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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, 15 July 09
INDONESIAN FIRM SUBMITS LOWEST BID FOR NAPOCOR COAL
ABS-CBN News reported that, An Indonesian firm offered to supply 195,000 tons of thermal coal to top Philippine electricity producer National Power ...
Wednesday, 15 July 09
INDIAN COAL MINISTRY TO CONSIDER POWER PLANT ALTERATION PROPOSALS
PTI reported that the coal ministry has agreed to consider applications of power plants seeking long term coal linkage due to enhancement in electri ...
Wednesday, 15 July 09
SHENHUA STARTS WORK ON INDONESIA POWER PLANT
Bloomberg reported that China Shenhua Guohau Power a unit of China’s biggest coal producer started construction of a power plant and mine in I ...
Wednesday, 15 July 09
PLN OPENS TENDERS FOR SUPPLY OF LOW - GRADE COAL
The Jakarta Globe, a Indonesian new paper reported that, State power utility PT PLN has opened a tender for the supply of low-grade coal for the nat ...
Tuesday, 14 July 09
MMTC SAYS MAY RE-TENDER FOR 12.5 MLN T COAL
* KIS has demanded investigation into procurement
* MMTC says import delays could add to power shortages
Alibaba reported that, India's s ...
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- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Minerals Council of Australia
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Planning Commission, India
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
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