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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, 06 October 22
COAL INDIA ASKED TO ENHANCE SUPPLY TO THERMAL POWER PLANTS - IANS
With the festival season round the corner, Coal India Ltd. has been directed by the government to scale up dispatch to thermal power plants.
&n ...
Wednesday, 05 October 22
BUNKER PRICES DOWN AGAIN; IS THERE MORE TO COME? - INTEGR8 FUELS
It’s the economy…..”
VLSFO prices are now back to levels at the start of this year. After all the extremes of thi ...
Wednesday, 05 October 22
MARKET INSIGHT - INTERMODAL
Amid the looming western sanctions on Russia, the country is challenged to pivot its energy markets away from Europe and toward the East. Yet, Russ ...
Tuesday, 04 October 22
A REMARKABLE SHIFT IN FORTUNES HAS BEEN NOTED IN THE CRUDE OIL TANKER MARKETS - ALLIED SHIPPING
A remarkable shift in fortunes has been noted in the crude oil tanker markets over the past month, yet despite these shifts being seemingly in thei ...
Tuesday, 04 October 22
OIL PRICES COULD SOON RETURN TO $100 AS OPEC+ CONSIDERS ‘HISTORIC’ CUT, ANALYSTS SAY - CNBC
An influential alliance of some of the world’s most powerful oil producers is reportedly considering their largest output cut since the start ...
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- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- The University of Queensland
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- ASAPP Information Group - India
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
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