Wednesday, November 22, 2017

EPC

Opportunities for EPC players in Indian infrastructure are plentiful

 

Fluor is one of the world’s leading publicly traded engineering, procurement, construction, maintenance, and project management companies. Fluor Daniel India Pvt. Ltd. (Fluor India), the India entity of Fluor Corporation  has been operating since 1995 combining global strength with local focus for clients in the country and around the world. Arun Kumar Jain, Managing Director, Fluor Daniel India Pvt Ltd responded to SHRIKANT RAO’s queries on the way forward for his firm in 2014.

 

As a key EPC and project management player what is your outlook for 2014?

With more than $1 trillion investment planned in the 12th Five-Year Plan, the opportunities for EPC players in the Indian infrastructure industry are plentiful. However, one has to contend with the risks of doing business in every country.  In India, among the major risks are pre-execution delays like land acquisition, right of way and permissions such as environmental. Then we have scarce finance, weakening financial strength of both owners and sub-contractors, volatility in money markets and in foreign exchange rates; material price increases driven by global price movements, government policy flux regarding import duties, indirect taxation, and issue of availability of feed such as natural gas, coal or power. Impractical industrial policies, such as the new land acquisition regulation will make it both a long drawn out process and an expensive proposition. Some analysts project that, while globally land costs are 5 per cent of a project cost, in India they could now touch 40 per cent! Then we would also have to contend with political and civil society activism.

The need of the hour is to address the risks I mentioned. We’d expect government of the moment to come forward and work with the industry to provide a more conducive and equitable environment for EPC companies operating in India. An Indian government intervention through announcement of long stalled big ticket infrastructure projects could very well perk up sentiment and bolster the Indian manufacturing and EPC sectors.

 

How confident are you of the economy getting back on the rails? 

We are bullish on the growth in the Indian and Asia-Pacific markets and hope to contribute to the economic growth of these regions. With more than a trillion dollars of infrastructure investment planned in the next few years, we are sanguine about the business opportunities in  India, especially in the segments of clean fuels, refineries, chemicals and LNG.

 

Give us an idea of the opportunities you are seeking this year in the construction space?

Fluor India’s growth plans are significant. From less than 700 employees in 2009, we are today 2,300 employees with plans to grow at a faster pace in the near term. We are working in a multitude of sectors in the Indian market, especially in chemicals, petrochemicals, LNG, gasification, power and industrial sectors. While we focus on new projects coming up in these sectors, we will continue to apply robust objective criteria of project selectivity.

 

Which are the geographies you are focused on in terms of projects?

The Middle East also continues to be an area of interest for Fluor with projects currently being executed and bid for in Saudi Arabia, Abu Dhabi, and Qatar. The Asia Pacific Region is also seeing a lot of pre-execution and execution activity. Several projects are on the anvil in Indonesia, Malaysia, Thailand, the Philippines, Bangladesh, Myanmar and Sri Lanka. Fluor is pursuing some of these and has recently won a couple in Indonesia.  In recent times, discovery of gas has made Africa an attractive destination for investment. Indian companies like ONGC and Videocon have invested in Africa. Fluor is executing a FEED design for Anadarko’s upcoming LNG facility in Mozambique. We believe that India in particular needs radically more efficient and rigorous execution approaches towards infrastructure project execution. Fluor can help implement and share such best practices based upon transparency, safety, execution excellence and sustainability.

 




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