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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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Wednesday, 13 January 10
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- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
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