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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, 23 February 10
UAE COMPANY TO ACQUIRE CONTROL OF ALLBOND MAKMUR
The Jakarta globe reported that, Renuka Energy Resources Holding, based in the United Arab Emirates, has signed an agreement to acquire 80 percent o ...
Tuesday, 23 February 10
CIL SHORTLISTS 24 FOREIGN COS FOR JV
India's Economic Times reported that, Coal India has shortlisted 24 foreign firms — six each from the US, Australia, South Africa and Indones ...
Saturday, 20 February 10
THE FREIGHT MARKET CONTINUED TO BE SOFT THIS WEEK - CAPT. REDDY
COALspot.com: The freight market continued to be soft this week as still affect of Chinese new year holidays continue. However the index overall had ...
Friday, 19 February 10
MAKING THE JOINT COOPERATION OF PRIVATE GOVERNMENT IN INDONESIA
COALspot.com - Press Release
1. Revision of the presidential decree 67/2005 has been signed by the President on January 28, 2010 with the public ...
Thursday, 18 February 10
THE INDIAN MARKET IS FIRMING A BIT, DUE TO LACK OF TONNAGE IN THE REGION
HANDY
The BSI still decline as holidays around the world have reduced trading.
...
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- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Planning Commission, India
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Bhatia International Limited - India
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
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