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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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Friday, 03 August 12
INDIA - LIGHTS OUT! - SALVA
The Indian power sector hit global headlines this week for all the wrong reasons. Firstly, on Monday, over 350 million people lost power across nort ...
Thursday, 02 August 12
OIL & GAS COMPANIES TO MEET IN MYANMAR FOR UPDATES ON NEW ROUND OF BIDDING AND INVESTMENT POTENTIAL IN UPSTREAM OIL, GAS, AND POWER GENERATION
Press Release - 2nd MOGP Summit (Myanmar Oil, Gas & Power) will convene in Yangon from 3 – 6 September 2012, to unveil new round of biddin ...
Thursday, 02 August 12
DRY BULK MARKET RATES CONTINUE SLUMP AMID SLOWER DEMAND NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on its downward path Wednesday, as the BDI (Baltic Dry Index) kept retreating to new lows. The index was down by 2.12 perce ...
Monday, 30 July 12
DRY BULK MARKET TO REMAIN UNDER PRESSURE FOR THE REST OF 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In an interview with Hellenic Shipping News Worldwide, Mr. Yannis Pachoulis, President of the Hellenic Shipbrokers' Association, remains cautiously ...
Sunday, 29 July 12
FREIGHT MARKET MOMENTUM CONTINUES TO WEAK
COALspot.com - The freight market continued to soft this week with all the segments dropped and the BDI fell below 1,000 points and closed at 933 po ...
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- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Australian Coal Association
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Xindia Steels Limited - India
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- The University of Queensland
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- VISA Power Limited - India
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