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