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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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- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- The University of Queensland
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- Xindia Steels Limited - India
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- GMR Energy Limited - India
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Minerals Council of Australia
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- VISA Power Limited - India
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