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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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Monday, 19 November 18
SUPRAMAX: THE BSI CONTINUED TO FALL LAST WEEK, ESPECIALLY THE ASIAN ROUTES - BALTIC BRIEFING
Capesize
After a cut throat couple of weeks, the market finally appeared to have found a floor and rates ticked up. Those analysts that predict ...
Sunday, 18 November 18
COAL STOCKS IN A THIRD OF NTPC PLANTS CLOSE TO NIL - FINANCIAL EXPRESS
Coal supply shortage continues to haunt NTPC, the country’s largest power generator, with latest government data showing 31% of the company&r ...
Thursday, 15 November 18
OIL MARKET REPORT: HEEDING THE WARNINGS - IEA
In last month’s Report, we noted that since the middle of the year oil supply had increased sharply, with gains in the Middle East, Russia an ...
Wednesday, 14 November 18
BIMCO ADOPTS 2020 BUNKER CLAUSES
BIMCO has developed two 2020 bunker clauses that deal with general compliance and the transitional period for an early December release.
...
Wednesday, 14 November 18
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The shipping industry is going through an interesting period across all markets. Since the end of last year, the Dry Baltic Index has been showing ...
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- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- London Commodity Brokers - England
- Australian Coal Association
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
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