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