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