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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, 02 December 20
INDONESIA CONSIDERING CLOSING 3,400MW SURALAYA COAL PLANT - THE JAKARTA POST
The government is considering to shut down the aging Suralaya coal-fired power plant (PLTU) in Cilegon, Banten, and replace it with green energy, a ...
Wednesday, 02 December 20
MARKET INSIGHT - INTERMODAL
It has been another busy week in the dry bulk secondhand market; a healthy number of sales reported predominantly from Japanese owners while owner& ...
Thursday, 26 November 20
DECLINE IN COAL EXPORTS ADDS TO NAVAJO-OWNED COMPANY'S PROBLEMS - IEEFA U.S.
Weak demand and low prices are likely creating steep losses for NTEC
U.S. coal exports to Asia—once heralded as the saving gra ...
Thursday, 26 November 20
COAL FINANCING QUICKLY DRYING UP WORLDWIDE - ANALYSTS : REUTERS
Financing for coal projects is drying up at ever increasing rates as more countries target zero carbon emissions amid an energy transition sweeping ...
Wednesday, 25 November 20
LIBOR REPLACEMENT AND SHIP FINANCE - WHERE IS IT HEADING? - WFW
The likely replacement of the LIBOR at the end of 2021 creates difficult technical and practical issues for all sectors of business and finance. Th ...
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- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- CNBM International Corporation - China
- MS Steel International - UAE
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- GMR Energy Limited - India
- The University of Queensland
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Trasteel International SA, Italy
- PTC India Limited - India
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
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