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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, 07 May 20
CRUDE OIL TANKER EARNINGS DROP 68% IN NINE DAYS - BIMCO
Crude oil tanker earnings have come down sharply in recent weeks with Very Large Crude Carrier (VLCC) earnings from the Middle East Gulf to China d ...
Thursday, 07 May 20
UKRAINE PRODUCES 2.5 MLN TONNES OF COAL IN APRIL - UKRINFORM
Ukraine produced 2.5 million tonnes of coal in April 2020, which is 39% less than planned, according to the Coal Miners Union of Ukraine.
...
Thursday, 07 May 20
INDIA: GOVT TO DO AWAY WITH MANDATORY WASHING OF COAL FOR THERMAL POWER UNITS - BUSINESS STANDARD
The Centre is planning to do away with the mandatory requirement of washing of coal before it is transported to thermal power stations. The Ministr ...
Thursday, 07 May 20
CIL'S SUPPLY TO POWER SECTOR FALLS IN MARCH AMID SLUMP IN COAL DEMAND - PTI
The supply of coal to the power sector by state-owned CIL registered a decline of eight per cent to 42.30 million tonne in March in the wake of slu ...
Thursday, 07 May 20
COAL PRICE REFERENCE FALL SHARPLY IN MAY 2020 DUE TO CORONAVIRUS OUTBREAK
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
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- Independent Power Producers Association of India
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- McConnell Dowell - Australia
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Australian Coal Association
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
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