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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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Thursday, 25 August 11
OPG EXPECTS COAL PRICES TO REMAIN FIRM IN THE SHORT TERM
COALspot.com - Revenue of OPG, the developer and operator of Group Captive power plants in India up 188% to £33.15m and Income from continuing ...
Thursday, 25 August 11
PAITON POWER LOOKING FOR 3.96 MILLION TONS OF COAL
COALspot.com - PT Pembangkit Jawa Bali (PJB) is looking for 3.96 million tons coal with calorific value 4,800 kcal/kg on as received basis. Accordin ...
Tuesday, 23 August 11
ICMA CALLS GOVERNMENT TO REVIEW EXPORT BAN REGULATION
COALspot.com - Chairman of the Indonesian Coal Mining Association (ICMA) Bob Kamandanu asks the government to review the regulation that being draft ...
Tuesday, 23 August 11
ADARO ENERGY ACQUIRES 75% STAKE OF PT MUSTIKA INDAH PERMAI FOR US$ 222.5 MILLION
COALspot.com - PT Alam Tri Abadi, a wholly owned subsidiary of PT Adaro Energy Tbk, signed a share purchase agreement to acquire a 75% stake of PT M ...
Tuesday, 23 August 11
COAL DEMAND IS REMAINED STRONG IN SPITE OF CURRENT GLOBAL ECONOMIC UNCERTAINTY - BUMI
COALspot.com - Indonesia's largest coal producer, PT Bumi Resources, Tbk (BUMI)'s sales revenue has increased to US$1.79 billion (compared with US ...
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- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Australian Coal Association
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- PTC India Limited - India
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
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