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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, 12 April 18
ALWAYS ACCESSIBLE
KNOWLEDGE TO ELEVATE
On 26 March 2018 Mr Justice Knowles determined that the berth warranty ‘always accessible’ must mean the vess ...
Wednesday, 11 April 18
CHINA UTILITIES PLAN NEW COAL IMPORT PRICE INDEX TO CURB VOLATILITY - REUTERS
China’s major utilities are preparing to launch their own coal price index for imports, an official at China Huaneng Group said, in a move th ...
Wednesday, 11 April 18
US-CHINA TARIFF THREATS RAISE GLOBAL TRADE RISKS - FITCH
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Tuesday, 10 April 18
BUMA GRANTED ADDITIONAL LOAN FACILITY FROM BTMU TO SUPPORT GROWTH
Press Release: PT Delta Dunia Makmur Tbk. is pleased to announce that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), signed an a ...
Monday, 09 April 18
APRIL INDONESIAN COAL PRICE REFERENCE DROPS TO LOWEST IN 2018
COALspot.com: According to latest ministerial decree, the Indonesian Coal Price Reference (HBA) decline 6.98 per cent in April 2018 compared to Mar ...
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- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- The University of Queensland
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Planning Commission, India
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
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