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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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Wednesday, 26 November 14
OVERSUPPLY OF TONNAGE PUSHED PANAMAX SEGMENT DOWN FOR ANOTHER WEEK
COALspot.com: The Dry Bulk market managed to reverse its course from the week prior and with the sole exception of the Panamax segment, we witnesse ...
Wednesday, 26 November 14
SHIPPING MARKET INSIGHT - EVA TZIMA
The tanker market has been enjoying some good returns lately. Ok, that may be a big understatement, but with all the ups and downs of the past year ...
Tuesday, 25 November 14
FISCAL BREAKEVEN OIL PRICES SHOW SOVEREIGN VULNERABILITY - FITCH
COALspot.com: The vulnerability of the sovereign credit profiles of net oil exporters, as shown by their fiscal breakeven oil prices, suggests that ...
Tuesday, 25 November 14
UK: TRIBUNAL RULES ON SPEED AND PERFORMANCE CLAIMS UNDER TWO CONSECUTIVE TIME CHARTERPARTIES - REED SMITH
KNOWLEDGE TO ELEVATE
“Owners not to be responsible if the vessel under the currency of this charter party stays at port or anchorage or ...
Tuesday, 25 November 14
FOB RICHARDS BAY COAL SWAP FOR Q4' 15 DELIVERY CLOSED AT US$ 68.20
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 gained month on month, week on week and day over day.
The Q1 swap has gain ...
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- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- White Energy Company Limited
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- MS Steel International - UAE
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Planning Commission, India
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
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