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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, 24 February 17
RUSSIAN OIL AND GAS WITHSTANDS OIL PRICE SHOCK - FITCH RATINGS
Fitch Ratings says in a new report that the Russian oil and gas sector has withstood the oil price stock of 1H16. Key events of 2016 include record ...
Friday, 24 February 17
US WEEKLY COAL OUTPUT ESTIMATED AT 16.8 MMST - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.8 million short ton ...
Thursday, 23 February 17
ULTRA SUPRAMAX: INDONESIA TO INDIA IS GETTING AROUND $10-11K BASIS SINGAPORE DELIVERY
Supramax
The week started off quietly in the Atlantic with more activity in the Pacific basin.
According to Fearnleys weekly report, frontha ...
Wednesday, 22 February 17
TANKER MARKET INSIGHT - KATERINA RESTIS
In 2016 a session of the IMO committee in London, set the new prerequisites effective from January 2020, which will necessitate global Sulphur cont ...
Tuesday, 21 February 17
INDIA'S JANUARY COAL IMPORTS DECLINE 21.7 PERCENT YEAR -ON-YEAR TO 14.31 MT - PTI
Coal imports declined by 21.7 per cent to 14.31 million tonnes in January as the power utilities did not lift much fuel due to abundant stock avail ...
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- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Australian Coal Association
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- White Energy Company Limited
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- The University of Queensland
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
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