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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
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Wake me up when September ends - Theodore Ntalakos
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Tuesday, 15 July 14
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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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- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Australian Coal Association
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
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