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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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Friday, 08 September 17
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A recent consultancy survey has suggested that some 85% of refiners have not made plans for how to deal with the expected dramatic fall in g ...
Thursday, 07 September 17
CAPESIZE: EARNINGS FOR THE BIG SHIPS KEEP UP NICELY AS DIPS ARE MODERATE AND SHORT-LIVED - FEARNLEYS
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Wednesday, 06 September 17
LAYTIME - CHARTERERS' RIGHTS & PORT COSTS - NORTH P&I CLUB
KNOWLEDGE TO ELEVATE
In a recent London Arbitration decision (18/17) the Tribunal had to consider whether the owners were entitled to recover ...
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SHIPPING MARKET INSIGHT - STELIOS KOLLINTZAS
The impact of Hurricane Harvey, which made landfall on 25th of August in South East coastline of Texas area has been the major concern of the shipp ...
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- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- White Energy Company Limited
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Australian Coal Association
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
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