Monday, February 10, 2014

Government enterprises look to leverage IITs' expertise

State-owned firms such as Oil and Natural Gas Corp. Ltd ( ONGC ) and Bharat Heavy Electricals Ltd ( BHEL ) may tap the expertise of the Indian Institutes of Technology (IITs) to help attain energy security and spur manufacturing in the country.

The government plans to develop an institutional mechanism to do this instead of the sporadic attempts made so far. The partnership between ONGC and the IITs will be for R&D in exploration and that between BHEL and the schools, manufacturing, according to Ashok Thakur, Secretary, Higher Education, Ministry of Human Resource Development (MHRD). Thakur added that the 16 premier engineering schools in the country had met the two companies and “would work as a unit” and not as “individual IITs”.

India needs to develop its domestic resources to achieve high growth. However, there has been waning interest in the hydrocarbon sector, with around 70% of Indian basins remaining largely under-explored. ONGC itself has been battling concerns over its production capabilities and diminishing yields at its ageing oil fields.

Thakur claimed that the IITs would play their part in meeting the government’s ambitious target of increasing the contribution of manufacturing output to 25% of gross domestic product (GDP) by 2025 and creating 100 million additional jobs. Currently, manufacturing contributes 15.2% of India’s GDP. 

The two state-owned firms are enthused by the idea of partnering with the IITs. “While we are working with individual IITs, the work is getting replicated. The idea is to appoint a person who could interface between the IITs and ONGC. A lot of E&P (exploration and production)-related work is being done at the IITs,” said Sudhir Vasudeva, Chairman & Managing Director, ONGC. “For example IIT-Madras does a lot of work on offshore, while IIT-Kharagpur does work in the area of corrosion. Also, a lot of work is being done at IIT-Roorkee and IIT-Bombay in the area of geosciences.”

“One of the ways to go about it is that the students at IITs do their academic research and then come to ONGC’s labs. This may also lead to the outsourcing of research from our labs to the IITs. The ideas need to be fleshed out. We plan to tie up with the IITs in a big way,” Vasudeva added. “It has been suggested that ONGC would be interested in increasing research investment in IITs to have IITs as research referral units for that critical mass could be provided for their massive futuristic projects,” a MHRD document said.

India’s energy demand is around 700 million tonnes of oil equivalent (mtoe). To meet the country’s growing energy demand, ONGC aims to produce more than 130 mtoe by 2030. While ONGC’s domestic reserves increased to 1,287 mtoe in 2011-12 from 1,243 mtoe in 2010-11, its production declined to 52.4 mt from 52.6 mt in that period. ONGC produced 26.12 mt of crude in 2012-13, against 26.92 mt in the previous fiscal. Gas production fell to 25.33 billion cu. m (bcm) from 25.51 bcm.

Any increase in domestic production will help India’s efforts to contain its current account deficit. The country has been trying to bring down its oil import bill by taking equity in overseas assets, which could reduce both supply risks as well as price shocks. Of India’s total imports worth $491 billion last fiscal year, oil accounted for $164 billion.

B.P.Rao, Chairman & Managing Director, BHEL said the company is expanding an existing relationship with IIT-Madras to other IITs. “We are looking at high-end manufacturing. The problem is that high-end manufacturing doesn’t happen in India. This will create jobs and will increase the contribution of manufacturing to GDP. We have identified some technologies for these joint efforts,” Rao added.

BHEL’s efforts come in the backdrop of the challenge it faces from Chinese manufacturers and their local joint ventures. BHEL has been trying to woo customers and revive growth in the capital goods space. It has been working with state-owned NTPC Ltd, as well as the Indira Gandhi Centre for Atomic Research for setting up an 800 megawatts (MW) prototype by 2017 of advanced ultra-super critical technology at an investment of around Rs.8,000 crore (Rs. 80 billion).

Source: Mint, February 10, 2014

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