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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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Wednesday, 21 October 20
INDIA: THE COMMERCIALISATION OF COAL BLOCKS WILL BENEFIT THE ECONOMY - HINDU BUSINESS LINE
As the government of India receives 76 bids for 23 coal mines against the 38 up on auction, what does this commercialisation of coal block allocati ...
Wednesday, 21 October 20
MARKET INSIGHT - INTERMODAL
The second wave of COVID-19 is now a reality; offices are closing again, and stricter rules and regulations are being implemented in public spaces. ...
Tuesday, 20 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.82 PCT - XINHUA
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The index, released by China ...
Tuesday, 20 October 20
BIMCO 'SHIPLEASE' TERM SHEET - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
The ever-growing importance of sale and leaseback transactions as an alternative to financing ships by way of loan, makes ...
Friday, 16 October 20
KOMIPO ON BEHALF OF K GENCO'S INVITED BIDS FOR TOTAL 715,000 MT MIN. 5,700 NAR COAL FOR DECEMBER
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 715,000& ...
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- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Parliament of New Zealand
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Australian Coal Association
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Posco Energy - South Korea
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Videocon Industries ltd - India
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