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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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Saturday, 11 June 22
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Wednesday, 27 April 22
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In 2021, the European Union (27) was the third largest seaborne importer of LNG in the world, with a 15.8% share.
It followed Mainla ...
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- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Planning Commission, India
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- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- London Commodity Brokers - England
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- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
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- Antam Resourcindo - Indonesia
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- Tamil Nadu electricity Board
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- Georgia Ports Authority, United States
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- Sinarmas Energy and Mining - Indonesia
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- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
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- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
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- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
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- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
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- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
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- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
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- Billiton Holdings Pty Ltd - Australia
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- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
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- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
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- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Australian Coal Association
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
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- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
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