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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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Friday, 08 June 12
MINISTER DENIES COAL EXPORT TAX PLAN, ENDORSES RESTRICTIONS - THE JAKARTA POST
The Jakarta post, one of the leading english news paper in Indonesia reported that, Energy and Mineral Resources Minister Jero Wacik has denied that ...
Friday, 08 June 12
NO IMMEDIATE IMPACT ON ADARO'S RATING FROM BEP TRANSACTION - FITCH RATINGS
Fitch Ratings has said that PT Adaro Indonesia's (Adaro, 'BB+'/ Stable) ratings are not immediately affected by its parent PT Adaro Energy Tbk's ...
Thursday, 07 June 12
DRY BULK MARKET FALLS FOR 10 STRAIGHT SESSION ON OVERSUPPLY PROBLEMS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A resurgence of oversupply, coupled with national holidays in various parts of the world has contributed to yet another fall of the dry bulk market ...
Thursday, 07 June 12
COAL EXPORT TAX NOT RATIONAL: MINISTER - THE JAKARTA POST
Trade Minister Gita Wirjawan has criticized as irrational the idea to restrict coal exports by imposing an export tax, According to The Jakarta post ...
Thursday, 07 June 12
BY 2022 PLN IS EXPECTED TO BURN AROUND 125 MILLION TONS OF COAL
COALspot.com - Indonesia's state owned electricity company's (PLN) coal consumption is expected to reach 125.7 million tons by 2012.
Nur Pamudj ...
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- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Central Java Power - Indonesia
- Parliament of New Zealand
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- The University of Queensland
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
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