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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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Tuesday, 27 October 20
PLN STILL REFUSING TO ADAPT, A MOVE WHICH WILL HURT INVESTORS, CONSUMERS, AND THE GOVERNMENT PURSE - IEEFA
Utility’s latest planning report locks PLN into the past
PLN would be better served restructuring its business to address the current en ...
Monday, 26 October 20
'LONG ASCENT' TO RECOVERY OF GLOBAL GROWTH - BALTIC EXCHANGE
The global economy has so far avoided a “financial catastrophe” but growth projections from the International Monetary Fund’s lat ...
Friday, 23 October 20
SHIPPING LOANS AND COLLATERAL DAMAGE - VICTOR ONYEGBADO, AKABOGU & ASSOCIATES
KNOWLEDGE TO ELEVATE
Shipping finance transactions are characterised by peculiar risk factors principally on account of the shipping asset&rsq ...
Friday, 23 October 20
WHAT WILL THE 2020 ELECTIONS MEAN FOR US ENERGY? - WOOD MACKENZIE
The 2020 elections present American voters with a choice between two radically different visions for the future of energy. President Donald Trump r ...
Wednesday, 21 October 20
BRAZIL EXPORTED 238.7 MLN TONNES OF IRON ORE IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
Brazil’s iron ore exports have been gradually but steadily recovering following a disastrous winter period of 2019/2020. In the first 9 month ...
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- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Economic Council, Georgia
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
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