CEE Oct-Dec 2002

INNOVATIVE FUNDING OPTIONS FOR ENERGY EFFICIENCY IMPLEMENTATION In novative funding and financing options are required to support and facilitate ene rgy efficiency initiatives in every energy consumi ng segment. Innovative financing schemes essentially help in fac ilitating the flow of funds to every energy efficiency project that satisfies the basic economic viabi lity criteria. Innovative approaches are required to correctly assess and reflect all the associated tangible and intangible benefits in estimating the financia l viability. The approac h is also needed to minimize the perceived tinancial risks of energy efficiency projects. Energy efficiency is important to both industrial and commercial estab li shm ents as thi s makes a company that practises it more profitable. The objecti ve of every energy efficiency project is to reduce ene rgy costs, and consequently to increase profitability and productivity. An effective energy management programme also acts as a hedge agai nst price increase. Energy management helps managers to reduce their exposure to increases in the price of energy. Energy .efficiency activities span a wide spectrum ranging from simple and low-cost initiati ves to more complex and capital-intensive ones. While the simple steps could be stimulated through awareness generation and minimal incentives, major inve stments in ene rgy efficiency projects require structured and innovati ve funding options. Energy efficiency projects presen t attract ive investme nt opportunities for lenders and borrowers alike, featu ring high rates of return, relatively low risk, potentially sec ure cash fl ow streams, and pervasive application oppo rtunities among most economic sectors. An energy efficien cy in vestment programme can be designed, impl emented, and managed by the company itself, or by an experienced eneroy services • t> company ( ESCO). Energy efficiency projects are mainl y developed and formulated by the indu stry and othe r end-user organisations eit her with the ass istance of consu lting firms, individualconsultants, or an intemal team of managers and engineers, ESCOs, technical advisers to the company/o rgani sation , energy auditors. Cow·te:;y: F1CC! Business Digest, 16-31, Aug 02, P6 Tel: 91-11-3738760-70 Fax: 91-11-3320714 Email: jicci (ifljicci.com TOWARDS A SUSTAINABLE CEMENT INDUSTRY China has been the leadin a 0 cement producer since 1985 and has produced nearly 36 per cent of the world 's total cement in the year 2000. The other three big producers namel y, USA, India and Japan put together contribute to about 20 per cent of the world's total cement production. Where both countries are in the road network and tran sportati on sector - China uses on ly cement conc rete in road constructi on which is not the case with India: The industry, though d iffe rs, is trying to highli gh t the positi ve factors of using cement instead of bitumen in road construction and save crores of rupees for the Indian governments. In comparison to the Chinese market, India is looki ng a t conce ntrating on inc reas ing the demand mainly from the housing and the infrastructure sectors. New 73 capacity addition does not seem likely in the near future. The Indian cement industry is getting consolidated with 60 per cent of the cement production being control led by the top 5 players. However, the on ly concern that seems to be faced by the industry is the extremely low pricing as compa red to other coun tries. Accord ing to a report on the Cement Sector from Credit Su isse First Boston, the six stages ofmacro development are: • Opening the economy to capital and trade fl ows • Foreign in vestment allowance in key sectors • Control of inflation • J\ ppearance of credit • Gove rnm e nt- dr i ven infrastructure spending • Long term industrialisation When you compare Ind ia and China on the above six parameters based on the rankings submitted by the Global Competitiveness Report (World Economic Forum) one can see there is definitely a gap which needs to be filled and potential which needs to be harnessed . On the basis of75 countries, as in the Globa l Competitiveness Report 200 1-2002, both are uncompetiti ve - China (39) and India (57). Over the years, the Global Compe titiveness Repo rt has become the most authoritati ve and comprehensive assessment of the comparative stre ngth s and weaknesses of national economics around the world. In recent years. the Report has been produced in close co llaboration with Harvard Un ive rsity to ensure the la test thinking and research of leadinu 0 scholars on global competitiveness are incorporated. Courtesy . lndian Cement Re1·iel1', Sep 02, P 25 Fax: 022-2072102 Email: wadherapublicat ions(q)vsnl.nel. in