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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, 16 September 09
NAPOCOR GETS 3 OFFERS IN COAL TENDER
ABS-CBN news reported that, The Philippines' state-run National Power Corp. (Napocor) said on Wednesday it received offers from 3 Indonesian firms ...
Wednesday, 16 September 09
S.KOREA KOSEP BUYS 1.06 MLN T COAL-SOURCE
* 6,080 kcal/kg at $63-65, 4,900-5,350 kcal/kg at $56-58
* Initially about 5 mln T offered for tender
Reuters reported that, Korea South ...
Tuesday, 15 September 09
CHINA COAL EXPORT ROSE M-O-M FOR THE STRAIGHT 3 MONTHS
Alibaba reported that, In the January-August period, China coal exports slid by 55.9% to 14.83mln tons month on month. In August, China exported 1.9 ...
Monday, 14 September 09
CIL MAY REDUCE FLOOR PRICE OF E-AUCTION COAL
After receiving a lukewarm response to the forward e-auction started in two of its subsidiaries, Coal India Limited (CIL) is mulling to reduce the f ...
Monday, 14 September 09
INDONESIAN GOVT UPBEAT ABOUT $1.5B, 185-KM COAL RAILWAY PROJECT
In addition to a 30-year concession right, the government will also award a competitive pricing scheme as an incentive to lure investors in a US$1.5 ...
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- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- PTC India Limited - India
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
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