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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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Wednesday, 07 June 17
INDO HBA INDEX SEE LARGEST DROP SINCE FEBRUARY 2017
COALspot.com: Indonesian coal benchmark price decline 9.96% in June, government data showed.
The benchmark price of Indonesian thermal coal de ...
Wednesday, 07 June 17
MARKET INSIGHT - PANOS MAKRINOS
2017 undoubtedly began with very optimistic signs for the future of the Oil & Gas industry on the back of the Vienna Agreement. OPEC and non-OP ...
Tuesday, 06 June 17
THE FREIGHT MARKET WAS CONTINUE TO TUMBLE THIS PAST WEEK
COALspot.com: The Freight market continued to tumble this past week, as BDI and cape index showed a negative trend week over week.
The Baltic ...
Friday, 02 June 17
THE WORLD COAL ASSOCIATION HAS RESPONDED TO THE WITHDRAWAL OF THE UNITED STATES FROM THE PARIS AGREEMENT
“This decision is the result of a failure to build a genuine coalition on climate action that recognises the role of all technologies, includ ...
Friday, 02 June 17
MOL SIGNS COAL TRANSPORT DEAL WITH THERMAL POWERTECH CORPORATION INDIA LIMITED
MOL Signs Coal Transport Deal with Thermal Powertech Corporation India Limited - Contributing to a Stable Power Supply in India -
Jun ...
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- Bulk Trading Sa - Switzerland
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- Electricity Generating Authority of Thailand
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- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
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- Siam City Cement - Thailand
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- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
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- Coal and Oil Company - UAE
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- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
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- Attock Cement Pakistan Limited
- The University of Queensland
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- Central Electricity Authority - India
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- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
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- Mercator Lines Limited - India
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- Standard Chartered Bank - UAE
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- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
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- Ministry of Transport, Egypt
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- Economic Council, Georgia
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- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
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- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Wilmar Investment Holdings
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- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
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- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
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- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Formosa Plastics Group - Taiwan
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- Pipit Mutiara Jaya. PT, Indonesia
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- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
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- MS Steel International - UAE
- Romanian Commodities Exchange
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- Electricity Authority, New Zealand
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- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
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- South Luzon Thermal Energy Corporation
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- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
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- PNOC Exploration Corporation - Philippines
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- Kohat Cement Company Ltd. - Pakistan
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- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
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- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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