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