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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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Sunday, 30 December 18
MAJOR LNG BUYERS' UNCONTRACTED DEMAND TO QUADRUPLE BY 2030 - WOOD MACKENZIE
Wood Mackenzie’s latest research reveals that uncontracted demand by the world’s seven largest LNG buyers could quadruple to 80 million ...
Saturday, 29 December 18
DELIVERY OF CARGO WITHOUT PRODUCTION OF THE ORIGINAL BILL OF LADING - TT CLUB
KNOWLEDGE TO ELEVATE
As the bill of lading is a document of title, a person presenting it to the carrier or its agent is ostensibly entitled t ...
Friday, 28 December 18
BIMCO 2020 SULPHUR CLAUSES: "A FAIR ALLOCATION OF RESPONSIBILITIES AND LIABILITIES'? - INCE & CO.
To assist owners and charterers to address the legal issues arising under any time charterparties, which will span the 1 January 2020 implementatio ...
Thursday, 27 December 18
DRY BULKERS SPOT FREIGHT MARKET W/E 21 DEC - ALLIED SHIPBROKING
Capesize
A negative week for the Capesize sector, as activity remained at low levels, especially in the Pacific, with rumors regarding agreed r ...
Thursday, 27 December 18
SHIPPING IS ENTERING A NEW ERA OF EVER CHALLENGING CONDITIONS - ALLIED
As we move closer to the end of the year and we look forward into New Year, we are still finding ourselves looking deep into a market outlook full ...
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- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- The University of Queensland
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Planning Commission, India
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- White Energy Company Limited
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Australian Coal Association
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
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