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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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Monday, 20 August 12
CHINESE COAL SWAPS RISE, INDONESIAN COAL CONTRACTS SOFT
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for October 2012 delivery lost -2.05 percent W-o-W on Friday (17 August 2012) closing but gained ...
Saturday, 18 August 12
BULK FREIGHT MARKETS CONTINUED THEIR DECLINE IN LINE WITH WEAK DEMAND - VISTAAR
COALspot.com - This week also the indices fell on all segments with BDI touching lowest in almost 3 years.
The BDI closed at 714 points down by 7 ...
Thursday, 16 August 12
PUBLIC PRIVATE PARTNERSHIPS CONFERENCE 2012
Press Release - Asia’s Premier Public Private Partnerships Conference 2012 will showcase commercial opportunities for investors and developers ...
Wednesday, 15 August 12
UT GENERATED RP 3.09 TRILLION NET INCOME
COALspot.com - As of June 2012 Indonesia’s heavy equipment market grew 14%, from 8,448 units to 9,618 units (based on UT’s internal mark ...
Tuesday, 14 August 12
SAKARI ENTERED INTO JV IN CAMBODIA TO EXPLORE COAL OPPORTUNITIES
COALspot.com - Sakari joints hands with The Royal Group of Companies in Cambodia to explore and develop coal opportunities throughout the country.
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- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Central Electricity Authority - India
- PTC India Limited - India
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
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