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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, 30 June 22
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- MS Steel International - UAE
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- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- White Energy Company Limited
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- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
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- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
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- Indian Oil Corporation Limited
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- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
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- Posco Energy - South Korea
- New Zealand Coal & Carbon
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- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- Central Electricity Authority - India
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- The University of Queensland
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
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- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
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- Bhoruka Overseas - Indonesia
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- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
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- Bulk Trading Sa - Switzerland
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