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Friday, 03 August 12
INDIA - LIGHTS OUT! - SALVA
 The Indian power sector hit global headlines this week for all the wrong reasons. Firstly, on Monday, over 350 million people lost power across northern India, including Delhi. The following day, the lights went out again, but this time over 600 million people in 20 of India’s 28 states were affected, with the outages covering range of 3000 kilometers in the northern and eastern regions. The authorities’ response has ranged from blaming states for overdrawing from the grid, to appointing a committee to inquire into the causes of the blackout. However, these latest outages are merely symptomatic of much larger problems in India’s power sector, which has been short of power for years.
In Salva’s view, the problem does not lie within the generation sector – but with its upstream (coal supply and transportation) and downstream (transmission and distribution) counterparts. Since the generation sector was deregulated in FY03-04 to enable private participation, installed generation capacity has almost doubled, growing by 92GW or 85%, at a CAGR of 10.8%. The vast majority of this new capacity is coal-fired, which added another 18GW of new capacity in FY11-12 and a further 4.2GW in Q1’12.
However, this new power generation capacity is not being fully utilised, with plant load factors for coal declining from 79.2% in H1’11 to 75.8% in H1’12 and 72% most recently in June. Over 4.3TWh of coal-fired generation was lost in June alone due to low coal supply with a further 1.4TWh lost because of transmission constraints and unplanned outages. Given these figures, clearly thermal coal supply remains a problem. While domestic coal production has increased in 2012, it has languished in recent years, growing at around 1% (5Mt) between 2008-11, which pales in comparison against annual coal-fired power capacity growth of over 10%. Even when production is strong, which it has been in early 2012 (by Indian standards), transportation of coal remains highly problematic. Indian Railways has not been able to procure wagons in time to boost availability sufficiently. This has resulted in coal shortages at power plants and growth in coal mine stockpiles. Transport capacity remains severely constrained as capacity addition has languished at the altar of populism. Passenger traffic shares the same infrastructure as freight, causing freight such as coal to be given a lower priority.
The Electricity Act of 2003 freed up the generation sector, but the same reforms haven’t yet percolated to the transmission and distribution sectors, which are suffering from the same bottlenecks that existed prior to 2003. Transmission capacity is not being developed at the same pace as generation capacity, while distribution reforms remain a pipe dream. As domestic coal production has not kept pace with demand, power producers have used much costlier imported coal to generate electricity. However, India’s tariff framework is still lagging behind, so the State Electricity Boards require ever increasing financial support from state owned banks and financial institutions. Tariff reform is an immediate requirement. Only that will facilitate the sector’s much needed investment.
What are the implications if this is not done now?
Indian cities are accustomed to power cuts. However, increasing prosperity has increased electricity demand and, coupled with the weak monsoon this year, has caused power demand to spike. Agricultural states like Uttar Pradesh, Haryana and Punjab have increasingly overdrawn power from the grids to feed the agricultural sector (which ironically is not metered as power is free for farmers) and to meet residential demand. The agricultural sector is still dependent upon the monsoon as the irrigation network is not widespread, and the weak monsoon has resulted in farmers pumping groundwater onto their fields. Generally electricity demand is low during the monsoon months (June-September) as the rains reduce temperatures. However, the rains have been weak and hence residential power demand has remained strong. This has been further exacerbated with the additional demand from the agricultural sector. State power distribution companies have not planned in advance to buy additional electricity and have overdrawn power from the grid without additional generation being supplied. This has destabilised the grid and caused it to fail.
The impact of the electricity shortages have been felt by the public at large, with a few incidents of people protesting on the road. However, it hasn’t erupted into widespread unrest - thankfully.
The implications of not carrying out reforms in the transmission and distribution sector are now apparent. Lack of adequate investment in the transmission sector will hobble the impressive generation capacity that has been developed. Lack of commercial reforms in the power distribution sector will not provide the returns or even cover the basic cost of generation. The power sector is already sick and if reforms are not carried out with the seriousness required, India will suffer further setbacks.
Source: Salva
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Thursday, 13 September 12
PANAMAX: THE NEGATIVE TREND, POOR SENTIMENT CONTINUES - FEARNLEYS AS
Handy
Lack of cargoes and a growing list of available ships is causing rates to slip for all Atlantic trades.
The only trade keeping somewhat s ...
Thursday, 13 September 12
FUEL EFFICIENT SHIPS MAY BE MORE EXPENSIVE, BUT THEY MAKE FINANCIAL SENSE SAYS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The latest trend in shipbuilding is the so called "Eco" ship, i.e. ships which offer much better fuel consumption and are more cost-effect ...
Wednesday, 12 September 12
INDIAS COALGATE: TIME FOR A ROOT CANAL
A recent report from India’s Comptroller and Auditor General (CAG) pertaining to the allocation of coal blocks has created a political storm i ...
Tuesday, 11 September 12
CLOUDY AND POLICY RISK INDONESIAN COAL INDUSTRY
COALspot.com - Bahana Securities in its latest coal outlook, commented on the Indonesian coal market, with economic slowdown in the four largest coa ...
Tuesday, 11 September 12
SHIP OWNERS KEEN ON SECOND HAND VESSEL PURCHASES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With most ship owners back from their summer rest, things are starting to pick up again in the second hand vessel market, with more and more deals b ...
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- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
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