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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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Wednesday, 23 September 09
TATA POWER TO COMMISSION 2 UNITS OF MUNDRA UMPP BY FEB 2012
Business Standard reported that, the country's largest private power producer Tata Power today said it would commission 1,600 MW capacity of its 4, ...
Wednesday, 23 September 09
NAVA BHARAT TO ADD 300MW CAPACITY, RAISE RS1,386 CRORE (US$ 289,674,610)
The firm plans to place orders for equipment by the end of October and commission both the plants by April 2012 to sell power in the open market
...
Tuesday, 22 September 09
ASIA COAL-PRICES TOPS $70 AS TRADERS SEEK BARGAINS
Reuters reported that, prices of power-station coal in Australia, a benchmark for Asia, rose for the second week to top $70 a tonne this week, clawi ...
Tuesday, 22 September 09
QINHUANGDAO COAL PRICES SURGE ON STRONG DEMAND
People's Daily Online reported that, Coal prices at Qinhuangdao port, China's largest coal port, witnessed the sharpest increase in the year last ...
Tuesday, 22 September 09
SHORT PERIOD RATE FOR SUPRAMAX WAS AROUND US$ 17,000 PER DAY FOR VESSELS OPENING FAR EAST / SE ASIA - VISTAAR
COALspot.com (Singapore): The dry bulk market continued to be stable with the BDI just dropping by about 5 pct to 2,356 points last week. The change ...
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- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Marubeni Corporation - India
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Planning Commission, India
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
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