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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, 31 August 10
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Tuesday, 31 August 10
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- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- White Energy Company Limited
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
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