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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, 25 December 19
COVER FOR WAR AND TERRORISM RISKS, AND COVER IN RESPECT OF BIOLOGICAL AND BIO-CHEMICAL WEAPONS - 2020 POLICY YEAR: AMERICAN CLUB
KNOWLEDGE TO ELEVATE
This Circular describes the arrangements which have been made to provide special cover for war and terrorism risks, and c ...
Wednesday, 25 December 19
EXHAUST GAS CLEANING SYSTEMS (SCRUBBER) GUIDANCE - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
In a few weeks, IMO’s ‘global sulphur cap’ will take effect. The permitted levels of SOx in ship emissi ...
Wednesday, 25 December 19
INDONESIAN BUKIT ASAM TARGETS TO MINE 30 MLN T OF COAL IN 2020 - REUTERS
Indonesian state-owned coal miner PT Bukit Asam targets to produce around 30 million tonnes of coal in 2020, compared with an estimate of 28.5 mill ...
Wednesday, 25 December 19
SHIPPING MARKET INSIGHT - INTERMODAL
As another year in the shipping industry is coming to an end, it is interesting to look at the dry bulk and tanker markets and how these performed ...
Monday, 23 December 19
VLSFO PRICING & AVAILABILITY NEEDS CAREFUL WATCHING - INTEGR8 FUELS
As we approach January 1st 2020 , the VLSFO price premium to HSFO has widened considerably
We are clearly well into the IMO 2020 transition; ch ...
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- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- The University of Queensland
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Economic Council, Georgia
- Planning Commission, India
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- PTC India Limited - India
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Minerals Council of Australia
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