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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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Friday, 29 May 15
COAL PRODUCTION IN THE U.S. ALMOST FLAT THIS PAST WEEK
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.1 million short ...
Friday, 29 May 15
SOUTH KOREAN STATE-OWNED UTILITY KOREA MIDLAND POWER INVITES BIDS FOR 780K MT OF COAL FOR H2' 15
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 780K Metric Tons (MT) of HCV and LCV ...
Thursday, 28 May 15
TIMEBAR FOR DEMURRAGE CLAIMS - SKULD
KNOWLEDGE TO ELEVATE
English law has traditionally had a strict approach to contractually agreed time bars between commercial parties as well ...
Wednesday, 27 May 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Earlier in the year I looked at how the market was reacting to the prolonged fall of the price of oil. Back then it was still unclear if the fallin ...
Tuesday, 26 May 15
HOW HAS THE DROP IN OIL PRICES AFFECTED OTHER COMMODITIES? - CLYDE & CO
KNOWLEDGE TO ELEVATE
The effects of the dramatic drop in the price of both Ice March Brent, the international oil marker, and its US counterpa ...
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- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- The University of Queensland
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Economic Council, Georgia
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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