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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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Saturday, 11 August 12
INDONESIAN COAL REFERENCE PRICE HAS LOST 27.78 PERCENT YOY
COALspot.com - Indonesian HBA fell again in August.
The monthly coal reference price for coal sales this month fell 3.32 percent. HBA fell ...
Saturday, 11 August 12
SUB-BIT INDONESIA COAL SWAPS SEEN MOVING IN THE RIGHT DIRECTION
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for September 2012 delivery gain 1.29 percent W-o-W on Friday (10 August 2012) closing but lost 1 ...
Friday, 10 August 12
DRY BULK MARKET DROWNING FROM TONNAGE OVERSUPPLY - HELLENIC SHIPPING
The dry bulk market has been overflowing with new building vessels, despite the fact that demand is more or less (and minus the seasonal factors) ri ...
Thursday, 09 August 12
3RD ANNUAL SHALE GAS
Press Release - With the North American shale gas boom, IBC’s 3rd Annual Shale Gas explores optimal strategies to monetize Asia’s domest ...
Wednesday, 08 August 12
EXPLOITASI AIMS TO RAISE RP 2.7T FOR ACQUISITION - THE JAKARTA POST
The Jakarta Post reported that, publicly listed coal miner PT Exploitasi Energi Indonesia (CNKO) is seeking to raise Rp 2.7 trillion (US$286.2 milli ...
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- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Planning Commission, India
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
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