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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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Sunday, 22 December 19
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Friday, 20 December 19
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- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- MS Steel International - UAE
- London Commodity Brokers - England
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Minerals Council of Australia
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- San Jose City I Power Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- VISA Power Limited - India
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
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