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Wednesday, 02 May 12
CHINA BLACKOUTS HIGHLIGHT PRICING POLICY WEAKNESS - FITCH
 Fitch reported that, the likelihood of further electricity blackouts in China this summer underlines Fitch's view of the basic problem facing thermal electricity generators - that the tariff framework is not sustainable in the long term.
The problem centres on China's thermal or coal-fired plants, which in 2011 represented 72.5% of total electricity production of 4,692.8TWh, and are likely to remain the backbone of electricity generation for the foreseeable future. The problem is not with China's national electricity grid, which is well developed, but rather with the non-viability of the pricing mechanism for the coal-fired generators.
The Chinese thermal generators are unwilling to produce excess electricity in peak periods when their marginal generation costs are above the tariffs the government will allow them to charge the grid companies. Tariff adjustments have not been timely or sufficient despite the rising cost of coal, as the government has prioritised the management of inflation - thereby constraining profitability. The weak economics have also discouraged private-sector investment, while the state-linked thermal generators - Huaneng International ('BB+'/Stable), Datang International ('BB'/Stable), China Power International Development ('BB'/Stable), and Huadian International ('BB-'/Stable) - are now struggling with substantially weakened balance sheets.
Coal input prices for the thermal generators have increased dramatically over the past three years to end-2011, rising by an average of 16% pa. Meanwhile, the Chinese government has only allowed nationwide electricity tariffs to rise once in the last two years, by around 5% for non-residential customers in December 2011. Some tariff increases also occurred in selective provinces in April 2011, but the impact on generators' profitability was limited.
A 5% cap on annual coal price increases was introduced along with the December 2011 electricity tariff revision, but this applied only to contracted coal prices. These capped prices only represent around 30%-40% of the total needs of most thermal generators. Accordingly, large amounts of coal have to be bought on the spot market at substantially higher prices, making excess electricity production an uneconomic proposition. The substantial premium - typically 30% - on spot market prices against the capped contract coal price results in coal producers seeking ways to reduce their contracted sales in favour of spot sales, which is steadily eroding any benefit from the coal price caps.
A longer-term problem, and a potential cause of an eventual structural shortfall in generation capacity, is that limited profit - or losses - from thermal operations have since 2008 led to new capex in the industry being diverted away from thermal and into wind, hydro and vertical integration via coal mine acquisitions. A National Energy Administration (NEA) report dated 30 January 30 2012 confirmed that China's investment in thermal power assets fell again in 2011, by 26%, to CNY105.4bn. This trend, which cannot be reversed quickly due to the typical minimum two-year lead time to build new thermal capacity, is a serious concern given China's continued dependence on coal for its power generation.
The Chinese thermal generators are likely to face sustained weak operating cash flows and negative free cash generation under this heavily regulated environment, a situation which Fitch believes to be unsustainable in light of the continued growth in the Chinese economy. The agency believes that China is looking to introduce price reforms across the energy industries, but achieving a truly cost-reflective tariff regime is likely to take several more years, and will require a favourable inflationary climate. In the meantime, demand will continue to outstrip supply, even if - theoretically - the capacity exists within the generation system.
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Sunday, 16 September 12
GLOBAL LOW DEMAND ; INDONESIA COAL AND CFR SOUTH CHINA COAL SWAPS DIP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 1.345 percent W-O-W on Friday, 14 September 2012, closing but gai ...
Sunday, 16 September 12
THE FREIGHT RATES FROM INDONESIA TO INDIA EXPECTED TO BE STEADY - VISTAAR
COALspot.com - The freight market was mixed with most indices closing positive except for the Panamax index.
The main sentiment seems to be ...
Saturday, 15 September 12
FINANCE MINISTRY OPPOSES TAX INCENTIVE PLAN FOR COAL MINERS - JP
The Jakarta Post reported that, the Finance Ministry has turned down the idea of providing a fiscal incentive to the country’s coal mining ind ...
Friday, 14 September 12
DRY BULK MARKET LOOKS TOWARDS CHINA FOR SOME POSITIVE NEWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market freight rates submerged underwater for a large part of the year, dry bulk owners are looking for some positive enhancement ...
Friday, 14 September 12
GOVT OFFERS CONDITIONAL TAX HOLIDAY TO AILING COAL MINERS - JP
The Jakarta Post, one of the leading English news paper in Indonesia reported that, acknowledging difficulties encountered by coal miners due to a p ...
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- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
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