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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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Tuesday, 22 November 11
NTPC TO BUY 2 MMT OF IMPORTED COAL FOR ITS FOUR PLANTS
COALspot.com - NTPC Limited, incorporated in 1975 as a public sector company wholly owned by Government of India, the largest thermal power generati ...
Tuesday, 22 November 11
ABM INVESTAMA SETS IPO AT RP 3,750
Insider Stories reported that, Integrated energy company PT ABM Investama Tbk has determined the IPO price at Rp3,750 (approximately US$ 0.415) per ...
Tuesday, 22 November 11
A SURPRISINGLY STRONG WEEK FOR THE CAPES - BRS
Positive gains for most of the segments this week, the exception being the Handysizes. Overall the BDI ended the week at 1,895 points (+3.3% week-on ...
Tuesday, 22 November 11
APPETITE FOR DRY BULK VESSELS SLOWS DOWN AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market was down at the beginning of the week, as demand for Capesize vessels was particularly low. The industry’s benchmark, the ...
Monday, 21 November 11
CAPESIZES DRIVE MARKET LOWER, ANALYSTS DIVIDED ON DRY BULK OUTLOOK IN THE LONG RUN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market ended the week on a sour note, with the industry’s benchmark heading downwards to 1,895 points, which represented a slight ...
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- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
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