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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, 16 July 14
INDIA BUDGET HAS LIMITED SHORT TERM IMPACT ON POWER SECTOR - FITCH RATINGS
Fitch Ratings says that the measures announced relating to India's electricity sector in the budget for FY2015 are directionally correct but in ...
Wednesday, 16 July 14
WEEKLY SHIPPING MARKET INSIGHT - INTERMODAL
Wake me up when September ends - Theodore Ntalakos
Since last September most thought that the worst was behind us. It looks like the market de ...
Tuesday, 15 July 14
INDONESIA'S TOTAL COAL PRODUCTION REACHED ANOTHER HIGH DURING THE FIRST SIX MONTHS; GOVERNMENT EXPECTED TO RAISE ROYALTIES
COALspot.com: Indonesia's total coal production reached 213 million tons during January through June, up by 7.6 percent y-o-y. Coal output in I ...
Monday, 14 July 14
THE END OF THE ERA OF HEAVY FUEL OIL IN MARITIME SHIPPING - ICCT
KNOWLEDGE TO ELEVATE
Since the 1960s, heavy fuel oil (HFO) has been the king of marine fuels. Viscous, dirty, yet inexpensive and widely avail ...
Monday, 14 July 14
SGX SUB-BIT FOB INDONESIA COAL SWAP FOR Q4' 14 DELIVERY CLOSED AT $ 54.80
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports re ...
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- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Minerals Council of Australia
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Independent Power Producers Association of India
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Planning Commission, India
- Trasteel International SA, Italy
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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