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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, 16 September 22
WHEN IS A VESSEL'S INCOME EARNING CAPACITY AT RISK? 'CONTROLLED INCOME CAN BE A KEY OF SUCCESS' - MARASCO MARINE
Managing marine risks is not an easy task, which requires special knowledge and expertise on the subject per se. Customarily, big ship management c ...
Friday, 16 September 22
DRY BULK MARKET: EU’S BAN ON RUSSIAN COAL LIFTS DEMAND DESPITE ECONOMIC HEADWINDS - BIMCO
Highlights
– The Baltic Exchange Dry Index (BDI) peaked in late May and has since fallen sharply as lower Chinese demand and adverse glob ...
Friday, 16 September 22
BIMCO EMBARKS ON NEW STANDARD FOR “QUIET ENJOYMENT”
KNOWLEDGE TO ELEVATE
A newly set-up BIMCO drafting team involving a cross-section of shipowners, charterers, financing and leasing i ...
Friday, 16 September 22
INDIAN COAL PRODUCTION TO RISE 150 PER CENT IN 10 YEARS: CENTRE - EXPRESS NEWS SERVICE
The Union Ministry of Mines is expecting 150 per cent growth in coal production 10 years down the line as a result of coal reforms that had been us ...
Thursday, 15 September 22
MARKET INSIGHT - INTERMODAL
While the Organization of Petroleum Exporting Countries and its allies agreed on a 100,000 b/d output cut last week, oil flows are in the spotlight ...
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- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
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