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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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Friday, 06 July 18
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- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Australian Coal Association
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- MS Steel International - UAE
- Parliament of New Zealand
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
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