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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, 24 February 17
RUSSIAN OIL AND GAS WITHSTANDS OIL PRICE SHOCK - FITCH RATINGS
Fitch Ratings says in a new report that the Russian oil and gas sector has withstood the oil price stock of 1H16. Key events of 2016 include record ...
Friday, 24 February 17
US WEEKLY COAL OUTPUT ESTIMATED AT 16.8 MMST - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.8 million short ton ...
Thursday, 23 February 17
ULTRA SUPRAMAX: INDONESIA TO INDIA IS GETTING AROUND $10-11K BASIS SINGAPORE DELIVERY
Supramax
The week started off quietly in the Atlantic with more activity in the Pacific basin.
According to Fearnleys weekly report, frontha ...
Wednesday, 22 February 17
TANKER MARKET INSIGHT - KATERINA RESTIS
In 2016 a session of the IMO committee in London, set the new prerequisites effective from January 2020, which will necessitate global Sulphur cont ...
Tuesday, 21 February 17
INDIA'S JANUARY COAL IMPORTS DECLINE 21.7 PERCENT YEAR -ON-YEAR TO 14.31 MT - PTI
Coal imports declined by 21.7 per cent to 14.31 million tonnes in January as the power utilities did not lift much fuel due to abundant stock avail ...
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- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Australian Coal Association
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- White Energy Company Limited
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
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