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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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Tuesday, 14 December 21
COAL LOCK-IN IN SOUTHEAST ASIA PRESENTS A CHALLENGE FOR THE ASIAN DEVELOPMENT BANK'S COAL RETIREMENT PLAN - IEEFA
In August, the Asian Development Bank (ADB) announced an ambitious plan to buy high emissions coal-fired power plants in Southeast Asia and retire ...
Saturday, 11 December 21
BUNKER BUYERS LOSE UP TO $5/MT FOR NOT COVERING ENOUGH SUPPLIERS - INTEGR8 FUELS
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Tuesday, 07 December 21
SUPERCYCLE DEMAND: ARE WE THERE YET? - WOOD MACKENZIE
Taking young children on a long journey is fraught with challenges, not least the inevitable question a few minutes after leaving: are we there yet ...
Tuesday, 07 December 21
COAL WOULD REMAIN ENERGY LEADER FOR AT LEAST 15 YEARS - LIVEMINT
Coal India Ltd (CIL) has been in the eye of the storm after fuel stocks at coal-fuelled power plants depleted in October. Fuel stocks since are bei ...
Tuesday, 07 December 21
GLOBAL SHIPPING OUTLOOK TURNS STABLE FROM POSITIVE ON THE BACK OF PEAKING EARNINGS DURING 2021 - MOODY'S
The outlook for the global shipping industry is changed to stable from positive for the next 12 to 18 months due to demand slightly outstripping su ...
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- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- VISA Power Limited - India
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Baramulti Group, Indonesia
- PTC India Limited - India
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
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