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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, 09 September 20
MARKET INSIGHT - INTERMODAL
The uneventful summer lull which is coming to an end soon has left its stigma on the newbuilding market, which has already been devastated by the g ...
Saturday, 05 September 20
INDIA WON'T KICK ITS COAL HABIT SO EASILY - HINDU BUSINESS LINE
India has traditionally considered itself lucky to have been endowed with abundant coal reserves, which it has sought to use to meet its energy nee ...
Saturday, 05 September 20
FINANCING COMPLETE FOR 900MW FIFTH PHASE OF MASSIVE DUBAI SOLAR PARK: ARABIAN BUSINESS
Saudi-based ACWA Power on Thursday announced it has completed the signing of all financing agreements for the fifth phase of the Mohammed bin Rashi ...
Saturday, 05 September 20
POLISH COAL DEMAND EXPECTED TO FALL BY 7 MLN TONNES NEXT YEAR: MINISTER - REUTERS
Poland’s demand for coal is expected to fall by around 7 million tonnes next year, or more than 10% of annual hard coal production, after a d ...
Saturday, 05 September 20
PAKISTAN'S NEW 27-YEAR POWER PLAN RISKS LOCKING IN LONG-TERM OVERCAPACITY, LEAVING IMPORTED COAL AND LNG PLANTS STRANDED - IEEFA
Wind and solar, the country’s cheapest source of new generation, also overlooked
Pakistan risks locking itself into building m ...
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- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Mjunction Services Limited - India
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Australian Coal Association
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
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