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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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Tuesday, 27 October 20
PLN STILL REFUSING TO ADAPT, A MOVE WHICH WILL HURT INVESTORS, CONSUMERS, AND THE GOVERNMENT PURSE - IEEFA
Utility’s latest planning report locks PLN into the past
PLN would be better served restructuring its business to address the current en ...
Monday, 26 October 20
'LONG ASCENT' TO RECOVERY OF GLOBAL GROWTH - BALTIC EXCHANGE
The global economy has so far avoided a “financial catastrophe” but growth projections from the International Monetary Fund’s lat ...
Friday, 23 October 20
SHIPPING LOANS AND COLLATERAL DAMAGE - VICTOR ONYEGBADO, AKABOGU & ASSOCIATES
KNOWLEDGE TO ELEVATE
Shipping finance transactions are characterised by peculiar risk factors principally on account of the shipping asset&rsq ...
Friday, 23 October 20
WHAT WILL THE 2020 ELECTIONS MEAN FOR US ENERGY? - WOOD MACKENZIE
The 2020 elections present American voters with a choice between two radically different visions for the future of energy. President Donald Trump r ...
Wednesday, 21 October 20
BRAZIL EXPORTED 238.7 MLN TONNES OF IRON ORE IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
Brazil’s iron ore exports have been gradually but steadily recovering following a disastrous winter period of 2019/2020. In the first 9 month ...
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- Thai Mozambique Logistica
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Central Electricity Authority - India
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Romanian Commodities Exchange
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Aditya Birla Group - India
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