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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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Tuesday, 25 January 11
DRY BULK RATES CONTINUED TO TUMBLE LAST WEEK - BRS
With weather-related problems affecting the short-term outlook, and new building deliveries the longer-term picture, dry bulk rates continued to tum ...
Tuesday, 25 January 11
R-POWER TO INVEST $5BN IN INDONESIA - THE TIMES OF INDIA
The Times of India reported that, In what is being seen as one of the largest foreign investments in Indonesia, Reliance Power will infuse $5 billio ...
Monday, 24 January 11
GOVT PROMISES COAL FOR PLN DESPITE PRICE SPIKES - THE JAKARTA POST
The Jakarta Post reported that, the government says state electricity company PT PLN will receive enough coal to fire its power plants, despite pric ...
Monday, 24 January 11
DRY BULK MARKETS DOWNTURN SEES NO RELIEF - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept falling for yet another week, with the industry’s benchmark, the Baltic Dry Index (BDI) losing an additional 4.79 ...
Sunday, 23 January 11
THE AVERAGE CHARTER RATE FOR CAPE SIZE VESSELS WAS AT $ 8,859 PD ALMOST CLOSE TO 2008 LOWS - VISTAAR
COALspot.com - The BDI continues to drop and saw a drop of about 5 pct this week closing at 1,370 points. “ In May 2010 the BDI touched ...
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- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Australian Coal Association
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Sical Logistics Limited - India
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
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