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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, 09 September 20
MARKET INSIGHT - INTERMODAL
The uneventful summer lull which is coming to an end soon has left its stigma on the newbuilding market, which has already been devastated by the g ...
Saturday, 05 September 20
INDIA WON'T KICK ITS COAL HABIT SO EASILY - HINDU BUSINESS LINE
India has traditionally considered itself lucky to have been endowed with abundant coal reserves, which it has sought to use to meet its energy nee ...
Saturday, 05 September 20
FINANCING COMPLETE FOR 900MW FIFTH PHASE OF MASSIVE DUBAI SOLAR PARK: ARABIAN BUSINESS
Saudi-based ACWA Power on Thursday announced it has completed the signing of all financing agreements for the fifth phase of the Mohammed bin Rashi ...
Saturday, 05 September 20
POLISH COAL DEMAND EXPECTED TO FALL BY 7 MLN TONNES NEXT YEAR: MINISTER - REUTERS
Poland’s demand for coal is expected to fall by around 7 million tonnes next year, or more than 10% of annual hard coal production, after a d ...
Saturday, 05 September 20
PAKISTAN'S NEW 27-YEAR POWER PLAN RISKS LOCKING IN LONG-TERM OVERCAPACITY, LEAVING IMPORTED COAL AND LNG PLANTS STRANDED - IEEFA
Wind and solar, the country’s cheapest source of new generation, also overlooked
Pakistan risks locking itself into building m ...
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- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Economic Council, Georgia
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- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
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- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- McConnell Dowell - Australia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Toyota Tsusho Corporation, Japan
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- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
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- GMR Energy Limited - India
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- Georgia Ports Authority, United States
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- Pipit Mutiara Jaya. PT, Indonesia
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- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Videocon Industries ltd - India
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- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
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- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
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- Interocean Group of Companies - India
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Electricity Authority, New Zealand
- Parliament of New Zealand
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
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