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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, 29 May 20
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- Price Waterhouse Coopers - Russia
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- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
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- Georgia Ports Authority, United States
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- Goldman Sachs - Singapore
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- European Bulk Services B.V. - Netherlands
- Australian Coal Association
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- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
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- Posco Energy - South Korea
- Indian Oil Corporation Limited
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- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- White Energy Company Limited
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
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