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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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- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Planning Commission, India
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
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