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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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- GMR Energy Limited - India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- Parliament of New Zealand
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- The University of Queensland
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Bhatia International Limited - India
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
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