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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, 19 October 22
WHAT WILL THE GAS MARKET LOOK LIKE IN A NET ZERO WORLD? - WOOD MACKENZIE
The global gas and LNG market faces a number of ‘great unknowns’. With the market in turmoil uncertainty abounds – from the scale ...
Wednesday, 19 October 22
MARKET INSIGHT - INTERMODAL
The LNG market remains extremely tight, and as a result adding further pressure on the vessel charter market, which is already stretched due to the ...
Sunday, 16 October 22
COULD A RETURN TO SHALE EXPLORATION BE PART OF THE SOLUTION TO EUROPE'S GAS SUPPLY PROBLEM? - WOOD MACKENZIE
The European gas market is in turmoil. Russia’s invasion of Ukraine has shaken things up, triggering a complete rethink of European energy st ...
Thursday, 13 October 22
THERMAL COAL PRICES RETREAT AS WINTER SUPPLY FEARS EASE - REUTERS
The prices of key thermal seaborne coal grades are retreating amid signs that supplies will be sufficient to meet winter demand in both Europe and ...
Thursday, 13 October 22
SPOT COAL BIDDING: CHINESE FIRM WANTS REVISED MECHANISM - BUSINESS RECORDER
Chinese company M/s Huaneng Shandong Ruyi (Pakistan) Energy Limited (HSR) has cautioned National Electric Power Regulatory Authority (Nepra) that i ...
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- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- White Energy Company Limited
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
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