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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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Wednesday, 29 August 12
COLOMBIA'S MINING BOOM: PART ONE - JOSEPH KIRSCHKE
COALspot.com - Colombia stands before one of the potentially largest, most diversified mining booms in the world. Untold reserves of gold, coal, cop ...
Wednesday, 29 August 12
SECOND HAND VESSELS IN HIGH DEMAND DESPITE SUMMER SEASON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Despite the slow summer season, ship owners appear to be rather keen in acquiring some modern second hand tonnage at "knock-down" prices. ...
Monday, 27 August 12
BUMI BOOKS $322.1 MILLION NET LOSS IN 1H 2012 IN SPITE OF 8.6 PERCENT INCREASE IN SALES REVENUE
PT Bumi Resources Tbk, the single largest coal producer and exporter in Indonesia announces its first half financial report for the ...
Monday, 27 August 12
OVER 200 FOREIGN COMPANIES AND ENERGY MAJORS EXPECTED AT 2ND MOGP SUMMIT IN YANGON
Singapore based CMT and Machinery & Solutions Co. Ltd (M&S) announce that the 2nd MOGP Summit will be held on 3-6 September at the Sedona ho ...
Sunday, 26 August 12
SOUTH AFRICAN COAL OVERVIEW
South Africa's indigenous energy resource base is dominated by coal.
Internationally, coal is the most widely used primary fuel, accounting for ...
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- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Marubeni Corporation - India
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
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