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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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Friday, 22 January 10
ENERGY ADVISORY COUNCIL MULLS - COAL EXPORT BAN
The National Energy Council, which advises the House of Representatives and the president on energy issues, has begun to debate a proposal to ban ex ...
Friday, 22 January 10
MERCATOR EYES MORE COAL MINES IN INDONESIA
India’s second-largest private shipping company Mercator Lines is looking at acquiring more coal mines in Indonesia as part of its strategy&nb ...
Friday, 22 January 10
BHAKTI ENERGI IN TALKS OVER COAL VENTURES IN KALIMANTAN
PT Bhakti Energi Persada, one of Indonesia’s biggest miners of brown coal, revealed on Thursday that it was in talks to form a joint venture w ...
Friday, 22 January 10
SHENHUA ENERGY 09 YIELDED 210MN TONS COMMODITY COAL
China Shenhua Energy Co., Ltd. yielded 210 million tons of commodity coal in 2009, hiking 13.2% year on year, the Chinese energy titan announced tod ...
Friday, 22 January 10
JSW ENERGY TO INVEST RS 4,500 CRORE IN COAL MINES ABROAD
The Sajjan Jindal-promoted JSW Energy is planning an investment of Rs 4,500 crore (US$ 978,260,869) to acquire coal mines abroad and another of Rs 1 ...
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- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- White Energy Company Limited
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
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