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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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Saturday, 08 May 21
LNG-TO-POWER INVESTORS IN THE PHILIPPINES RISK EXPOSURE TO $14 BILLION IN STRANDED ASSETS - IEEFA
High regulatory and financial uncertainty in the Philippines market
The race to develop liquified natural gas (LNG) facilities in th ...
Saturday, 08 May 21
THE COAL-TO-RENEWABLES TRANSITION TAKES OFF - IEEFA
Pre-Biden changes underscore coming 10-year wave of coal plant retirements
The traditional S-curve growth exhibited by disruptive te ...
Friday, 07 May 21
CHINA'S TOTAL COAL IMPORTS FOR 2020 REACHED A VOLUME OF 304 MILLION TONS - ASSOCARBONI
Our benchmarks, manufacturing Countries like China, Germany, Japan, India, South Korea and Taiwan will continue to use a mix of coal and nuclear to ...
Friday, 07 May 21
SEABORNE WORLD COAL TRADE CLOSED 2020 IN NEGATIVE - ASSOCARBONI
Coal confirmed its leadership as leading fuel for electricity generation also in 2020, accounting for 38% of overall production. For the first time ...
Friday, 07 May 21
INDONESIA'S THERMAL COAL EXPORTS IN 2020 DECREASED BY 13%; INDIA REMAINED THE TOP DESTINATION FOR INDONESIAN COAL - ASSOCARBONI
An increase in seaborne trade is forecast for 2022, driven by markets in Southeast Asia, where growing demand for coal from Bangladesh, the Philipp ...
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- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
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