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