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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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Thursday, 13 September 12
PANAMAX: THE NEGATIVE TREND, POOR SENTIMENT CONTINUES - FEARNLEYS AS
Handy
Lack of cargoes and a growing list of available ships is causing rates to slip for all Atlantic trades.
The only trade keeping somewhat s ...
Thursday, 13 September 12
FUEL EFFICIENT SHIPS MAY BE MORE EXPENSIVE, BUT THEY MAKE FINANCIAL SENSE SAYS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The latest trend in shipbuilding is the so called "Eco" ship, i.e. ships which offer much better fuel consumption and are more cost-effect ...
Wednesday, 12 September 12
INDIAS COALGATE: TIME FOR A ROOT CANAL
A recent report from India’s Comptroller and Auditor General (CAG) pertaining to the allocation of coal blocks has created a political storm i ...
Tuesday, 11 September 12
CLOUDY AND POLICY RISK INDONESIAN COAL INDUSTRY
COALspot.com - Bahana Securities in its latest coal outlook, commented on the Indonesian coal market, with economic slowdown in the four largest coa ...
Tuesday, 11 September 12
SHIP OWNERS KEEN ON SECOND HAND VESSEL PURCHASES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With most ship owners back from their summer rest, things are starting to pick up again in the second hand vessel market, with more and more deals b ...
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- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- White Energy Company Limited
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Planning Commission, India
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- CNBM International Corporation - China
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
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