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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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Thursday, 22 December 22
RUSSIAN OIL EXPORTS CRATER BY 54% IN THE FIRST FULL WEEK OF THE EU'S EMBARGO AMID A SHORTAGE OF TANKERS WILLING TO CARRY CARGOES - BUSINESS INSIDER
Since the European Union imposed its seaborne crude sanctions, Russian oil exports have tumbled by more than half, according to data compiled by Bl ...
Thursday, 22 December 22
CHINA TIGHTENS VERIFICATION OF SHIPS’ ENERGY CONSUMPTION DATA - GARD
From 22 December 2022, ships trading to Chinese ports must record their energy consumption data in accordance with the requirements of their Ship E ...
Thursday, 22 December 22
AN OVERVIEW OF THE LNG MARKET - VESSELSVALUE
LNG values have continued to strengthen, spurred by skyrocketing earnings that have surpassed last year’s record breaking peaks. In November, ...
Thursday, 22 December 22
COKING COAL SLUMPS AS TALKS ON AUSTRALIA-CHINA TRADE RIFT LOOM - REUTERS
Chinese coking coal futures dropped more than 3 per cent on Tuesday (Dec 20), extending losses, as supply of the steelmaking input might increase i ...
Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited ...
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Showing 161 to 165 news of total 6871 |
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- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- The University of Queensland
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- MS Steel International - UAE
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
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