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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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Thursday, 25 August 11
OPG EXPECTS COAL PRICES TO REMAIN FIRM IN THE SHORT TERM
COALspot.com - Revenue of OPG, the developer and operator of Group Captive power plants in India up 188% to £33.15m and Income from continuing ...
Thursday, 25 August 11
PAITON POWER LOOKING FOR 3.96 MILLION TONS OF COAL
COALspot.com - PT Pembangkit Jawa Bali (PJB) is looking for 3.96 million tons coal with calorific value 4,800 kcal/kg on as received basis. Accordin ...
Tuesday, 23 August 11
ICMA CALLS GOVERNMENT TO REVIEW EXPORT BAN REGULATION
COALspot.com - Chairman of the Indonesian Coal Mining Association (ICMA) Bob Kamandanu asks the government to review the regulation that being draft ...
Tuesday, 23 August 11
ADARO ENERGY ACQUIRES 75% STAKE OF PT MUSTIKA INDAH PERMAI FOR US$ 222.5 MILLION
COALspot.com - PT Alam Tri Abadi, a wholly owned subsidiary of PT Adaro Energy Tbk, signed a share purchase agreement to acquire a 75% stake of PT M ...
Tuesday, 23 August 11
COAL DEMAND IS REMAINED STRONG IN SPITE OF CURRENT GLOBAL ECONOMIC UNCERTAINTY - BUMI
COALspot.com - Indonesia's largest coal producer, PT Bumi Resources, Tbk (BUMI)'s sales revenue has increased to US$1.79 billion (compared with US ...
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- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Planning Commission, India
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
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