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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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Thursday, 19 December 19
COAL POWER GENERATION CONTINUES TO DECLINE IN GERMANY: DESTATIS, XINHUA REPORTED
The volume of electricity generated in coal-fired power plants in Germany decreased “markedly” by 37 percent to 34 billion kilowatt-hou ...
Thursday, 19 December 19
BANGLADESH'S NBR CUTS VAT ON COAL IMPORT FOR POWER PLANTS - THE DAILY STAR
The National Board of Revenue (NBR) reduced value added tax on the import of coal for power plants to 5 percent from present 15 percent for five ye ...
Wednesday, 18 December 19
AVERAGE PRICES OF COAL IN 2018 WERE MORE THAN 60% HIGHER THAN IN 2016 - IEA
Coal use grew again in 2018.
Global coal demand increased by 1.1%, continuing the rebound that began in 2017 after three years of decline ...
Wednesday, 18 December 19
ASIA IS SET TO SUPPORT GLOBAL COAL DEMAND FOR THE NEXT FIVE YEARS - IEA
Press Release: Global coal demand is expected to decline in 2019 but remain broadly stable over the next five years, supported by robust growth in ...
Wednesday, 18 December 19
SHIPPING MARKET INSIGHT - INTERMODAL
As we all know very well by now, the reduction in the maximum allowable sulphur content of marine fuels in 2020 is likely to have a massive impact ...
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- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Planning Commission, India
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Australian Coal Association
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Minerals Council of Australia
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
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