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