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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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Tuesday, 04 September 12
SHIP OWNERS' COMPETITION LEADS TO TANKER FIXTURES BELOW OPERATING COSTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners operating in the VLCC tanker markets are increasingly finding it difficult to obtain even breakeven rates for their vessels, as competit ...
Tuesday, 04 September 12
ORPHEUS SECURES ADDITIONAL SIGNIFICANT KINTAP COAL PROJECT IN SOUTH KALIMANTAN
COALspot.com - Indonesian coal producer, Orpheus Energy (ASX:OEG) has announced that it has secured a 50% equity ownership in an additional tenement ...
Monday, 03 September 12
SHIPOWNERS TO WAIT FOR FURTHER PRICE REDUCTIONS IN THE SECOND HAND VESSEL MARKETS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With September now upon us, shipbrokers are looking towards an interesting winter season, as ship owners are looking to capitalize on more second ha ...
Sunday, 02 September 12
ADAROS COAL ROYALTIES TO THE GOVERNMENT INCREASED BY 10.5 PERCENT Y-O-Y TO US$196.8 MILLION
COALspot.com - PT Adaro Energy Tbk (IDX: ADRO), the second largest power plant coal producer in Indonesia, announced its consolidated auditor-review ...
Saturday, 01 September 12
FALLING PRICES; BLEEDING MINERS
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for October 2012 delivery lost 4.070 percent and 0.422 percent respectively on W-o-W and D- ...
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- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
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