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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, 25 October 21
A QUESTION OF POSSESSION - THE BALTIC EXCHANGE
Possession and tangibility are closely related concepts long established under English law. Yet a change to these concepts is around the corner. Th ...
Monday, 25 October 21
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Monday, 25 October 21
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Monday, 25 October 21
CHINA COAL PRICES MARK WORST WEEK SINCE MAY ON GOVERNMENT INTERVENTION - REUTERS
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Friday, 22 October 21
THE BIG PICTURE: ENERGY MARKETS - BREAK WAVE ADVISORS
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- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Australian Coal Association
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Parliament of New Zealand
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
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