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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, 30 March 17
WHERE AN AGREEMENT FAILS TO DELIVER - WATSON FARLEY & WILLIAMS
KNOWLEDGE TO ELEVATE
Watson Farley & Williams acted for MRI Trading AG in a leading case on ‘agreements to agree’ that was fin ...
Thursday, 30 March 17
PANAMAX : ACTIVITY IN THE PANAMAX MARKET HAS INCREASED SUBSTANTIALLY IN BOTH HEMISPHERES - FEARNLEYS
Supramax
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Thursday, 30 March 17
THE ROLE OF COAL IN THE ENERGY SUPPLY OF THE EU-28: HANS-WILHELM SCHIFFER
The European Union (EU-28) is one of the largest economies in the world, with a gross domestic product (GDP) of €14,635 billion in 2015. It ha ...
Wednesday, 29 March 17
MARKET INSIGHT - NASOS SOULAKIS
Shipowners will always look for market signals in order to gauge market perception and decide upon which strategy to follow next. And while owners ...
Monday, 27 March 17
THE FREIGHT MARKET CONTINUED TO FIRM WEEK OVER WEEK
COALspot.com: The Freight market was continuing to firming up.
The Baltic Exchange, tracking rates for ships carrying dry bulk commodities ros ...
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- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Economic Council, Georgia
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- PTC India Limited - India
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Parliament of New Zealand
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- White Energy Company Limited
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Australian Coal Association
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
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