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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, 25 March 20
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- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Mercator Lines Limited - India
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- White Energy Company Limited
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Australian Coal Association
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Economic Council, Georgia
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