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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, 06 August 12
3RD ANNUAL INDONESIA POWER
Press Release - 3rd Annual Indonesia Power is Indonesia’s premier power event, where commercial opportunities and new projects are identified. ...
Monday, 06 August 12
COAL EXPORTS COULD ADD $2B TO $6B ANNUALLY TO U.S. ECONOMY - HELLENIC SHIPPING
Business groups backing Pacific Northwest coal export proposals on Thursday lauded a new report that claims increased U.S. coal exports could bring ...
Sunday, 05 August 12
SUB-BIT INDONESIA COAL SWAPS ARE WAY UP
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for September 2012 delivery gain 1.36 percent on Friday (3 August 2012) closing W-o-W but gained& ...
Sunday, 05 August 12
INDONESIA'S ADARO TRIMS PRODUCTION FORECAST, CITES BAD ECONOMY - THE JAKARTA GLOBE
The Jakarta globe reported that, Adaro Energy, the country’s second-largest coal producer, has cut its annual production forecast to between ...
Sunday, 05 August 12
DRY BULK FREIGHT MARKET TO STAY WEAK NEXT COUPLE OF WEEKS - VISTAAR
COALspot.com - The freight market continued to soften further in all segments.
The BDI was down by 8.68 pct closing at 852 points. The cape index ...
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- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
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