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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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Thursday, 05 January 17
UNCHANGED COAL-FIRED TARIFFS PRESSURE CHINA'S GENERATORS - FITCH
COALspot.com: China's decision to keep on-grid electricity prices from coal-fired power unchanged amid higher coal prices will further squeeze ...
Thursday, 05 January 17
CAPE MARKET HAVE KEPT SURPRISINGLY FIRM AND ACTIVE DURING THE CHRISTMAS AND NEW YEAR HOLIDAYS - FEARNLEYS
Supramax
The first week after a slow Christmas break has started off with little activity and softening rates. Not surprisingly, the market is fi ...
Thursday, 05 January 17
COMPARISON OF HONG KONG AND LONDON ARBITRATION - SKULD
KNOWLEDGE TO ELEVATE
Whilst London arbitration is the most popular platform for resolution of charterparty disputes, where the parties involved a ...
Wednesday, 04 January 17
INDONESIA'S COAL PRODUCTION IS ESTIMATED TO REACH 434 MILLION TONS IN 2016 EXCEEDED THE GOVERNMENT'S INITIAL TARGET
Indonesia's coal production is estimated to reach 434 million tons in 2016 exceeded the government's initial target. The Ministry of Energy ...
Tuesday, 03 January 17
BENGKULU TO IMPOSE TOUGHER REGULATION FOR UNPROCESSED COAL AND MINERALS EXPORTS IN 2017 - MEDIA
Bengkulu provincial government is planning to impose tougher regulation for export of coal and mineral in 2017. According to liputan6 online portal ...
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- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
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