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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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Saturday, 08 May 21
LNG-TO-POWER INVESTORS IN THE PHILIPPINES RISK EXPOSURE TO $14 BILLION IN STRANDED ASSETS - IEEFA
High regulatory and financial uncertainty in the Philippines market
The race to develop liquified natural gas (LNG) facilities in th ...
Saturday, 08 May 21
THE COAL-TO-RENEWABLES TRANSITION TAKES OFF - IEEFA
Pre-Biden changes underscore coming 10-year wave of coal plant retirements
The traditional S-curve growth exhibited by disruptive te ...
Friday, 07 May 21
CHINA'S TOTAL COAL IMPORTS FOR 2020 REACHED A VOLUME OF 304 MILLION TONS - ASSOCARBONI
Our benchmarks, manufacturing Countries like China, Germany, Japan, India, South Korea and Taiwan will continue to use a mix of coal and nuclear to ...
Friday, 07 May 21
SEABORNE WORLD COAL TRADE CLOSED 2020 IN NEGATIVE - ASSOCARBONI
Coal confirmed its leadership as leading fuel for electricity generation also in 2020, accounting for 38% of overall production. For the first time ...
Friday, 07 May 21
INDONESIA'S THERMAL COAL EXPORTS IN 2020 DECREASED BY 13%; INDIA REMAINED THE TOP DESTINATION FOR INDONESIAN COAL - ASSOCARBONI
An increase in seaborne trade is forecast for 2022, driven by markets in Southeast Asia, where growing demand for coal from Bangladesh, the Philipp ...
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- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- The University of Queensland
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
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