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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, 27 July 09
MIDDLE EAST COAL TO MOVE ON $1B EAST KALIMANTAN PROJECT
The Jakarta globe reported that, Middle East Coal reiterated on Monday that it would push ahead its $1 billion development program for East Kutai Re ...
Monday, 27 July 09
SHORT AND ONE YEAR PERIOD RATES FOR SUPRAMAX WAS FIRM AT AROUND US$ 18, 000 -18,500 PER DAY
COALspot.com (Singapore): The Supramax charter rates up sharply last week (ended 24th July 2009), especially India / Far East region said, Capt ...
Monday, 27 July 09
COKING COAL, IRON-ORE LIKELY TO BENEFIT NON-INTEGRATED STEEL PRODUCERS
Economictimes reported that, The second half of the financial year 2008-09 was one of the toughest periods for steel companies, especially the non-i ...
Monday, 27 July 09
GMR ENERGY BUYS EMCO POWERGEN SUBSIDIARY
DNA India reported that, Thane-based transformer manufacturer Emco Ltd has sold its stake in unlisted power generation subsidiary Emco Energy to Ban ...
Sunday, 26 July 09
CESC PLANS 2000 MW POWER PLANT IN BIHAR
Jai Bihar reported that, RPG flagship company CESC Ltd on Friday unveiled its plan to set up a 2,000 MW power generation plant at Pirpainti near Bha ...
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- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Economic Council, Georgia
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- PTC India Limited - India
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Ministry of Transport, Egypt
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