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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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Wednesday, 14 March 12
GLOBAL THERMAL TRADE FLOW CHANGES WILL ENSURE SECURITY OF THERMAL COAL SUPPLY, ALBEIT AT A HIGH PRICE - WOOD MACKENZIE
Wood Mackenzie Says Global Thermal Trade Flow Changes Will Ensure Security of Thermal Coal Supply, Albeit At a High Price Seaborne thermal demand by ...
Wednesday, 14 March 12
COKAL TAKES ANOTHER STEP IN DEVELOPING INFRASTRUCTURE TO FACILITATE METALLURGICAL COAL PRODUCTION
Global coal group, Cokal Limited (ASX-CKA), has signed Memorandums of Understanding (MoU’s) to develop two river ports and two small scale coa ...
Tuesday, 13 March 12
CLARIFICATION OF GR 24 OF 2012 REQUIRING DIVESTMENT OF FOREIGN OWNERSHIP OVER TIME
ASX Announcement
Global metallurgical coal group, Cokal Limited (ASX-CKA), is responding to the recent announcement of the Indonesian Ministry of ...
Tuesday, 13 March 12
EUROPEAN COAL CONTANGO: FURTHER STEEPNESS REQUIRED TO MAKE LARGE SCALE PHYSICAL TIME SPREAD ARBITRAGE MORE ATTRACTIVE - MISWIN MAHESH, BARCLAYS CAPITAL
COALspot.com - "With the contango between the Y+1 and M+1 ARA delivered contract now averaging above the $14/t level, there is an increasing in ...
Monday, 12 March 12
DELTA DUNIA 1M OVERBURDEN DROPS 3.1% - INSIDER STORIES
Insider Stories reported that, Indonesia's second largest coal mining contractor PT Delta Dunia Makmur Tbk (DOID) reported a 25 million bank ...
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- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- PTC India Limited - India
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Minerals Council of Australia
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
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