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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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Tuesday, 23 August 22
SHIPPING INDUSTRY TO REMOVE THE INDIAN OCEAN HIGH RISK AREA - BIMCO
After more than a decade of effective threat-reducing counter-piracy operations the shipping industry has removed the ‘Indian Ocean High Risk ...
Tuesday, 23 August 22
SHIPPING: GLOBAL TAX REFORM - WATSON FARLEY & WILLIAMS
OECD rules designed to implement a global minimum corporate tax rate for very large multinational groups have now been published and are expected t ...
Tuesday, 23 August 22
PARTIES CONCLUDE JOINT R&D AGREEMENT FOR WORLD’S FIRST AMMONIA FLOATING STORAGE AND REGASIFICATION BARGE CONTRIBUTING TO PROMOTING THE EARLY INTRODUCTION OF AMMONIA FUEL - NYK
NYK Line, Nihon Shipyard Co., Ltd. (NSY), ClassNK, and IHI Corporation (IHI) signed a joint research and development agreement for the commercializ ...
Monday, 22 August 22
INDONESIAN GOVERNMENT IMPOSED ON NEW PROGRESSIVE ROYALTIES FOR COAL
Indonesian President Joko Widodo has signed a Government Regulation (Number 26 of 2022) on 15 August 2022 related to the progressive royalty rates ...
Monday, 22 August 22
CHINA'S JULY RUSSIAN COAL IMPORTS HIT 5-YR HIGH AS WEST SHUNS MOSCOW - REUTERS
China’s coal imports from Russia jumped 14% in July from a year earlier to their highest in at least five years, as China bought discounted c ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Australian Coal Association
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- The University of Queensland
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
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