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