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