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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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Wednesday, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
Wednesday, 22 November 23
OBLIGATION. INDONESIA AIMS TO START COLLECTING LEVIES FROM COAL MINERS IN JANUARY - REUTERS
Indonesia plans to start collecting levies from coal miners in January to be used to compensate miners who sell coal to the state utility at lower ...
Tuesday, 21 November 23
INDIAN COAL POWER PLANTS’ CAPACITY UTILISATION WILL IMPROVE TO 65% THIS FISCAL: - CRISIL
Coal-based thermal power units’ plant load factor (PLF) or capacity utilisation will improve to 65 percent in the current fiscal year despite ...
Tuesday, 14 November 23
CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES TRANSFORMATIVE TRANSACTION INCLUDING THE ACQUISITION OF 11 NEWBUILD LNG CARRIERS FOR $3.1 BILLION
Capital Product Partners L.P. announced that it has entered into an umbrella agreement (the “Umbrella Agreement”) with Capital Maritime ...
Tuesday, 14 November 23
COAL INDIA BEATS Q2 PROFIT VIEW ON HIGH POWER DEMAND AMID WEAK MONSOON - REUTERS
Coal India on Friday reported better-than-expected second-quarter profit, helped by high power demand and boosted production amid a weak monsoon.
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- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
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