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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, 03 May 12
DRY BULK MARKET REMAINS INACTIVE, POSTING MILD DECREASE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept retreating this week, although at a very low pace, on the back of a lull in demand. The industry's benchmark, th ...
Thursday, 03 May 12
MINERS DEMAND LEGAL CERTAINTY ON PRE-BAN INTERIM POLICY - THE JAKARTA POST
The Jakarta Post reported that, Mining companies represented by the Indonesian Mining Association (IMA) welcomed the government’s plan to impo ...
Thursday, 03 May 12
HANDY EAST COAST INDIA - CHINA AROUND USD 7000 - FEARNLEYS AS
Handy - Stable demand in the Atlantic offered good rates for the tonnage.
USG/Cont was worth USD 17500 and more. Baltic and Black Sea appeared to ...
Wednesday, 02 May 12
CHINA BLACKOUTS HIGHLIGHT PRICING POLICY WEAKNESS - FITCH
Fitch reported that, the likelihood of further electricity blackouts in China this summer underlines Fitch's view of the basic problem f ...
Tuesday, 01 May 12
VIETNAM FEARS IT MAY NOT SEEK COAL SUPPLIES - TBKTSG / VIETNAMNET BRIDGE
TBKTSG / VietNamNet Bridge reported that, with five coal-run thermopower plants under construction, PetroVietnam alone would need 18 million tons of ...
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- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Posco Energy - South Korea
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
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