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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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Thursday, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
Monday, 23 October 23
CHINA SEPT COAL OUTPUT HITS SIX-MONTH HIGH ON RISING POWER DEMAND - REUTERS
China’s September coal output rose 0.4% from August to the highest level since March, official data showed on Wednesday, on rising power dema ...
Monday, 23 October 23
INDIA COAL INVENTORIES DROP AT FASTEST PACE IN TWO YEARS, BOOSTING IMPORTS - REUTERS
Coal inventories at Indian power plants in the first half of October fell at their fastest rate in two years, an analysis of government data showed ...
Tuesday, 19 September 23
LNG SHIPPING STOCKS: THE ASIAN GROWTH UP-INDICES
Last week, the UP World LNG Shipping Index (UPI) gained 3.81 points or 2.51%, closing at 155.85 points. This index tracks the performance of LNG sh ...
Sunday, 10 September 23
GOLDMAN SACHS PREDICTS OIL PRICE TO HIT $100 ON OPEC CUTS - YAHOO FINANCE
Oil supply cuts by Saudi Arabia and Russia could lead to Brent crude jumping as high as $107 a barrel in 2024, Goldman Sachs Commodities Research h ...
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- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Indika Energy - Indonesia
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- CNBM International Corporation - China
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- PTC India Limited - India
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
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