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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, 19 December 19
COAL POWER GENERATION CONTINUES TO DECLINE IN GERMANY: DESTATIS, XINHUA REPORTED
The volume of electricity generated in coal-fired power plants in Germany decreased “markedly” by 37 percent to 34 billion kilowatt-hou ...
Thursday, 19 December 19
BANGLADESH'S NBR CUTS VAT ON COAL IMPORT FOR POWER PLANTS - THE DAILY STAR
The National Board of Revenue (NBR) reduced value added tax on the import of coal for power plants to 5 percent from present 15 percent for five ye ...
Wednesday, 18 December 19
AVERAGE PRICES OF COAL IN 2018 WERE MORE THAN 60% HIGHER THAN IN 2016 - IEA
Coal use grew again in 2018.
Global coal demand increased by 1.1%, continuing the rebound that began in 2017 after three years of decline ...
Wednesday, 18 December 19
ASIA IS SET TO SUPPORT GLOBAL COAL DEMAND FOR THE NEXT FIVE YEARS - IEA
Press Release: Global coal demand is expected to decline in 2019 but remain broadly stable over the next five years, supported by robust growth in ...
Wednesday, 18 December 19
SHIPPING MARKET INSIGHT - INTERMODAL
As we all know very well by now, the reduction in the maximum allowable sulphur content of marine fuels in 2020 is likely to have a massive impact ...
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- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Bhatia International Limited - India
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Planning Commission, India
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- The University of Queensland
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
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