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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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Saturday, 20 October 18
PANAMAX: THE PACIFIC SAW A LARGE VOLUME OF FIXING, WITH INDONESIA AGAIN THE DRIVING FORCE - THE BALTIC BRIEFING
Capesize
A positive end to last week after a shaky start, with a Coaltrans taking participants out of the market early on and with rates slippi ...
Thursday, 18 October 18
SUPRAMAX: INDO/WC INDIA SUPRAS ARE FIXING AROUND MID $14000S P/D BASIS SPORE DELIVERY
Capesize
The volatile Cape market continues this week, especially in the Pacific says Fearnleys in its latest weekly report.
...
Thursday, 18 October 18
COAL SHORTAGE HITS POWER SECTOR AGAIN; HOW INDIA CAN GET ITS PRODUCTION RIGHT - ANIL SWARUP
By convincing states of the value proposition of increased production, the record production of Fy15 & Fy16 can be emulated.
The ...
Thursday, 18 October 18
CHINA POWER REFORM NEUTRAL ON GRIDS, PRESSURES IPP MARGINS - FITCH RATINGS
China's power sector reform has a broadly neutral impact on transmission grids although it will pressure the power producers' margins, says ...
Wednesday, 17 October 18
ESCROW SERVICE FOR BALTIC MEMBERS NOW LIVE
The Baltic Exchange’s Escrow Service for its members to hold deposits for ship sale transactions goes live today (15 October). The service is ...
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- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- The University of Queensland
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- Planning Commission, India
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
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