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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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Wednesday, 28 July 21
IN THE PHILIPPINES, COAL’S DEMISE MAKES WAY FOR A RENEWABLE ENERGY BOOM - IEEFA
Imported gas lock-in could undermine the economic benefits of a clean energy transition
The Philippines’ energy sector is on t ...
Wednesday, 28 July 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during this first half of the year, we continue to come across surprises and new restrictions which are trembling ...
Saturday, 24 July 21
UNDERSTANDING INDIA'S LATEST PEAK POWER DEMAND RECORD - IEEFA
Ramping up solar will be crucial as peak power demand hits during the day
At around noon on 7 July 2021, India’s instantaneous ...
Wednesday, 21 July 21
MARKET INSIGHT - INTERMODAL
Dry Buk Sales and Purchase activity has heated up during 2021, reaching record high levels during the first half of the year. The increased interes ...
Monday, 19 July 21
CHINA'S COAL OUTPUT UP 6.4 PCT IN H1 - XINHUA
China’s raw coal output climbed 6.4 percent year on year to 1.95 billion tonnes in the first six months of the year, official data showed.
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- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- The University of Queensland
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Planning Commission, India
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- GMR Energy Limited - India
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
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