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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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Friday, 06 November 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 05 November 20
THE INDONESIA COAL PRICE REFERENCE RISES FOR SECOND CONSECUTIVE MONTH
COALspot.com: The Indonesia Coal Price Reference rose for a 2nd month by 9.24% month on month. The Indonesia Coal Price Reference for the month of ...
Wednesday, 04 November 20
PHILIPPINES COAL MORATORIUM HIGHLIGHTS DRAMATIC PIVOT TO RENEWABLE ENERGY INVESTMENT FOR LOWER PRICES AND POWER SYSTEM RESILIENCE - IEEFA
Policymakers and industry leaders ready to embrace new energy technologies
The Department of Energy’s call for a moratorium on ...
Wednesday, 04 November 20
FOREIGN INVESTORS FACE TOUGH TIMES CLOSING VIETNAM’S REMAINING COAL POWER DEALS - IEEFA
Project bankability at risk as new regulations threaten usual contractual terms
Foreign investors will face higher-than-usual risks ...
Wednesday, 04 November 20
MARKET INSIGHT - INTERMODAL
As the end of the year approaches, one would definitely notice that the newbuilding orderbook for bulk carriers is significantly smaller compared t ...
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- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Sical Logistics Limited - India
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- The University of Queensland
- Central Java Power - Indonesia
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
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