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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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Friday, 08 February 13
NORTH P&I CLUB WARNS OF LIQUEFACTION RISK FOR BAUXITE CARGOES
The ‘A’ rated 170 million GT North P&I club has warned shipowners carrying bauxite aluminium ore cargoes that they have the potentia ...
Thursday, 07 February 13
CHINA NDRC APPROVED 10 BILLION YUAN POWER GENERATION PROJECTS
NDRC of China currently announced that some of power grid and power station in Jiangxu, Sichuan and Anhui Province would be newly constructed or ext ...
Thursday, 07 February 13
CAPESIZE : MORE ACTIVE WEEK IN THE PACIFIC - FEARNLEYS AS
Handy
The Atlantic market remained stable with no significant movement in rates. Rates from USG to FEast were around USD 18k and Black Sea to Feast ...
Thursday, 07 February 13
WEAK STEEL MARKET MEANS IRON ORE RALLY LIKELY TO END SOON - FITCH
The sharp rebound in iron ore prices over the last couple of months will hurt margins at non-integrated steel producers in the first quarter of 2013 ...
Tuesday, 05 February 13
THE SHIPPING SECTOR IS " NAVIGATING IN STORMY WATERS" - PWC
The vulnerabilities of the global economy have been exposed and have more than played their part in making 2011 one of the worst years of shipping i ...
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- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Australian Coal Association
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Planning Commission, India
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
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