SERVICE TAX BURDEN ON TECHNICAL CONSULTANCY ORGANISATIONS

The recent decision of the Government of India to impose service tax on the consultancy organizations including technical consultants give rise to suspicion as to whether the Government of India have failed to understand the problems of the technical consultancy organizations and the importance of strengthening them , that would enable them to contribute to the improved performance of the Indian industries and perform competitively in the global market.

Unfortunately, the technical consultancy organizations in India still have not grown to the extent of their potentials and many of them remain as very small outfits and quite a number of them as single man’s organization, mostly formed by those who have superannuated after long years of service. Many of them lack adequate facilities and manpower and do not have the muscle power to compete with the international players even in India..

The one obvious reason for the lacklustre growth of such organizations is that they suffer from the vicious cycle of inadequate income, which prevent them from equipping themselves adequately and consequently results in low performance . It takes long years of experience to build expertise by the technical consultancy organizations. Unfortunately, many organizations facing financial problems do not survive for long. . More such consultancy organizations have wound up than that have survived in the last several years in India.

The culture of utilizing the services of technical consultants as a matter of priority and paying them reasonably well have still not been well entrenched in the Indian industrial management psyche. Even several large organizations demand ridiculously low service charges, obviously not giving the type of importance and respect that the consultants deserve and not appreciating the type of facilities and expertise that the consultants have to build to provide quality service. As a result, many consultancy organizations have found it extremely difficult to make both ends meet and therefore, have been often forced to take up non consultancy functions also such as trading and liasion services for their survival. When such diversified functions are undertaken, the quality of the consultancy services inevitably suffers.

To excel in the profession, the technical consultancy organizations have to specialize in fields such as market research , technology appraisal, product development etc. and they need strong data base and supporting laboratory and pilot plant facilities to operate at globally competitive level. . Unless they would earn adequately well, it would not be possible to have such supporting facilities.

The Government of India imposing service tax on technical consultancy organizations have further added to their problems by taking away as much as one tenth of their income by way of service tax. This has resulted in a situation that most of the organizations are left with no surplus at all. Further, the financing institutions are very reluctant to extend financial assistance and loan to the consultancy organizations, as they are essentially a brain trust and do not have fixed assets to give security. All such problems have made the technical consultancy profession unattractive as business enterprise for technocrats and investors.

. Unless the focus of the technical consultancy organizations become global and they develop the knowledge and expertise level to operate internationally, the Indian technical consultancy organizations will not be able to serve adequately the Indian and global industrial establishments . Therefore, this implies that the technical consultancy organizations in India should become large sized and develop the expertise to operate in specialized functions at different level which would be possible, only if they would have large investments and substantial order levels.

There are , of course, a number of Design and Detailed engineering organizations operating in India , who are multinational companies or Indian organizations largely in collaboration with international players. But such organizations only provide engineering services and are not involved in providing consultancy services , in the form of advice in project selection, market research , technology appraisal. techno management functions etc

There are immense possibilities for Indian technical consultancy organizations to provide services abroad particularly in developing countries as they have greater expertise with regard to small and medium level projects in comparison to their counterparts in developed countries. But, such opportunities largely remain untapped, as the Indian technical consultancy organizations remain financially weak and they have no resources to spread their wings internationally.

As the consultancy organizations are knowledge based resource centers , they have a very crucial role to play in enabling the Indian industrial establishments to grow at a faster pace For the Indian industries to grow in the competitive global environment and penetrate the international market effectively, they need the services of technical consultancy organizations to provide them data and suggest appropriate strategies based on adequate understanding of the emerging technology and market scenario. Therefore, strengthening the technical consultancy organizations is in the interest of everyone.

The Government of India should immediately conduct a detailed study and analysis of the constraints and problems faced by the Indian technical consultancy profession and work out a strategy to facilitate their improved performance and enable them to operate in a wider sphere. This calls for special incentives to encourage greater investment in the consultancy field.

Before imposing such measures as service tax on technical consultancy organizations, the Government of India should have been more careful and should have taken a deeper look into the conditions in which the technical consultancy organizations function.

Contributed by : Dr.S.Madhavan,
Director,Plant Services, Kellogg Brown & Root (KBR), Inc. Houston, TX, USA

Natural Gas business is the hottest area at the moment because of the impetus of the higher prices and because of the fact that it is a very clean fuel.

The LNG business is now booming because of the attractive natural gas prices.As many countries rapidly increase the domestic and industrial consumption of natural gas there is going to be an increasing thirst for LNG especially from India and China among other countries globally.

Dr Madhavan, talked about the status of the LNG industry at the moment, the technology involved, various plants and facilities that need to be developed to make the LNG "chain" possible, the economics of LNG business and the projections for gas and LNG consumption globally.

The presentation was given at the invitation of the Indian Institute of Chemical Engineers to speak in their meeting of the Chennai chapter on 12 December 2005.

Dr.S.Madhavan has done his B.E.(Hons) in Chemical Engineering from Annamalai University and his M.Tech. in Engineering from IIT, Bombay and his Ph.D (With Honors) in Chemical Engineering from Kansas University,USA. He has been with the Engineering & Construction company Kellogg Brown & Root (KBR) for 33 years based in Houston, Texas,USA. His current function is Director of Plant services with global responsibility for commissioning, startup, operations and maintenance of plants and projects contracted by KBR globally

Dr.Madhavan explained how the hydrogen to carbon ratio of the energy fuels was steadily increasing and the different options available for the effective utilisation of gas.These included distribution by pipe lines; liquefaction and re-gasification; compressed gas (CNG); conversion to liquid hydrocarbons; conversion to methanol; conversion to fertilisers; conversion to electric power.

Looking at the economies of different situations, Dr.Madhavan explained that for gas utilisation within a distance of 2,000 km or about, pipeline could prove beneficial; while beyond this distance, transportation either as LNG or in some other converted liquid form or chemicals, could be considered. According to Dr.Madhavan, if flexibility of end-use is also taken into consideration, in addition to other factors, LNG will prove to be the best option.

The `LNG chain,' he noted, refers to the processing of natural gas near the well-head; piping to the liquefaction plant; the liquefaction plant itself; the shipping of LNG; and the receiving and re-gasification terminals in the consuming countries.

Comparative cost of LNG transport vis-a-vis transport through pipelines
[Costs in US$]

Distance in miles 1,000 2,500 3,000 5,000 8,000
Offshore pipe 1.30 4.00 --- --- ----
Onshore pipe 1.00 2.25 2.70 4.45 ---
LNG 2.00 2.25 2.40 2.95 3.60

Dr.Madhavan opined that the process technology is not a major differentiator, as there is very little difference in efficiencies and the overall project costs.However according to him equipment selection - for example between the gas turbine and/or motor drives; spiral wound vs plate-fin exchangers; fit between selected equipment and desired capacity - can make major difference to the project.

According to him, LNG technology is all about executing complex projects in difficult locations.

Dr.Madhavan also explained with illustrations about the difference in the design concepts of 'double containment tanks' and 'full containment tanks' for storage of LNG.He said that taking advantage of the economy of size, LNG train capacities have been steadily increasing over the years.

Presently, investment on an LNG chain of an economic size of around 3.0 -mmtpa could be in the region of $3.0 to 4.0 bn, split approximately as: treatment & liquefaction plant (2 trains) -$1.3 to 1.8 bn; LNG carriers (a battery of six ships of 127,000-cu.m.each) -$1.3 to 1.5 bn; storage and re-gasification facility -$0.4 to 0.6 bn.

Dr Madhavan also threw some light on the LNG consumption pattern world over and some projections about possible future scenario.According to him, global NG consumption, which was in the region of 42-tcf in 1980, is slated to touch a figure of 150-tcf by 2025.

He pointed out that in the USA alone there are nearly 40 LNG receiving terminals operating and proposed to be set up.He pointed out that in the Atlantic Basin, LNG demand could be in the region of 178-million tonnes per annum by 2015, distributed as Continental Europe , North America and UK .

In the Asia-Pacific region, countries like Japan (70-mmtpa), Korea (40), Taiwan (20), China (20) and India (18) are slated to emerge as the large LNG consuming nations by the year 2015.Even as early as 1985.Japan was consuming around 30-million tonnes per annum.As against this, India is now in the process of constructing just two terminals.

This article discusses the following details :

• Gas utilisation
• The LNG Chain
• LNG Process Technology-Key facts
• Typical natural Gas Composition
• Typical LNG Product specification
• LNG Terminal Flow Diagram
• LNG Train Capacities
• Change in LNG Plant Nameplate Capacity
• Main Cost Items for LNG Plant-Distance comparison
• Results of Economic Model
• LNG Contractors for Liquefactino Plants
• Industry LNG Liquefaction Grassroots EPC Awards 1976-2003
• NG/LNG Market Information
• Global Natural Gas Consumption : 1980-2005
• Regional Increases in Natural Gas Consumption – 2002-2025
• World LNG Production to 2015
• LNG Demand
• Significant Demand growth for emerging LNG Markets
• LNG Plants in Qatar
• Natural Gas Production in Qatar
• LNG Output at Bintulu site, Malaysia

Specification

Product applications

Cyanuric chloride is a very important heterocyclic compound, with selective substitution of the three chlorine atoms, which are coupled with the stable triazine ring

Application Sector

• Crop protection
• Optical Whitener
• Reactive dyes
• UV Stabilisers
• Miscellaneous application such as Flame retardants and Pharmaceuticals

This article also discusses the following aspects in detailed manner :

• Indian Production
• Individual Import details
• Demand supply trends
• Process-Typical process from HCl
• Source of technology
• Global scenario
• Global demand for Cyanuric chloride
• Global manufacturers
• Recommendation

There have been considerable national efforts in recent times to source Natural gas from different parts of the world.

First, there was the proposal to lay a pipeline for import of Natural gas from Middle East. This idea was given up as impracticable. Later on, there was proposal to lay a pipeline for import of Natural gas from Iran and Turkmenistan. This proposal is also going in circles. There have been discussions about sourcing Natural gas from Bangladesh and Myanmar, which are also largely in discussion stage.

Obviously, such earnest efforts to source Natural gas from abroad have been initiated, due to the realisation that India can never become self sufficient by way of indigenous production of Natural gas.

There have been considerable national discussions about the need for building up several LNG terminals in the country for import of LNG for use both as feed stock as well as fuel. While a number of LNG projects have been announced in different states in the country, progress could be achieved only in Gujarat state. The LNG terminal in Kerala has been considerably delayed already with fresh schedule announced in recent time.The plan for LNG terminals in Karnataka and Tamil Nadu have not taken off at all.

Considering the huge investments involved in setting up LNG terminals, there have been views in the country that India should focus in exploiting its massive coal reserves, for use both as fuel and feedstock, instead of extensively depending upon LNG. Many in India feel that the coal resources of the country have not been given its due. Such view is particularly relevant, considering the fact that countries like China and Japan are increasingly working out their future strategies based on coal. Two years ago, China was exporting coal, but today it has become net importer of coal thanks to the booming economy and China’s industrial growth. Japan has closed number of Nuclear power projects and now largely depend upon import of coal for steam generation.

There is now a lively national debate on LNG vs Coal, as the building block for India’s future energy source.

This article further discusses the following details:

• India’s coal demand and availability-Facts and Figures
• Geological resources of Indian coal
• Depth-wise analysis of proved resources
• Extractable reserves
• Distribution of coal resources
• Coal demand
• Availability of coal in 2005-2006
• Countrywise Imports
• Discussions on coal scenario
• Production estimate
• Lignite Deposits
• Production level of Lignite
• Status of Coal bed Methane Project
• Details of Blocks awarded under the first round of CBM (CBM-I)
• Details of 2 Blocks awarded to ONGC-CIL for CBM on Nomination
• Discussions on Coal vs.LNG
• Cost of LNG from Dahej
• Cost of LNG outside Gujarat
• Investment Factors
• Coal vision
• Recommendation

This article contains the following details :

• Application
• Manufacturing Process
• Global Producers
• Demand Drivers
• Demand
• Global Use Pattern
• Future Demand

ECO-BIO FOR WASTEWATER BREAKTHROUGH

A technological breakthrough in wastewater treatment, called Eco-Bio, has been achieved by the Building Research Establishment (BRE) in partnership with the Nimasco Group.

Eco-Bio is based on biocatalysis, a technique for accelerating microbiological activity and the natural decomposition of wastewater contaminants through the addition of natural plant extracts containing nutrients, vitamins, minerals and an active proprietary ingredient, Dakarin.

The technique can be used for the treatment of sewage and odours, landfill leachate, oily wastewaters, industrial effluents and soil bioremediation and brings water quality to international discharge and recycling standards.

ISSUES ON MERCURY CELL CAUSTIC CHLORINE PLANTS IN EUROPE

The use of mercury in chlor-alkali production is being superceded by membranes in Europe.

The use of mercury cells for chlor-alkali production in Europe has fallen to its lowest ever level and is being phased out. As pressures mount to move to a cleaner, more efficient technology, the next few years will pose a difficult decision for some suppliers: convert or close.

Fewer than half of Europe’s chlor-alkali plants are now mercury based far below the 80% levels of 10 to 15 years ago. Mercury accounted for 46% of west European capacity in 2004, ahead of membrane at 37%.

POLYHYDROXY ALKANOATE (PHA) BIOPOLYMERS
THE EFFORTS OF METABOLIX, UK

Biodegradable plastics based on renewable raw materials have the potential to replace traditional polymers in many applications, but they have been slow to catch on due to high production costs and limitations in properties and processability.

Metabolix (Cambridge, MA) claims that its family of polyhydroxyalkanoate (PHA) biopolymers can compete head to head on price and properties against existing products, particularly polyethylene, and could ultimately replace up to 50% of traditional plastics.

GLOBAL EFFORTS TO BOOST COAL USAGE

Predictions that oil and gas could run out in 40 years’ time, creates a great and increasing pressure to find alternative fuels. It is generally thought that renewables will provide only a part of the world’s future electricity needs, so coal with reserves that could last 300 years may become extremely important.

Coal currently produces about 30% of the world’s electricity. At present, China accounts for half of world’s consumption of coal; 4.1 bn tonnes are burnt per year to produce 80% of China’s electricity. However, there is a growing demand in other Asian Economies, which means that the world could be burning 7bn tonnes a year by 2030.

STUDY ON NEED FOR HYDROPROCESSING CAPACITY ADDITIONS

Crude capacity expansions projected for the next two decades obscure the underlying need for vast expansions to global conversion and hydrotreating capacity. Declining crude oil quality is a global phenomenon, as is the trend toward cleaner transportation fuels and the combination is setting the stage for massive construction of downstream refinery units worldwide.

Hart’s Global Refining and Clean Fuels Outlook 2020 reveals that global hydrotreating capacity will have to expand dramatically beyond today’s level.The Outlook was presented at a gathering of attendees at the National Petrochemical & Refiners Association’s Q&A meeting.

STRATEGIES TO LIMIT ACID LOSS IN REFINERIES

Excessive alklylation acid consumption can be an expensive problem, especially for refiners operating sulphuric acid alkylation units.

Concerns about transporting fresh hydrofluoric (HF) acid give operators of those alkylation units an incentive to minimise acid loss.

Top alkylation technology experts speaking at the National Petrochemical & Refiners Association (NPRA) Q&A offered tips to minimise alkylation acid consumption.

20 YEARS ADVANCE ACTION REQUIRED TO HEAD OFF OIL SHORTAGES: FINDING OF THE STUDY

Nobody knows for sure when world crude oil production will reach a “peak,” after which production will continue to decline even in the face of growing worldwide oil demand.

But if the most optimistic “oil peaking” forecasts (between 2020 to 2030) are correct, then now’s the time to start taking dramatic action to ensure robust liquid fuel energy supplies, according to Robert Hirsch, senior energy programme advisor at SAIC.

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