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