Speed leads to crashes - Oman Daily Observer

Push for
Korean
reforms
NORTH Korea's
new leadership is
apparently pushing
for reforms in a bid to
revive its crumbling statedirected
economy, analysts
and a South Korean official
said.
"Our government
is aware of North
Korea's discussion and
consideration of various
changes in the economic
sector since the launch of
its new leadership," Kim
Hyung-Suk, spokesman
for the South's unification
ministry, told reporters.
These were probably
aimed at improving the
people's livelihood, he said,
adding specific details have
not been confirmed.
The extent of the latest
changes was unclear. The
North in 2002 introduced
limited reforms but rolled
them back three years
later, apparently fearful of
loosening the regime's grip.
Washington-based Radio
Free Asia (RFA) said last
Thursday the regime has
held public lectures about
the new system, which
centred on easing tight
controls over output and
letting each production unit
become self-supporting.
Factories or companies
would be given greater
autonomy in management
and set prices of products
by themselves, RFA said.
The state would
distribute food rations
and other materials only
to government, military,
education or health workers.
In agriculture, the regime
would take 70 per cent of
the harvest from collective
farms and farmers would
keep the remaining 30 per
cent, it said.
The official food
distribution system largely
collapsed during the famine
years of the 1990s, and
analysts say it currently
only covers part of the
population in any case.
Private markets sprang
up as people struggled
to survive in the famine
years and have become
increasingly important.
In late 2009 a shock
currency revaluation
wrought havoc with
distribution networks,
aggravating food shortages
and sparking inflation.
The move was widely
seen as a bid by the regime
to clamp down on growing
market activities.
One analyst said the
latest changes indicated that
the North may follow in
China's footsteps. — AFP
By Ramadan al Fatash
VETERAN Algerian
diplomat Lakhdar Brahimi,
noted for roles in
defusing tensions in several
hotspots around the world, is
likely to be picked as the next
United Nations-Arab League
envoy to Syria, diplomats said
yesterday.
An official announcement
of the appointment of the
78-year-old Brahimi is expected
to be made early this
week, diplomats said, speaking
on condition of anonymity
as talks continue. "We are certain
it will be Brahimi," said
one UN diplomat.
"He is the choice of the
UN secretary-general and his
name will be announced next
week as long as he does not
pull out," added another.
Kofi Annan, a former UN
secretary-general, said he is
leaving because of the lack of
international support for his
efforts to end the 17-month
Syria conflict, in which rebels
say more than 20,000 people
have been killed. He is to carry
on working until August 31.
If confirmed for the mission,
Brahimi will replace Annan,
who said last week he was
resigning as an international
emissary to Syria, citing a lack
of support from major world
powers for his plan to end the
12
ANALYSIS/OPINION
OMAN DAILY Observer
SATURDAY, AUGUST 11, 2012
AN employee inside a power cable testing laboratory for insulation at the Kei Industriesin Bhiwadi. — Reuters
Taking no more chances
By Frank Jack Daniel
ASIREN rang out in the cable
factory in northern India when
there was a power blackout
in half the country recently, but its
computer screens didn't even blink as
$180,000 worth of batteries seamlessly
took over the machines winding the
thick coils on the shop floor.
A few moments later, in a back room
of the cavernous plant in the scruffy
Bhiwadi industrial park near New Delhi,
mechanic Gaurav Bhatia fired up a
shipping container-sized diesel generator
that ensured continued electricity.
It was the second time in 36 hours
that power supply to vast swathes of
India was halted.
In factories, offices, apartment
blocks and malls across the north of
the country recently, similar generators
coughed into life, making what were
perhaps the largest blackouts in history
irritating and costly events, but not
catastrophic.
Indian cities and their companies are
well prepared to keep business moving
during power cuts because they always
have to cope with unreliable supplies,
not just during once-in-a-decade
spasms on the grid.
The recent shutdowns were not
routine power rationing, the kind that
is enforced every day in the summer
and forces Kei Industries — one of
India's leading electrical equipment
manufacturers — to generate energy on
site for several hours with rudimentary
engines.
Both times it was a major grid failure.
Three of India's five transmission
conflict in that country.
Brahimi, 78, has already
employed his diplomatic skills
in resolving a string of international
crises.
As an Arab League envoy,
he helped to mediate an end
to the Lebanese civil war between
1989 and 1992. In 1994,
he headed a UN observer mission
to South Africa in the
lead-up to the country's first
multiracial elections.
Brahimi has also been dispatched
on UN peace missions
to Afghanistan, the Democratic
Republic of Congo, Liberia,
Sudan and Haiti.
He was named the UN
special representative for Iraq
in 2004, to support efforts to
form a transitional govern-
Estimates show most of
the Indian companies have
back-up or independent
power supplies, but the
recent blackouts have
proved to be disastrous
grids collapsed, cutting power to states
where some 670 million people live,
more than half of the country's population.
That blackout, one of the world's
worst, followed a similar breakdown
across the north the previous day.
"We have fuel for about 10 hours on
site, but when we heard that (it was a
major failure), we called our boss and
asked for more supplies," said Bhatia,
speaking above the mechanised roar of
cable spinners.
The World Bank estimates that twothirds
of Indian companies have backup
or independent power supplies.
Added to about a third of the 1.2 billion
population that never has electricity,
this means total grid failure in India
is less of a disaster than in the United
States or Europe.
This off-grid system is effective, but
it hits companies' bottom lines and is
a major pollutant. It is so wasteful of
ment in the country a year after
the US-led invasion.
Having served as Algeria's
foreign minister from 1991 to
1993, Brahimi is not surprised
by the popular uprisings
sweeping over the Arab region
that have come to be known as
the Arab Spring.
In a June interview with the
Kuwaiti newspaper Al Seyassah,
Brahimi was cautiously
optimistic about ending the
conflict in Syria.
"I am optimistic that there
can be a solution in Syria. But
I am not optimistic that this
solution will come at an inexpensive
price," he told Al Seyassah.
"I am afraid this solution
could be long and costly."
Brahimi is a member of
The Elders, an independent
group of world dignitaries set
up in 2007 to promote peace
and human rights.
He visited Syria in 2010 as
part of an Elders peace tour
that also took him to Egypt,
Gaza and Jordan.
Annan and UN Secretary-
General Ban Ki-Moon have
made it clear that they believe
divisions among the major
powers on the UN Security
Council undermined the Annan
plan.
"I think there are different
models for what an envoy
might look like, what kind
of background, what kind of
role," US Ambassador Susan
Rice said last Thursday without
mentioning who Annan's
imported oil that the 10 per cent shortfall
in grid power at peak hours is a significant
contributor to a yawning trade
deficit.
"We cannot rely on diesel to serve
the needs of day-to-day operations of
small, medium and large businesses,
it will drain this country and we will
find ourselves back in 1991," said Amit
Sinha of management consultant Bain
& Co's utilities practice in India. He
was referring to the year when India
almost ran out of foreign exchange
reserves because of a balance of payments
crisis.
Diesel demand jumped during the
power cuts by as much as 25 per cent
in some states, according to state-run
refiner Bharat Petroleum Corp.
The Indian captive power producers
association estimates about 15 per cent
of the country's 205,000 MW generation
capacity is from on-site plants of 1
replacement might be.
"We are open-minded
about that. I think we have
to be realistic that it is a very
difficult job, and Annan did it
admirably and found himself
understandably frustrated at
the end," Rice added.
A UN diplomat, speaking
on condition of anonymity,
said the Security Council now
has to decide whether to stick
MW or over, including coal, diesel and
other sources. Bain estimates another
40,000 MW comes from small back-up
generators.
On a normal day, consumers on the
periphery of Delhi can expect between
2 and 6 hours without mains electricity,
time when they rely on diesel-fired
back-up systems to generate power at
twice the cost of mains power.
Kei Industries' Chairman Anil Gupta
feels lucky. He suffers cuts just four
hours a day and only in the summer
months when the Rajasthan state electricity
board gives priority to irrigating
farms. He says the board is courteous
enough to warn the industrial estate by
e-mail before cutting supplies.
"Effectively it is rationing," said
Gupta, who estimates his company
would grow 5 per cent more each year
with regular power.
The 44-year-old company can take
no chances. A few seconds' hiccup to
the 24-hour-a-day extrusion process
could mean kilometres of copper cable
being scrapped and five hours of shutdown.
Fluctuations cause bumps on the
cable's insulation.
So they have nine back-up diesel
motors generating 7.5 MW of power on
site and have invested in uninterruptible
power supply (UPS) technology
— banks of high-maintenance batteries
connected to computers that ensure
power is not lost for even a fraction of
a second. They pass the running costs
on to customers.
"It effects our cost competitiveness,"
Gupta said. "We slip on deliveries,
manpower costs, wasted labour and
idle machines."
with Annan's plan.
"For the moment it is all we
have, but that does not mean
that it cannot be reviewed.
There are parts now that are
redundant. There could be
a new version with a new
name," the diplomat said. "All
these elements are now being
discussed," he added.
The badly divided Security
Council powers are also dis-
Food inflation
to hit budgets
By Ed Stoddard
FOOD inflation
is taking hold in
southern Africa,
putting pressure on some
state budgets and making
it hard for central banks to
loosen monetary policy in
the hunt for growth and jobs.
US drought has driven
corn prices to historic
peaks, and maize and wheat
futures in South Africa, the
continent's biggest producer,
are at or near record
highs, raising the stakes
for governments such as
Mozambique that subsidise
the cost of basic food.
The price pressures
constrain central banks in
the region, notably in South
Africa, which is feeling
the pinch from economic
stagnation in the euro zone, a
major trading partner.
Already drawn to
the region by attractive
but waning bond yields,
foreigners may choose to
pile in in greater numbers
if bubbling inflation
contributes to higher returns.
Politicians, too, will
be taking note, given the
relative size of spending
on food in the average
household's budget and the
potential for hungry masses
to take to the streets, as
happened two years ago in
Mozambique.
Compared with the
food price crunch of 2008,
headline inflation is still
moderate, but looks unlikely
to stay that way, especially
as the price of corn is felt
across the food chain in
southern Africa, one of the
few regions where the crop
is mostly grown for human
consumption instead of
livestock.
In South Africa, the
continent's biggest economy,
inflation was 5.5 per cent
in June compared to 11.6
per cent at the same point in
2008. It accelerated to 13.6
per cent in August that year.
In Zambia, inflation
ended 2008 at almost 17
per cent but is currently 6.2
per cent, a trend mirrored
elsewhere in the region.
South African inflation
is not seen racing to 13 per
cent next year but pressure
from food prices — which
account for 14 per cent of the
inflation basket — are seen
remaining in place.
Local wheat prices, for
example, are sizzling with
the December contract
hitting record highs in
cussing the future of the UN
Supervision Mission in Syria
(UNSMIS) — the unarmed
observers who were meant to
monitor the implementation of
Annan's peace plan.
A final decision is expected
at a Security Council meeting
on Thursday.
The original 300 military
observers have been cut to less
than 150 because of the wors-
July. There is a strong-nine
month tie lag between South
African consumer inflation
and domestic wheat futures.
Inflation pressures 9
months hence could have
wide consequences as mine
workers and platinum, gold
and coal bosses will start
sitting down then to hammer
out new wage deals. This in
turn could keep the pedal on
overall prices in the economy
if the settlements far exceed
inflation.
Even if grain futures
suddenly fall back to earth,
the prices consumers pay in
South Africa and elsewhere
in the region may not follow
suit because of ballooning
input costs.
According to Mike
Schussler, director of
economists.co.za, South
African seed prices have
been rising at almost 18 per
cent per year since 1999,
almost triple the average
inflation rate over the same
period, because there are so
few distributors.
"Regionally I think food
inflation is likely to be higher
for the next 18 months to two
years," Schussler said.
"I think the whole costs
base here in southern Africa
is under pressure as diverse
costs such as rail fees and
port fees and seeds all are
increasing above the rate of
inflation."
With inputs so high,
commercial and peasant
farmers alike will have no
incentives to plant big crops
if global grain futures do
cool off and domestic prices
fall with them. This in turn
could push domestic prices
back up.
And in the longer run,
the outlook for regional food
prices can only be skyward
because of demography,
which will lift demand, and
also possibly climate change,
which may hit supply if
events such as the current US
drought become frequent.
Take Zambia and Malawi.
Both countries have been
reaping bumper harvests
in recent years, helping to
contain inflation.
Zambia needs around
2.5 million tonnes of maize
for human consumption and
output has been topping that.
The 2010/2011 season saw a
record crop of over 3 million
tonnes.
But this 500,000-tonne
surplus could get snapped
up by population growth if
harvests don't continue to
grow.
Algerian troubleshooter likely Syria envoy
If confirmed for the mission,
Brahimi will replace Kofi Annan,
who said last week he was resigning
as an international emissary to
Syria, citing lack of support from
major world powers for his plan to
end the conflict in the country
AFRICAN WOES
LAKHDAR Brahimi is expected to be named to replace Kofi Annan as the special envoy for Syria. — Reuters
ening violence. They are still
carrying out limited patrols
but most of their work has
now been suspended.
The Security Council gave
it a "final" 30-day mandate in
a resolution passed last month.
Russia, Assad's key ally, says
it wants UNSMIS to remain.
Western nations say it is too
dangerous to keep the observers
there.