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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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Monday, 02 August 10
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Saturday, 31 July 10
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Thursday, 29 July 10
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- India Bulls Power Limited - India
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- Tata Chemicals Ltd - India
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- Lanco Infratech Ltd - India
- Economic Council, Georgia
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- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- White Energy Company Limited
- Thiess Contractors Indonesia
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- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Semirara Mining Corp, Philippines
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- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
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- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Minerals Council of Australia
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- Karaikal Port Pvt Ltd - India
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- Bahari Cakrawala Sebuku - Indonesia
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- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
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- Renaissance Capital - South Africa
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- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
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- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Deloitte Consulting - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
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- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
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- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- The University of Queensland
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- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
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- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
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- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
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- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
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- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
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- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
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- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
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- Global Business Power Corporation, Philippines
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- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Iligan Light & Power Inc, Philippines
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