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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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Saturday, 15 October 11
BUNKER PRICES AND DEMANDS PUSHED FREIGHT RATES UP - VISTAAR
COALspot.com - The market continued to be firm with all segments moving up with biggest gain in Handy size segment up by 15 pct. The BDI was u ...
Saturday, 15 October 11
BENGAL COAL IMPORT TEST - THE TELEGRAPH
The Telegraph reported that, the power position in Bengal improved today but alarm bells are ringing over imported coal stocks that are running out ...
Friday, 14 October 11
CAPE DERIVATIVES MARKET HAS NOT REFLECTED OWNERS EXPECTATIONS' - FEARNBULK
Handy
The Atlantic market continued its upward trend, with fresh cargo entering the market. Skaw Passero to US Gulf climbed US$ 1500 from la ...
Friday, 14 October 11
ADARO BUYS SERVO MEDA FOR RP200 BIO - INSIDER STORIES
Insider Stories reported that, PT Adaro Energy Tbk (ADRO) announced that its subsidiary PT Alam Tri Abadi (ATI), acquired 35% stake in PT Serv ...
Thursday, 13 October 11
DRY BULK MARKETS RALLY CONTINUES, BUT ANALYSTS WARN IT WILL BE SHORTLIVED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market continued its push forward yesterday, for yet another session, as the BDI (Baltic Dry Index), the industry’s benchmark edg ...
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- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- The University of Queensland
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Planning Commission, India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- MS Steel International - UAE
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
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