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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, 26 July 22
CAP RUSSIA'S OIL PRICE NOW - PROJECT SYNDICATE
Though the price of oil has declined in recent weeks, it is still through the roof, filtering through to gasoline prices, and causing economic and ...
Tuesday, 26 July 22
WILL SOUTH AMERICA’S WINTER DEMAND DRAW LNG CARGOES AWAY FROM EUROPE? - ICIS
South America is now in the middle of its winter demand season. Last year the region increased its share of global LNG imports in winter, with Braz ...
Monday, 25 July 22
GLOBAL 2021 COAL-FIRED ELECTRICITY GENERATION SURGES TO RECORD HIGH - REUTERS
By contrast, mine output was still fractionally below the record set between 2012 and 2014 because older and less efficient coal generators have be ...
Saturday, 23 July 22
THE EU HAS BEEN REDUCING IMPORTS OF RUSSIAN REFINED OIL PRODUCTS SINCE MARCH - BANCHERO COSTA
The European Union could now ban the import and transit of fuel oil from Russia around six months ahead of the planned deadline, an EU official and ...
Saturday, 23 July 22
INDONESIA CONSIDERING SCRAPPING DOMESTIC SALES RULE FOR PALM OIL EXPORTS - REUTERS
Indonesia is considering removing a domestic sales requirement for palm oil exports because high inventories of the vegetable oil have been holding ...
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- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Aditya Birla Group - India
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
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