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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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Monday, 26 March 12
WEEKLY DRY MARKET OVERVIEW - MARIA BERTZELETOU, HELLENIC SHIPPING
The Baltic Dry Index follows its upward incline for fourth consecutive week by rising to more than 900 points, up by 37% from the bottom low in the ...
Monday, 26 March 12
GOLDEN MINES FY11 REVENUE JUMPS 209% - INSIDER STORIES
Insider Stories reported that, coal miner PT Golden Energy Mines Tbk (GEMS), that is controlled by Sinar Mas Group, recorded a 209% jump in revenue ...
Saturday, 24 March 12
AUSTRALIA'S MINERAL TAX : BENCHMARK FOR OTHER COUNTRIES - SUNIL K KUMBHAT
COALspot.com - Natural resources rich counties like Australia , Indonesia , South Africa , Brazil etc are going through a spectacular resources boom ...
Saturday, 24 March 12
THE AVERAGE CHARTER RATES WAS AT CAPESIZE $ 4,546 PER DAY VS SUPRAMAX / $ 10,819 PER DAY - VISTAAR
COALspot.com - The BDI crossed 900 points this week closing at 908 points up by 3.89 pct. All other sectors were up except for cape index whic ...
Thursday, 22 March 12
ECI-CHINA HANDY RATES ARE AROUND US$ 8000 - FEARNLEYS
Handy
Another positive trend was seen last week with more cargoes entering the market. Skaw-Passero/US Gulf climbed slowly up to USD 3700, while US ...
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- Kobexindo Tractors - Indoneisa
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- Central Electricity Authority - India
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- Metalloyd Limited - United Kingdom
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- Standard Chartered Bank - UAE
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- Alfred C Toepfer International GmbH - Germany
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- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
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- Economic Council, Georgia
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- PTC India Limited - India
- Thiess Contractors Indonesia
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- Price Waterhouse Coopers - Russia
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- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
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- The Treasury - Australian Government
- Goldman Sachs - Singapore
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- Ambuja Cements Ltd - India
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- AsiaOL BioFuels Corp., Philippines
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- MS Steel International - UAE
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- Borneo Indobara - Indonesia
- Planning Commission, India
- Parliament of New Zealand
- Lanco Infratech Ltd - India
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- Indian Energy Exchange, India
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- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
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- Africa Commodities Group - South Africa
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- Chamber of Mines of South Africa
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- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
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- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
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- The University of Queensland
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- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
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- Kumho Petrochemical, South Korea
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