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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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Monday, 10 August 09
POLICY HURDLES DELAY NALCO'S U$$ 4.166 BILLION OVERSEAS PROJECTS
National Aluminium Company Ltd's (NALCO) greenfield projects in overseas markets like Indonesia and Iran are in limbo because of political
...
Monday, 10 August 09
SAIL, TATA STEEL TO REDUCE COAL IMPORTS BY PARADIP PORT
World Shipping News reported that, Steel Authority of India Ltd (SAIL) and Tata Steel have scaled down coal imports through Paradip Port, hit by pre ...
Monday, 10 August 09
NTPC LIKELY TO SET UP POWER PLANTS IN NIGERIA AND SRILANKA
Economic time reported that, National Thermal Power Corporation Limited (NTPC), country's largest power utility, is likely to set up power plants i ...
Monday, 10 August 09
VINACOMIN TO SELL COAL AT MARKET PRICES TO DOMESTIC USERS
VNBusinessNews.com - Reuters reported that Vietnamese government has agreed to let coal monopoly Vinacomin sell coal at market oriented prices to do ...
Sunday, 09 August 09
TNEB ENNORE PORT CALLS TO TRIPLE COAL OUTPUT
World Shipping News reported that, the Tamil Nadu Electricity Board (TNEB) has asked Ennore Port Ltd (EPL) to increase the port’s installed ca ...
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- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Planning Commission, India
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
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