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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, 19 August 09
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Wednesday, 19 August 09
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- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- The University of Queensland
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
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