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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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Tuesday, 23 August 22
SHIPPING INDUSTRY TO REMOVE THE INDIAN OCEAN HIGH RISK AREA - BIMCO
After more than a decade of effective threat-reducing counter-piracy operations the shipping industry has removed the ‘Indian Ocean High Risk ...
Tuesday, 23 August 22
SHIPPING: GLOBAL TAX REFORM - WATSON FARLEY & WILLIAMS
OECD rules designed to implement a global minimum corporate tax rate for very large multinational groups have now been published and are expected t ...
Tuesday, 23 August 22
PARTIES CONCLUDE JOINT R&D AGREEMENT FOR WORLD’S FIRST AMMONIA FLOATING STORAGE AND REGASIFICATION BARGE CONTRIBUTING TO PROMOTING THE EARLY INTRODUCTION OF AMMONIA FUEL - NYK
NYK Line, Nihon Shipyard Co., Ltd. (NSY), ClassNK, and IHI Corporation (IHI) signed a joint research and development agreement for the commercializ ...
Monday, 22 August 22
INDONESIAN GOVERNMENT IMPOSED ON NEW PROGRESSIVE ROYALTIES FOR COAL
Indonesian President Joko Widodo has signed a Government Regulation (Number 26 of 2022) on 15 August 2022 related to the progressive royalty rates ...
Monday, 22 August 22
CHINA'S JULY RUSSIAN COAL IMPORTS HIT 5-YR HIGH AS WEST SHUNS MOSCOW - REUTERS
China’s coal imports from Russia jumped 14% in July from a year earlier to their highest in at least five years, as China bought discounted c ...
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- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- PTC India Limited - India
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
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