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