Thursday, December 06, 2007

Understanding the role of diesel in India.

I had said earlier that diesel was India's lifeline.

Let me put some numbers on it.

India imports 70% of the oil it uses. This is about 100 Million Metric Tonnes (MMT), with crude trading at about $100 per barrel, we get a bill of about $70 Billion.

India consumes about 50 MMT of Diesel.

The Indian Railways and the road transport sector consumes about 80% of that.

Coal accounts for about 30% of the total transport activity.

So basically to move the coal around to our (Thermal Power Plants) TPPs we consume approximately 10 MMT of diesel a year.

That is almost exactly how much the DOD burned during the year 2006 for the operations in Iraq and Afghanistan. The only way to logistically hedge against supply disruptions from KSA/Iraq, is for the US to turn to India for this specifically Jamnagar for things like Diesel and ATF.

Now the question is, what is the size of the US fuel hedge? they are going to come and ask us for 5-10 MMT of heavy oils, then can we really spare that much? at a time when we need to move more coal for our TPPs?

If we don't move more coal to our TPPs, how are we going to make up the short fall due reduced capacity factors on our Nuclear Power Plants?

Ofcourse you all remember that our Nuclear Power Plants are running at lower capacity factors due to anticipated fuel shortages?

Mind you I have left out the impact this could have on other things like pump sets, agriculture related transport etc...

But does even such a simple calculation enter the DCH consciousness?


At 4:59 AM, Anonymous Anonymous said...

Hi M,

There are plants rated 500MW but actually run at 270-350MW because coal is not simply available. (This doesn't include plant factor and other considerations) Now these ain't some TPPs that's far away from our coal-fields, I'm talking about some big thermal projects in Central India. The funny thing is, most of these plants even have the "own Your Own Wagon" scheme if not whole rolling stocks and their own railway yards...
I talked about the underground coal fires in Jharia, the coal mafia and issues like coal/ash handling in an avatar of the Nuke Thread but still the usual suspects continued with their safety in numbers game and DCHism. In a recent DF member meet I listed out other issues about our power sector I can't say publicly (and your point on passenger train freq as a function of coal transport) and why we need the Nuke deal just in case things go belly-up in the M.E. I hope that point was appreciated ....
IMO it's a matter of time before we hit a big energy-deficit boulder on our expressway to "superpowerdom". But even that doesn't make me too gung-ho on the thermal power thing, from what I have seen in my present line of work, construction of new TPPs got to be stopped by 2010-'15. But then what choice do we have....? :(


At 6:32 AM, Blogger maverick said...

Hi T.W.

No one - not even most of the non-DCH junta grasps that rail infrastructure is massively over saturated. We can buy/lease rolling stock from other countries, but we simply do not have the tracks to put them on. All the main routes the so called golden quadrilateal routes are completely filled up, if we cram any more freight trains there we will have serious accidents. It costs way too much to build more track. These people agitating about land acquisitions, should ask around how much trouble it is to clear land around a railline - even land that is legally owned by the Railway!

We can't rapidly decrease the ash content either. All these measures washing etc... require time and energy. We certainly do not have energy, and we may run out of time.

I see the the DCH putting on this show of soverignity in the Nuclear Deal context, but I ask you, is what little soverignity they earn going to last? or is it going to have to be pissed away in market fluctuation some six months down the line?

This safety in number is utter horseshit.

I want to get this point across, we are going to see a slowing of growth, we can probably adjust for that with stronger consumption controls. This is in some sense a manageable energy deficit. All the DCHers should understand first and get ready for it.

But if we see a single fluctuation, will we be able to secure against that? That is a question for all of us, DCH and non-DCH to think very hard about. How do we insulate our internal market from price fluctuations and shocks?

We keep saying instability in the ME. But boss, Jamnagar produces over 30 percent of our heavy oil. A disruption could occur there for a variety of reasons. An earthquake, a Tsunami, take your pick. What do we do then?

We had some $200 Billion USD in cash. Are we going to spend that on refined oil? Assuming ofcourse there is refined oil to buy in the first place.

If the Iranians blow up Abadan - a la Saddam in Kuwait - where are we going to get diesel from? Pakistan?

What besides Kashmir will we have to hand over then?

I am perfectly happy to let Indians feel happy about themselves and India, but people should not get carried away with it.

The positive thinking of the DCH is all good but this obsession with feel-good rubbish is becoming a barrier to objective thinking.

At 6:49 PM, Anonymous PK said...

Couple of DCH questions , is the nuke deal a panacea for all the issues and risks mentioned, in the short term.
If a big energy crisis develops , possibilities of liberating Sind and Baluchistan.
Could you explain how ,handing over of Kashmir , is related to the energy crisis.


At 7:00 AM, Blogger maverick said...

Hi Pk,

The nuclear deal is a way to get some fuel in the short term. It turns out that it also has benificial long term implications but it has a very definete short term purpose.

At the present time America dominates India's *access* to key fuel resources. The Americans do not want India to free up energy resources as that will destabilise their dollar based ponzi scheme. The Americans have their little global chessboard and they don't want us Indians fucking it up.

We don't need to fuck America's little game up. We can pay them off - that is what this deal was a way to pay them off. Everyone knows their whole NPA thing is an extortion racket. The Americans do not give a crap what happens to the world so long as their little game of "world politics" continues. All we have to do is keep clear of their game. If America is on board - then negotiations with the NSG are much easier.

India could push Pakistan into a negotiation process over energy transit. This process will take time. It cannot be expedited without US support. It won't come through in time to head off diesel price spikes.

It was cheap to pay them off because we had a load of dollars sitting around in our banks rotting away. The deal would have enabled us to create a financial loop which would have served as the economic base for enhanced access to nuclear energy technology and materials on a global scale.

Unfortunately because of the way the debate on the issue has shaped up, at the present time, the deal will not go through profitably. We have to forget about this and move on. And yes that means the Americans are going to be angry - and we are going to have to deal with that.

But more importantly - without the deal we have to concieve of a way to meet our immediate energy needs, and get rid of those damn dollars.

Without a meaningful degree of financial security and energy access in the immediate term, all notions of soverignity is are completely fucking pointless.

The DCH and their pied pipers are missing that altogether. Every missile that is fired and submarine that is launched is going straight into their heads.

The DCH need to stop talking about soverignity in abstract "ten years down the line" terms and think about soverignity in a more concrete way - eg. - "a year down the line - how are we going to deal with possible diesel shortages".

What hold true for the DCH holds doubly true for those that seem to have them under their spell.

At 7:05 AM, Blogger maverick said...

Hi Pk,

continued from above.

If you want Pakistan to give you energy transit - that is going to cost you Kashmir - and by that I mean *water* - what happens to the 10 million Kashmiris - I am less concerned about.

Whatever ideological matters surround the conflict in Kashmir, at this point it is a way to keep key water resources in India.

Those water resources are the main bargaining power we have. Tomorrow even if we invade Pakistan and magically take Sindh and Baluchistan without firing losing a single soldier, keeping the energy flow going across Pakistan will require that we use water to keep them in line.

At 8:52 PM, Anonymous Anonymous said...

Hi m,
Aren't you saying that attack on Iran
is on the works and it may happen post india gaining an entry into NSG.

""But more importantly - without the deal we have to concieve of a way to meet our immediate energy needs, and get rid of those damn dollars.""

Also you talk of immediate energy needs? Do you know how long does it take to set up an Nuclear Plant?
Off course we can import fuel (there is a link in DF which talks of 8 new nuclear plants coming up)

on a lighter note why didn't you take a shot at IAS? You already talk like a Babu with facts, figures. No wonder MMS has NDA in circles.

At 10:03 PM, Anonymous Anonymous said...

On the time issue, we CAN put up a nuke plant rated 1 X 1000MW or 2 X 1000MW in the same time (3-4 yrs) it takes to get a 2 X 250MW or even2 X 600MW up n running. How? Here's how...
The whole problem with our coal fired TPPs is the limitation in capacity, all other things being equal. There are coal-fired TG designs of 1400MW but those are too far away on the horizon. The max we are getting/available in the near future is Sasan (740MW) and Yamunanagar (600MW) etc.... and even that's from Glorious Cathay. Once the Boiler-Turbine-Generator is completed, which takes like 1-1.5 yrs (let's put 2-2.5 yrs in the case of a Nuke Reactor), the remaining time required (1.5-2 yrs for Coal TPPs) is for Bulk Handling systems like Coal handling Plant, Ash Handling Plant.... and HDO/LDO complexes and Off-Site Areas like water Pre-Treatment etc. Take off those worrisome issues (which are major problems in O&M even) out of the equation and you can commission a BIGGER plant in even lesser time.

But then, what exactly are our capabilities on "handling" reactor waste once more plants start coming up? I remember Maverick mentioning issues related with that some time ago...


At 1:10 AM, Anonymous Alok_N said...

regarding timelines being discussed, the only known fact is this:

India has wasted one year+ discussing this nuke deal ad nauseum and analysis paralysis has set in like rigor mortis ...

are folks incapable of long term thinking? ... I am beginning to suspect that this is indeed so ... while we have argued like this, China has built the equivalent of 2GW (take 8GW/4 years) ...

when this argument is over, there may be elections which will be full of arguments, just so that new arguments can begin with a new government ...

a good example of endless chatter is the nuke thread on DF ...


India has advanced reprocessing tech for dealing with reactor waste ...

this is yet another pointless argument that is raised at every discussion of nuke power ...

I fail to understand why folks are so concerned about "nuke waste" while merrily releasing MegaTons of carbon into the atmosphere ...

nuke waste has not killed anyone thus far ... what can we say about the oil economy? ... just add up all the oil spills and 3 Mile Island seems like nothing ...

oh well, I don't want to start an argument here ... :)

At 5:50 PM, Blogger maverick said...

Hi Anonymous,

An attack on Iran is likely despite the euphoria over the NIE statement. If a sizable terrorist attack occurs on US troops in Iraq, then the US would attack Iran.

I am talking about fuel needed to keep existing ones running at high capacity factor *NOT* fuel for new reactors.

The DCH have a very weak grasp of detail.

Taking the Russian offer to fuel reactors outside of a US backed negotiation with the NSG would have only pushed us into a single source relationship with Russia.

That completely defeats the aim of the entire "engage the Americans" process we entered into after on July 18th - to create access to the global nuclear technology market via open discourse with the NSG.

The PM knew what he was doing, the DCH has much to learn from him.

You see the DCH is more obsessed with image than realities of the energy market. The PM can't afford such luxuries, unlike the folks who curse him, the PM is accountable to the Indian people.

The DCH will have to learn their lesson the hard way - nothing like a few diesel shortages to teach them valuable lessons of life.

My family didn't approve of any professions besides engineering and medicine so as a young man this was all I was allowed. That said, the IAS was not to my taste, IPS would have been my first choice.


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