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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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Sunday, 10 September 23
CHINA AUGUST COAL IMPORTS OF 44.3 MLN T HIT RECORD - REUTERS
China, the world’s top coal consumer, imported 44.3 million metric tons of the fuel last month, customs data showed, the highest amount in an ...
Tuesday, 22 August 23
CHINA'S COAL PRODUCTION LOGS STEADY GROWTH IN JANUARY-JULY: XINHUA
China’s output of raw coal went up 3.6 percent year on year in the first seven months of this year, official data showed.
The ...
Sunday, 13 August 23
THE COMMODITIES FEED: LNG SUPPLY RISKS LINGER - ING
Energy – OPEC sees deficit over remainder of 2023
Oil prices came under some pressure yesterday with ICE Brent settling a litt ...
Wednesday, 09 August 23
COAL TRADE TO RETURN TO 2019 LEVELS - BALTIC EXCHANGE
The International Energy Agency’s mid-year Coal Market Update for 2023 brings both positive and concerning news for the global coal industry. ...
Sunday, 23 July 23
ANALYSIS-INDIA'S COAL MINING BET STUMBLES AS WARY BANKS WEIGH RISING RISKS - REUTERS
India’s drive to ramp up coal output to meet growing energy demand is faltering due to banks’ reluctance to finance newly auctioned min ...
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- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- MS Steel International - UAE
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- ASAPP Information Group - India
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- The University of Queensland
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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