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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, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
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- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Australian Coal Association
- Deloitte Consulting - India
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- PTC India Limited - India
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
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