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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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Tuesday, 25 January 11
DRY BULK RATES CONTINUED TO TUMBLE LAST WEEK - BRS
With weather-related problems affecting the short-term outlook, and new building deliveries the longer-term picture, dry bulk rates continued to tum ...
Tuesday, 25 January 11
R-POWER TO INVEST $5BN IN INDONESIA - THE TIMES OF INDIA
The Times of India reported that, In what is being seen as one of the largest foreign investments in Indonesia, Reliance Power will infuse $5 billio ...
Monday, 24 January 11
GOVT PROMISES COAL FOR PLN DESPITE PRICE SPIKES - THE JAKARTA POST
The Jakarta Post reported that, the government says state electricity company PT PLN will receive enough coal to fire its power plants, despite pric ...
Monday, 24 January 11
DRY BULK MARKETS DOWNTURN SEES NO RELIEF - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept falling for yet another week, with the industry’s benchmark, the Baltic Dry Index (BDI) losing an additional 4.79 ...
Sunday, 23 January 11
THE AVERAGE CHARTER RATE FOR CAPE SIZE VESSELS WAS AT $ 8,859 PD ALMOST CLOSE TO 2008 LOWS - VISTAAR
COALspot.com - The BDI continues to drop and saw a drop of about 5 pct this week closing at 1,370 points. “ In May 2010 the BDI touched ...
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- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Bhatia International Limited - India
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
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