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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, 05 January 17
UNCHANGED COAL-FIRED TARIFFS PRESSURE CHINA'S GENERATORS - FITCH
COALspot.com: China's decision to keep on-grid electricity prices from coal-fired power unchanged amid higher coal prices will further squeeze ...
Thursday, 05 January 17
CAPE MARKET HAVE KEPT SURPRISINGLY FIRM AND ACTIVE DURING THE CHRISTMAS AND NEW YEAR HOLIDAYS - FEARNLEYS
Supramax
The first week after a slow Christmas break has started off with little activity and softening rates. Not surprisingly, the market is fi ...
Thursday, 05 January 17
COMPARISON OF HONG KONG AND LONDON ARBITRATION - SKULD
KNOWLEDGE TO ELEVATE
Whilst London arbitration is the most popular platform for resolution of charterparty disputes, where the parties involved a ...
Wednesday, 04 January 17
INDONESIA'S COAL PRODUCTION IS ESTIMATED TO REACH 434 MILLION TONS IN 2016 EXCEEDED THE GOVERNMENT'S INITIAL TARGET
Indonesia's coal production is estimated to reach 434 million tons in 2016 exceeded the government's initial target. The Ministry of Energy ...
Tuesday, 03 January 17
BENGKULU TO IMPOSE TOUGHER REGULATION FOR UNPROCESSED COAL AND MINERALS EXPORTS IN 2017 - MEDIA
Bengkulu provincial government is planning to impose tougher regulation for export of coal and mineral in 2017. According to liputan6 online portal ...
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- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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