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