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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Friday, 27 August 21
THE ECONOMICS OF INDONESIA’S DIESEL POWER PLANT TO GAS CONVERSION PLAN ARE PROBLEMATIC - IEEFA
Deploying new small-scale LNG is an uphill battle for PGN
Indonesian gas is currently in a precarious position, where the government needs to ...
Thursday, 26 August 21
INDIA IMPORTED 17.06 MLN TONNES OF LPG IN 2020; UP 11.5% Y-O-Y
Global LPG trade remained fairly positive in 2020, despite the global economic impact from COVID-19, and surged strongly in the first half of 2021. ...
Thursday, 26 August 21
MARKET INSIGHT - INTERMODAL
24th of August 2021, the Baltic Dry Index reached 4,201, a YTD high and the highest since May 2010.
Cape 5TC daily average @ 51,472
...
Tuesday, 24 August 21
COAL PRICE RALLY TO PRESSURE CHINESE POWER GENCOS’ MARGINS FITCH RATINGS
Fitch Ratings expects the pressure on Chinese power generation companies’ (gencos) profit from the recent coal price surge to weaken their cr ...
Tuesday, 24 August 21
TIGHT POWER SUPPLY IN CHINA AMID STRONG DEMAND, HIGH COAL PRICES - FITCH RATINGS
China experienced tight power supply in 1H21 on stronger than expected power demand as economic activity continued to recover, Fitch Ratings says i ...
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- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- MS Steel International - UAE
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Siam City Cement - Thailand
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
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