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