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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, 23 February 10
UAE COMPANY TO ACQUIRE CONTROL OF ALLBOND MAKMUR
The Jakarta globe reported that, Renuka Energy Resources Holding, based in the United Arab Emirates, has signed an agreement to acquire 80 percent o ...
Tuesday, 23 February 10
CIL SHORTLISTS 24 FOREIGN COS FOR JV
India's Economic Times reported that, Coal India has shortlisted 24 foreign firms — six each from the US, Australia, South Africa and Indones ...
Saturday, 20 February 10
THE FREIGHT MARKET CONTINUED TO BE SOFT THIS WEEK - CAPT. REDDY
COALspot.com: The freight market continued to be soft this week as still affect of Chinese new year holidays continue. However the index overall had ...
Friday, 19 February 10
MAKING THE JOINT COOPERATION OF PRIVATE GOVERNMENT IN INDONESIA
COALspot.com - Press Release
1. Revision of the presidential decree 67/2005 has been signed by the President on January 28, 2010 with the public ...
Thursday, 18 February 10
THE INDIAN MARKET IS FIRMING A BIT, DUE TO LACK OF TONNAGE IN THE REGION
HANDY
The BSI still decline as holidays around the world have reduced trading.
...
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- Manunggal Multi Energi - Indonesia
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- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
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- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
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- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
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- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Anglo American - United Kingdom
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- Deloitte Consulting - India
- Australian Coal Association
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- Orica Australia Pty. Ltd.
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- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
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- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
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- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
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- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Bhatia International Limited - India
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
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- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
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- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
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- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- The University of Queensland
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
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- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
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- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
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- Indian Energy Exchange, India
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