
installed. The supports, guides, and anchors
that are illustrated have been designed to
match the analysis and support requirements
for FRP pipe and will provide maximum
service life for any FRP system.
Acknowledgement
The authors would like to acknowledge Fluor
India Pvt. Ltd. and Mr. S Sathiyagreeswaran,
Department Manager of Piping department of
Fluor India for establishing to complete this
paper presentation.
O 67

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Energy Infrastructure and Transportation

“Challenges and Way Forward”

4th to 6th of February, 2016

Editor: Tarun Dhingra, Ph.D.

College of Management & Economics Studies

First Impression: 2016

Energy Infrastructure and Transportation

Infrastructure and economic growth go hand in hand, years of underinvestment in infrastructure

Dr. Anirban Sengupta

Message from the desk of Vice-Chancellor

Dr. Shrihari Honwad

Message from the desk of Dean

Dr. Anirban Sengupta

The linkage of energy with infrastructure is multifaceted and it is an empirically established

Message from the desk of Convener

Dr. Tarun Dhingra

Understanding our immediate responsibility towards contributing to the energy security

Dr. Anil Kumar Dr. Nikhil Kulshrestha

Dr. Tarun Dhingra

Dr. A. Lakshman Rao Mr. N. Bhanu Prakash

Dr. A. Lakshman Rao Dr. Narendra Nath Dalei

Speakers / Session Chair Coordination Team

Participant cum Registration Coordination Team

Finance cum Purchase Team

Content Development team

Venue Management Team

Media relations Team

22 Identifying Barriers to Energy Conservation in Indian Telecom Sector. E 405

A Critical Study of the Disarrayed Regulatory Constitutency of

*Industry Fellow with UPES, Dehradun, Uttarakhand

Abstract India is to change to a negotiating India with

Introduction blamed but little is talked about how one can

Figure 1 -Toshiba Corporation Concept of a smart grid

Figure 2- Nippon Oil: Energy Network of a low carbon society

9. Public sector projects failing vii. Kerosene (Restriction on use

 Petroleum and Gas Transactions1: Power, planning and policy, State

Can there be a unified command and The western experience

a) Long Term Comprehensive Strategy b) ,Economic competitiveness, Energy security,

retaliatory “Hiroshima and Nagasaki” operations of integration calls for a holistic

The geopolitical scenario

learning experience. Not to The summit should work through an agenda

Europe /USA/UK and last but not http://www.dghindia.org/

least our own indigenous http://www.oisd.gov.in/

Resolving India power crisis as in

Hindustan times/ UTTARAKHAND ISSUE December

A Review of Current Safety Barrier Technique Effectiveness in the

Prashanth Ignatius* , Boardman Benjamin** , Sunder Raju Ganesh***

Abstract in the most heavily utilized barrier evaluation

Keywords Search results using keywords and phrases:

Research risk assessment barrier effectiveness

Having multiple barriers in place to minimize

events (The International Association of Oil effectiveness of these long-used methods.

& Gas Producers, 2014). The International

Cheese Model shows how a multi-barrier

The bow-tie framework is similar to the

Figure 2: Swiss cheese framework (IAOGP, 2008)

Figure 4: Barrier classification (Sklet, 2006)

Context The failure of these barriers can be attributed

the evaluation of barrier ineffectiveness, it is

by the previously mentioned Swiss Cheese evaluation technique (based on SEVESO

Model. The component of ineffectiveness II directive)

ranges from partial to total and is also a

Limitations 80% of major accidents have root causes

Prashanth Ignatius* , Boardman Benjamin , Sunder Raju Ganesh*