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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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Sunday, 22 January 12
FREIGHT MARKET DROPPED TO THE LOWEST LEVEL SINCE 2008
COALspot.com - "The markets continued to soften almost reaching 2008 levels breaking the 1,000 point mark", said Capt. Reddy of Vistaar Sh ...
Saturday, 21 January 12
ASIAS PREMIER COMPREHENSIVE OPEN CUT MINING CONFERENCE SCHEDULED FOR FEBRUARY 2012
As the only such conference in the region for miners and service providers, IBC Asia’s Open Cut Mine Planning & Operational Excellence con ...
Saturday, 21 January 12
COAL MARKETS CELEBRATES A DECADE OF BRINGING BUYERS & SELLERS TOGETHER
In 2012, IBC Asia’s premier Coal Markets conference series – Asia’s only globally focused coal import, export and supply chain eve ...
Saturday, 21 January 12
SAMIN TAN COMPLETES BUMI PLC TAKEOVER - INSIDER STORIES
Insider Stories reported that, Indonesian coking coal miner PT Borneo Lumbung Energi & Metal Tbk (BORN), that is controlled by stellar businessm ...
Thursday, 19 January 12
SOUTHGOBI RESOURCES SELLS MORE THAN FOUR MILLION TONNES OF COAL IN 2011, 58% MORE THAN 2010
COALspot.com - SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) has successfully complets year 2011 on guidance in terms of coal sales and production.
...
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- Jorong Barutama Greston.PT - Indonesia
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- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
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- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- MS Steel International - UAE
- VISA Power Limited - India
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- Petron Corporation, Philippines
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- PowerSource Philippines DevCo
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- New Zealand Coal & Carbon
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- Aditya Birla Group - India
- ICICI Bank Limited - India
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- Sical Logistics Limited - India
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- Sarangani Energy Corporation, Philippines
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- IEA Clean Coal Centre - UK
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- The University of Queensland
- Indian Oil Corporation Limited
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- Latin American Coal - Colombia
- Indonesian Coal Mining Association
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- Bukit Makmur.PT - Indonesia
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- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
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- CNBM International Corporation - China
- White Energy Company Limited
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- Africa Commodities Group - South Africa
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- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
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- Baramulti Group, Indonesia
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- Malabar Cements Ltd - India
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- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
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- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
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- Merrill Lynch Commodities Europe
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- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
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- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
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- Romanian Commodities Exchange
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- GAC Shipping (India) Pvt Ltd
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- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
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