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