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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, 22 June 12
GLOBAL ACTION NEEDED ON ENERGY POVERTY - WORLD COAL
Eradicating energy poverty is possibly the biggest challenge facing the world today. Like climate change it can only be addressed with a concerted g ...
Friday, 22 June 12
COAL: THE BACKBONE OF MODERN ELECTRICITY - ECOAL
Coal has been described as the "forgotten fuel," perhaps because many aren't aware of the huge role it plays in powering the global econo ...
Thursday, 21 June 12
DRY BULK MARKET ON THE RISE AGAIN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was on the rise once again yesterday, with the Baltic Dry Index (BDI), the industry’s benchmark, rising by 18 points, or 1 ...
Wednesday, 20 June 12
BDI MOVING HIGHER, PANAMAX AND SUPRAMAX VESSELS STRONGER, CAPESIZE RATES NEAR TO HISTORICAL LOWS OF DECEMBER 2008 - MARIA BERTZELETOU, HELLENIC SHIPPING
The dry market seems to follow the dynamic of the previous week with the Baltic Dry Index showing daily increases since June 8th, but is still stand ...
Tuesday, 19 June 12
SMALLER DRY BULK CARRIERS LIFT UP MARKET, PANAMAXES SET TO FALL SAYS ANALYST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Another rise for the dry bulk market was evident yesterday, as the industry’s benchmark, the BDI (Baltic Dry Index) was up for a ninth straigh ...
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- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Anglo American - United Kingdom
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
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