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