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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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Tuesday, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining Corp, Philippines
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
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