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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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- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- MS Steel International - UAE
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
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