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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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Wednesday, 28 July 21
IN THE PHILIPPINES, COAL’S DEMISE MAKES WAY FOR A RENEWABLE ENERGY BOOM - IEEFA
Imported gas lock-in could undermine the economic benefits of a clean energy transition
The Philippines’ energy sector is on t ...
Wednesday, 28 July 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during this first half of the year, we continue to come across surprises and new restrictions which are trembling ...
Saturday, 24 July 21
UNDERSTANDING INDIA'S LATEST PEAK POWER DEMAND RECORD - IEEFA
Ramping up solar will be crucial as peak power demand hits during the day
At around noon on 7 July 2021, India’s instantaneous ...
Wednesday, 21 July 21
MARKET INSIGHT - INTERMODAL
Dry Buk Sales and Purchase activity has heated up during 2021, reaching record high levels during the first half of the year. The increased interes ...
Monday, 19 July 21
CHINA'S COAL OUTPUT UP 6.4 PCT IN H1 - XINHUA
China’s raw coal output climbed 6.4 percent year on year to 1.95 billion tonnes in the first six months of the year, official data showed.
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- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Australian Coal Association
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- MS Steel International - UAE
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
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