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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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Monday, 30 December 13
INDONESIAN COAL TO BE PART OF INDEX DETERMINING POWER TARIFFS - BUSINESS STANDARD
In a significant move, power sector regulator CERC has decided to provide 50 per cent weightage for Indonesian coal in the benchmark index that is u ...
Friday, 27 December 13
THE EXPORT OF UNPROCESSED MINERALS WOULD NOT BE ALLOWED AFTER 12 JAN 2014 - INDONESIAN ENERGY MINISTER
COALspot.com: The government of Indonesia will implement Law No. 4 of 2009 on Mineral and Coal in full and consistently by January 12, 2014, said, m ...
Friday, 27 December 13
INDONESIA SHIPPED 15.75 PERCENT MORE COAL IN NOVEMBER
COALspot.com: Indonesia, the world's 4th largest coal producer and the largest multi grade coal exporter shipped over $2* billion worth of co ...
Thursday, 26 December 13
COAL & OIL GROUP SECURES US$ 250 MILLION FUNDING FOR ITS 1200MW THERMAL POWER PLANT IN INDIA
COALspot.com: Dubai-based Coal & Oil (C&O) Group has announced that it has secured additional funding of approximately Dhs. 1 billion (appro ...
Wednesday, 25 December 13
DRY BULK INDEX LOST SOME GROUND THIS PAST WEEK - INTERMODAL
Chartering (Wet: Firm+ / Dry: Softer - )
The Dry Bulk Index lost some ground this past week, on the back of activity slowing down befor ...
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- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- ASAPP Information Group - India
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- The University of Queensland
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
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