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Friday, 19 June 15
INDONESIA'S COAL-TRAFFICKING PROBLEM REQUIRES IMPARTIAL INQUIRY - JAKARTA GLOBE
 Indonesia, the leading supplier to the seaborne thermal coal market, produces 420 million tons of coal per year, according to its official tally.
But the unofficial tally is much higher.
It’s an open secret, in fact, that millions of tons of Indonesian coal are being mined and shipped out of the country illegally. Last year at the Coaltrans Asia conference in Bali, R. Sukhyar, the minerals and coal director at Indonesia’s Energy and Mineral Resources Ministry, estimated such shipments totaled 50 million tons to 60 million tons annually. Other estimates put annual illegal shipments as high as 90 million tons, worth some $5 billion.
Whatever the exact amount, the government of Indonesia is losing hundreds of millions in royalty revenues each year on these illegal exports. Coal royalties are important to the fiscal health of the country — they account for $4 billion of the Indonesian national budget of $170 billion this year — and government services suffer when royalty programs aren’t rigorously enforced.
Indonesia, of course, is an important global supplier of coal. More than 80 percent of its annual production is exported, mostly to India, Japan, South Korea and India, and its coal exports — both legal and illegal — affect global markets. Illegal exports create a special, pernicious effect on the coal industry as a whole by undermining efforts to manage supply and rebalance prices.
Coal markets today are shrinking rapidly. The price of coal in the Asian seaborne market has dropped by about 50 percent since 2011. The industry is oversupplied and likely to remain so for the foreseeable future. Illegal exports only exacerbate that challenge.
Epidemic of illegal shipping
The country’s process of licensing, customs and royalty collection maintains the official tally of annual coal production. But neither ports nor coal-transfer system are as tightly controlled as they should be. Opportunity abounds for producers to escape regulation. Much of the avoidance happens in Indonesia’s network of small private and unmonitored ports, and much of it occurs at offshore transfer points that are difficult to monitor.
The problem stems from the roaring days of global coal market expansion during the mid-2000s, when Indonesia saw a huge number of new companies, new permits and news investment in coal production.
Indonesian coal production skyrocketed to 420 million tons in 2013 from 174 million tons in 2006 in a difficult-to-manage boom that helped evasive companies get away with either ignoring reporting requirements altogether or simply under-reporting their coal production.
The government is raising coal-royalty rates in a move that will only magnify the competitive advantage royalty-avoiding producers hold over reputable companies that follow production- and export-reporting requirements. Thankfully, Indonesia’s illegal coal-export activity is under growing scrutiny today, although recent central government efforts at various reforms have done little so far to actually reduce illegal shipments.
Indonesian leaders seem well aware that unreported or under-reported exports undermine broader policy objectives of improving national energy security, providing sound management of Indonesia’s finite natural resources, having effective border control and showing leadership in international trade management.
Yet it’s unlikely the government will succeed on its own. Illegal coal mining and shipping is embedded in the economic fabric of Indonesia. Financially powerful interests support the status quo. Unreported or underreported activity has become a crucial source of revenue for regional political interests, and even the Indonesian Coal Mining Association (APBI) says it finds little to support in reform proposals. The drive to police illegal production and trafficking is also stymied by deeply endemic government corruption.
No level playing field
Indonesia and its people are currently being shortchanged by the absence of a business climate committed to a level playing field across its coal industry. Reform is in the national interest — and it makes good business sense, too, because it would tighten up the seaborne coal markets and provide some price stability for Indonesia’s largest source of export revenue.
When corruption is as pervasive as it is today in Indonesia’s coal industry, it is difficult to maintain a national effort to reform it. This is not an uncommon challenge, and is often best addressed by outside parties invited by the authorities to observe, report and enforce change. Reputable business, governmental and judicial officials are often brought in to help companies or countries find the right long-term path toward restoring confidence where confidence has been lost.
Many mechanisms exist to empower an independent organization with the authority to act. An external investigation of illegal coal shipping in Indonesia could go a long way to establishing a strong basis for establishing honest reform.
By Tom Sanzillo
About Tom Sanzillo
Tom Sanzillo is the director of finance at the Institute for Energy Economics and Financial Analysis (IEEFA), which promotes research into global energy markets. Sanzillo has 30 years of experience in public and private finance, including as a first deputy comptroller of New York State, where he held oversight over a $156 billion pension fund and $200 billion in municipal bond programs.
Source: The Jakarta Globe
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Saturday, 14 February 15
SHALE GAS AND TIGHT OIL ARE COMMERCIALLY PRODUCED IN JUST FOUR COUNTRIES - EIA
KNOWLEDGE TO ELEVATE
The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing com ...
Friday, 13 February 15
U.S. WEEKLY COAL PRODUCTION SHOWS 10% DECLINE
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.1 million short tons (mmst) of coal ...
Friday, 13 February 15
SMALL AND MEDIUM-SIZED SHIP OWNERS SQUEEZED OUT OF THE MARKET ON CRASHING DRY BULK MARKET AND EUROZONE CRISIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Financing issues have started to tighten the noose in the throats of small and medium-size ship owners, who were already facing problems over the p ...
Thursday, 12 February 15
CAPESIZE: THE BEST DESCRIPTION FOR THE MARKET IS, FLAT - FEARNRESEARCH
Handy
The handy and supra market is also being affected by the marginal volume of activity in the commodity sales. We see a small upturn in the T ...
Thursday, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
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- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- The University of Queensland
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Planning Commission, India
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- White Energy Company Limited
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
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