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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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Friday, 06 November 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 05 November 20
THE INDONESIA COAL PRICE REFERENCE RISES FOR SECOND CONSECUTIVE MONTH
COALspot.com: The Indonesia Coal Price Reference rose for a 2nd month by 9.24% month on month. The Indonesia Coal Price Reference for the month of ...
Wednesday, 04 November 20
PHILIPPINES COAL MORATORIUM HIGHLIGHTS DRAMATIC PIVOT TO RENEWABLE ENERGY INVESTMENT FOR LOWER PRICES AND POWER SYSTEM RESILIENCE - IEEFA
Policymakers and industry leaders ready to embrace new energy technologies
The Department of Energy’s call for a moratorium on ...
Wednesday, 04 November 20
FOREIGN INVESTORS FACE TOUGH TIMES CLOSING VIETNAM’S REMAINING COAL POWER DEALS - IEEFA
Project bankability at risk as new regulations threaten usual contractual terms
Foreign investors will face higher-than-usual risks ...
Wednesday, 04 November 20
MARKET INSIGHT - INTERMODAL
As the end of the year approaches, one would definitely notice that the newbuilding orderbook for bulk carriers is significantly smaller compared t ...
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- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Thai Mozambique Logistica
- The University of Queensland
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
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