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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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Monday, 02 December 19
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- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
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