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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, 02 December 20
INDONESIA CONSIDERING CLOSING 3,400MW SURALAYA COAL PLANT - THE JAKARTA POST
The government is considering to shut down the aging Suralaya coal-fired power plant (PLTU) in Cilegon, Banten, and replace it with green energy, a ...
Wednesday, 02 December 20
MARKET INSIGHT - INTERMODAL
It has been another busy week in the dry bulk secondhand market; a healthy number of sales reported predominantly from Japanese owners while owner& ...
Thursday, 26 November 20
DECLINE IN COAL EXPORTS ADDS TO NAVAJO-OWNED COMPANY'S PROBLEMS - IEEFA U.S.
Weak demand and low prices are likely creating steep losses for NTEC
U.S. coal exports to Asia—once heralded as the saving gra ...
Thursday, 26 November 20
COAL FINANCING QUICKLY DRYING UP WORLDWIDE - ANALYSTS : REUTERS
Financing for coal projects is drying up at ever increasing rates as more countries target zero carbon emissions amid an energy transition sweeping ...
Wednesday, 25 November 20
LIBOR REPLACEMENT AND SHIP FINANCE - WHERE IS IT HEADING? - WFW
The likely replacement of the LIBOR at the end of 2021 creates difficult technical and practical issues for all sectors of business and finance. Th ...
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- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Australian Coal Association
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- The University of Queensland
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
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