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