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