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