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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, 18 March 09
MANILA'S NAPOCOR SAYS BIDDING FOR 100,000T COAL FAILS - REUTERS
Top Philippine electricityproducer National Power Corp (Napocor) was unable to secure 100,000 tonnes of local coal for one of its power plantsfollow ...
Wednesday, 18 March 09
INDONESIA'S PLN APPOINTS KPC TO SUPPLY COAL - REUTERS
State electricity firm Perusahaan Listrik Negara (PLN) appointed PT Kaltim Prima Coal to supply 1 million tonnes of coal per annum to Tanjung Jati B ...
Monday, 16 March 09
TATA POWER HAS NO PLAN TO SELL STAKE IN INDONESIA BUMI MINES - BLOOMBERG
Tata Power Co., India’s biggest electricity generator outside state control, said it has “no intention” to sell its stake in two I ...
Monday, 16 March 09
ANTAM SELECTS PARTNERS FOR POMALAA POWER PLANT - THE JAKARTA POST
PT Aneka Tambang Tbk, Indonesia’s second-largest nickel producer, said it intended to develop a $300 million coal-fired plant in Pomalaa, Sout ...
Monday, 16 March 09
ADARO TO BOLSTER SUPPLY CHAIN THROUGH ACQUISITIONS - THE JAKARTA POST
PT Adaro Energy Tbk, Indonesia's second-largest coal producer, plans to acquire a coal barging and transshipment company to improve its supply chai ...
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- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
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