FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

Latin America: Investor News Letter 18 January 2013

Mexican Peso Slides on Carstens Hint at Interest-Rate ReductionMexico’s peso fell the most in four weeks after central bankers signaled that a further slowdown in inflation could prompt them to lower interest rates.
Nieto seeks to open Mexican energy sector
Los Tres Amigos: Positioning Your Portfolio In Mexican Peso Denominated Deb
Most U.S. funds missed Mexico gains, Brazil drop in 2012
Japanese investments in Mexico steady
Region completes work on international infrastructure project with Mexico

Brazil’s Real Declines on Inflow Concern; Swap Rates Climb
Brazil: Daylight piracy
“SQUEEGEE merchants of the seas”: that is the nickname shipping companies have bestowed on the pilots who guide ships into Brazilian ports. Their legal monopoly and unregulated fees place them among the country’s highest earners: 150,000 reais ($73,500) a month, estimates the shipowners’ association. It costs twice the OECD average to import a container to Brazil, says the World Bank—and since that excludes bribes and fees for go-betweens, the true figure is surely greater.
Brazil Seeks Private Partners to Operate Rio de Janeiro, Belo Horizonte Airports
Brazil announces regional airport infrastructure investment plans
Brazil aviation faces turbulence after rapid ascent
Brazil ports starved of investment, buried in red tape-group
Guyana, Brazil sign on to infrastructure plan
Brazilian municipality of São Bernardo do Campo to improve sustainable urban mobility with loan from IDB

Latin America
Argentina: Tax & Estate Planning
Argentina rapidly changing oil/gas industry levies to attract foreign investment
Bolivia takes over Spanish-owned Iberdrola energy suppliers
Colombia: ANI to launch four new public infrastructure concessions valued at US$1.95bn
Colombian Peso Advances on Foreign Investment Outlook
Chile: First Solar Stakes Claim in Latin America
Peru’s investment opportunities attracts Qatar’s firms Peru: Infrastructure gap put at $88bn
Peru-based AFPs invest over US$3.5bln in infrastructure
Cement Industry Figures In Peru: Btg Pactual Begins Coverage Of Cpac With A Buy Recommendation
Peru to invest over US$701mln in access infrastructure projects
Peru: Ezentis shifts focus to Latin America, helped by $64M Telefónica Peru contract
Peruvian entrepreneurs expect investment to continue growing in 2013
Venezuela: What Hugo Chavez’s Illness Means for Venezuelan Mining

Latin America and Caribbean PhotoVoltaic Demand Growing 45% Annually Out To 2017 
Latin American ports record strong performance in 2012
South America: A Powerhouse, Not a Circus
10 Latin American startups to look out for in 2013

Filed under: Argentina, Brazil, Chile, Colombia, Energy & Environment, Japan, Latin America, Mexico, News, Peru, Risk Management, Venezuela, , , , , , , , , , , , , , , , , , , , , , ,

Latin America: Investor News Letter 19.October 2012


Elektra to offer No-Fee Banking and Long Term loans to US low income population
Billionaire Ricardo Salinas said he wants to offer no-fee banking deposits and longer-term loans to low-income U.S. consumers, aiming to export his Mexico business model, successful in 8 Latin American countries to the world’s biggest economy.

Mexico’s market shines as reforms, confidence take hold
NYSE Technologies, Bolsa Mexicana and ATG build Mexican trading infrastructure
Slim-backed Mexican firm plans IPO, new cement company
Alsea to invest $110 million in Mexico, Argentina Starbucks cafes
Mexico passes law to combat cartel money laundering


Itau Sinks as Rousseff Plan Hurts Bank Profits: Corporate Brazil

Brazil’s push to drive down consumer borrowing costs is eroding the value of its biggest banks.

Brazil wants to restrict strikes in public sector
Monsanto suspends collection of royalties in Brazil following state court ruling
Brazil M&A hits five-year low on turmoil, state intervention
Brazil and South Africa Form Partnership On Future Investment Promotion Initiatives
Brazil’s Water Sector Benefits From Investment Ahead of World Cup, Olympics

Latin America

Cencosud of Chile to Acquire Carrefour Colombia Division

Cencosud SA agreed to buy Carrefour SA’s Colombian unit for 2 billion euros ($2.6 billion) as it taps rising consumer spending in Latin America and the world’s second-largest retailer retreats from markets it can’t dominate.

Venezuela/Paraguay rift spoils Brazil’s plans for a ‘normal’ Mercosur summit
Singapore, the fastest growing market for Latin America
CAF Encourages Singapore to Invest in Latin America
Cuba Praises China-Latin America Ties
Latin America can produce double-digit investment returns over next decade
Arab and Latin American leaders agree to investment bank
LatAm’s Largest Solar Power Plant  in Peru receiving 40 MW of Solar PV Modules from China
Arab and LatAm leaders agree to investment bank
Peru central bank could allow more pension funds invested abroad
Latin American Ratings Strong Enough to Weather a Commodity-Cycle Downturn
Latin American gold rush brings riches, conflict
Latin lithium output mired in controversy

Source: Various 19.10.2012

Filed under: Argentina, Banking, Brazil, Chile, China, Colombia, Energy & Environment, Mexico, Peru, Singapore, Venezuela, , , , , , , , , , , , , , , , , , , , , , ,

Risk Management – Solar Storms: Protecting Your Operations Against the Sun’s ‘Dark Side’

Recent scientific information indicates that an extreme solar storm cycle activity producing Geomagnetically-Induced Currents (GIC) is predicted to peak again in 2012. Some scientists are warning that the GIC from sunspots and solar flares could cause significant damage to the electrical grid, telecommunication and other devices.

Compared to disruption of the electrical grid from natural hazards and other sources, GIC related damage and disruption to the power distribution grid has the potential to have a very broad footprint across a large region for an extended period with possible cascading societal and economic impact.

On the other hand, this 2012 prediction could be a rather benign “non-event” similar to Y2K. Even if 2012 is a non-event, the threat of solar storms and associated space weather risks are rare but real and should not be ignored. Such an event does not have any precedence for comparison for the potential severity of impact. It can be considered an unrecognized catastrophic risk due to our increased reliance on technology today.

This paper provides background on the hazards associated with solar storms based on a review of available information from a variety of reliable resources and explores potential loss scenarios from Geomagnetically-Induced Currents (GIC) associated with solar storms activity.

Read full article here: Zurich 2010 – Protecting your Operations from Solar Storm

Read Full article here: Swiss Re 2000 – Space Weather Hazard to the Earth

Source: Zurich Service Corporation, 08.04.2010 by  A.V. Riswadkar and Buddy Dobbins, Risk Engineering,     Swiss Re, 2000 by Rene Favre, Risto Pirjola, Frank Jansen

Filed under: Energy & Environment, Risk Management, , , , , , , , , , ,

Solar and Wind Power Pricing in China

Government planners are trying to set a benchmark price for solar power, but the industry is resisting. Will market forces prevail?

(Caijing Magazine) In a bid to drive down solar energy costs, the National Development and Reform Commission (NDRC) is preparing to set a lowball price benchmark for major solar power plants.

A source close to the NDRC, the government’s chief economic planning agency, told Caijing that a draft benchmark price plan for large, on-grid solar plants was completed in early October and would be discussed at the agency’s highest level soon.

Nevertheless, controversies in the industry over benchmark pricing could force additional changes before the plan is formally released.

Pricing is considered a crucial factor for this budding branch of the renewable energy industry as it helps potential investors calculate return expectations while driving power company and industry supplier decisions.

A 1.09 yuan per kilowatt hour price set by the government through a supplier-distributor bidding process in Gansu Province in March may have been too low for many solar power producers to match in the future ( 1 yuan = 0.14 USD)

But according to NDRC’s original plan, the 1.09 yuan price – the lowest in the young industry’s history — would be used to set the future industry benchmark. The price was set for the Dunhuang 10 megawatt photovoltaic (PV) power project. Approved prices for four, earlier solar projects averaged 4 yuan per kwh.

“Policy for on-grid electricity decides the fate of power generation companies,” said a source at a Dunhuang power company. “If 1.09 yuan per kilowatt hour is set as the benchmark price, the majority of photovoltaic enterprises will be unable to achieve profitability.”

Instead of using a lowest bid as a yardstick – a practice that’s proven successful for setting wind power prices — solar energy firms are advocating a system that sets prices according to costs.

NDRC’s latest thinking is that setting a benchmark price of 1.09 yuan would pressure upstream solar producers to cut costs of raw materials needed for a batch of new solar projects. This would work toward achieving the long-term goal of an on-grid solar power price that’s below 1 yuan per kwh, which in turn would affect the entire solar industry.

‘Proper’ Benchmark

Before the Gansu price was determined, NDRC’s Pricing Department was more inclined to set a benchmark based on cost analysis. According to the original department plan, the benchmark price for PV electricity initially would have been set at 1.20 yuan per kwh. Further discussions led to a call for prices between 1.10 and 1.20 yuan.

“The greatest point of controversy lies in how the benchmark price will be decided,” a source close to NDRC told Caijing.

Zhang Guobao, deputy director of NDRC and director of the National Energy Bureau, introduced in 2003 a system for setting wind power prices through competition. The government would pick a relatively large wind-power plant and compile area meteorological data for potential investors, which would then calculate and offer bids.

Earlier this year, Zhang re-emphasized the importance of this pricing mechanism, saying whether a product’s price is reasonable impacts development of the entire industry linked to the product.

“Practice proves that the wind power pricing mechanism we have been using is correct,” Zhang said. “Whether investors or grids, they all found a fair price.”

Zhang said most wind power is distributed at between 0.5 yuan and 0.6 yuan per kwh. And as the scale of wind power and turbine manufacturing increases, stand-alone costs are decreasing.

On the basis of wind power tenders, the NDRC set moderate prices through bidding in various regions and then set local benchmarks.

Yet in July, NDRC said wind power prices would no longer be set by tender pricing but through a fixed, regional benchmark system. Based on wind levels and construction requirements, NDRC divided the country into four wind energy resource areas with corresponding wind power benchmarks for on-grid pricing of 0.51 yuan, 0.54 yuan, 0.58 yuan and 0.61 yuan per kwh.

In early August, NDRC said measures were being promoted to reform on-grid, retail and other types of prices for electricity. Benchmark prices for renewable energy subsequently drew significant attention. Because of the correlation between wind and solar power, industry insiders sharpened their focus on solar benchmark prices.

“New policies for on-grid energy prices significantly impact the industry,” Han Xiaoping, director of China Energy Network Information, told Caijing. A fixed price for on-grid wind power fixes expectations for investors, Han explained, and PV companies are similarly affected.

Vying for Price Power

Wind power has been the renewable energy focus for major domestic power groups in China. Solar projects have been considered too expensive.

Internationally, government subsidies are being used to spur the solar industry. But Zhang supports the use of market forces to determine prices.

“In the initial stages of development of an industry, the government can use financial subsidies to offset the high price of renewable energy sources,” Zhang said. “But as the scale increases, subsidies are not the only option.

“Market forces should determine the proper price and guide development of the industry.”

China has not ignored the subsidy approach, however. Early this year, the government launched the Solar Roofs Plan, which offers subsidies for solar architecture demonstration projects. China is also considering two plans including the Golden Sun Project to support the use of PV technology.

But officials say China’s subsidy options are limited.

“China’s financial situation makes it difficult to introduce subsidies on a large scale,” said an expert at the China Electricity Council (CEC). “Reducing the cost of solar energy through market price competition may be a more realistic option.”

NDRC’s Pricing Division proposal to use cost analysis for benchmark pricing could be a way to adjust the industry to China’s unique circumstances. Solar power plants would not use the resource classification approach to set prices, but would develop a unified benchmark price in areas with the right resource levels.

An NDRC cost analysis of solar power generation components, design, construction and installation, ancillary facilities and maintenance pointed to a proper benchmark price of 1.20 yuan per kwh. But Bureau of Energy officials said the difference between cost-based electricity and tender prices were too great, prompting a scaling back to the proposed level between 1.10 yuan and 1.20 yuan per kwh.

A source at one of the five power generating groups participating in bidding for the Dunhuang project said the 1.09 yuan price is currently the bottom line for on-grid PV. For most businesses, though, this price is too low. As a result, most PV photovoltaic companies currently prefer cost-based price setting.

Many industry experts say on-grid solar prices are not the most important issue facing the industry. Behind the proposed 1.20 yuan on-grid electricity price is a hefty serving of government support related to a chess game being played between market forces and central planning.

“The government wants to control the pricing of PV power generation services, so they need to redefine pricing from a cost-based perspective,” a CEC expert said.

Source: Cajing, 29.10.2009 by staff reporter Li Qiyan

Filed under: Asia, China, Energy & Environment, News, , , , , ,