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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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Friday, 13 November 09
API4 IGNORES LOW COAL TRADES - SWISS SINGAPORE
* Jan, Feb S.Africa coal prices hit 12-month highs
* Indian trader says deals done dollars below index
Reuters reported that, the physical coal ...
Thursday, 12 November 09
INDONESIA'S BUMI COAL PRODUCTION TO INCREASE
The sale is predicted to jump 14 percent to 58 million tons.
Viva News reported that, PT Bumi Resources Tbk. (BUMI) projected that the company's ...
Thursday, 12 November 09
INDIA'S BHEL IS IN INDONESIA NOW WITH THE COST EFFECTIVE CFBC BASED BOILER TURBINE PACKAGES
COALspot.com(Indonesia): BHEL, the largest engineering and manufacturing enterprise in India in the energy-related / infrastructure sector, is now f ...
Thursday, 12 November 09
NTPC FARAKKA AND KAHALGAON UNITS SHUT DOWN ON COAL SHORTAGE
Operations at two units each of power major NTPC Ltd’s 1600 MW Farakka and the 2340 MW Kahalgaon stations have ground to a halt due to an acut ...
Thursday, 12 November 09
GANGAVARAM PORT SETS RECORD BY DISCHARGING 80,514 TONNE OF COAL CARGO
Gangavaram Port, the deepest port in the country with water depth of 20 meters, has achieved an unprecedented milestone by discharging 80,514 metric ...
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- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
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- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
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- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
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- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- European Bulk Services B.V. - Netherlands
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- Essar Steel Hazira Ltd - India
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- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
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- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
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- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Posco Energy - South Korea
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
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- Siam City Cement PLC, Thailand
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