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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, 02 February 22
COAL STORAGE IN CHINA’S POWER PLANTS NEAR RECORD HIGHS - XINHUA
Coal inflows into China’s power plants have picked up, bringing their coal storage to near record highs, the National Development and Reform ...
Wednesday, 02 February 22
MARKET INSIGHT - INTERMODAL
Oil prices have rallied to the highest level since October 2014 breaking above $90/bbl recently. November 2014 was the point when OPEC unleashed pr ...
Monday, 31 January 22
HOW INDONESIA'S COAL EXPORT BAN COULD IMPACT INDIA - IEEFA
What does it mean for power generation and energy security?
Not long ago, India faced coal shortages due to a decline in domestic co ...
Sunday, 30 January 22
AIR PRODUCTS' COAL GASIFICATION PROPOSAL TRIGGERS LOOMING POLICY DISPUTES IN INDONESIA - IEEFA
Plan to substitute Indonesia’s LPG imports with dimethyl ether may be hard to realize due to conflicting business interests
In ...
Sunday, 30 January 22
ENDGAME FOR NEW COAL POWER PROJECTS? - IEEFA INDIA
Retired coal units must be replaced only by assets that can provide grid flexibility
Reportedly, an expert committee appointed by th ...
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- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- VISA Power Limited - India
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Planning Commission, India
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
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