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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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Tuesday, 31 July 18
ENERGY MINISTRY REMAINS FIRM ON DMO POLICY FOR COAL - JP
The Energy and Mineral Resources Ministry has stressed that it will not cancel its policy on the domestic market obligation (DMO) for coal, as the ...
Saturday, 28 July 18
GOVERNMENT TO REVOKE COAL PRICE CAP POLICY - JP
The government plans to revise its domestic market obligation (DMO) on coal price next week during a high-level meeting with President Joko “ ...
Thursday, 26 July 18
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In the Pa ...
Thursday, 26 July 18
ASEAN COAL IMPORTS INCREASED IN 2Q' 18 COMPARED TO THE PRIOR YEAR; THIS TREND TO CONTINUE AS 56 GIGAWATTS OF NEW COAL PLANTS IN 24 COUNTRIES WORLDWIDE ARE EXPECTED TO COME ONLINE IN 2018 - PEABODY
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Wednesday, 25 July 18
COAL MINER BUKIT ASAM'S PROFIT GROWS 50% IN FIRST HALF - JP
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- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
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