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