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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, 29 November 22
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- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Australian Coal Association
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- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Ministry of Finance - Indonesia
- SN Aboitiz Power Inc, Philippines
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- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
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- GVK Power & Infra Limited - India
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- Latin American Coal - Colombia
- Georgia Ports Authority, United States
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- Directorate Of Revenue Intelligence - India
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- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Interocean Group of Companies - India
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- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Merrill Lynch Commodities Europe
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- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kepco SPC Power Corporation, Philippines
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