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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, 27 September 14
OIL MARKET CONTANGO: SPECULATION ON FUTURE PRICES CAN BE A RISKY MOVE, EVEN FOR TANKER OWNERS HELLENIC SHIPPING NEWS
Despite the fact that tanker owners can easily use their vessels as floating storage units for oil, in a bid to exploit the current oil market dyna ...
Saturday, 27 September 14
MORE COAL MINERS AGREE TO AMEND CONTRACTS - THE JAKARTA POST
The Energy and Mineral Resources Ministry is in a rush to beat a deadline for the conclusion of numerous memorandums of understanding (MoUs) with t ...
Friday, 26 September 14
INDIA SUPREME COURT RULING TO HIT STEEL, UTILITY EARNINGS, SAYS FITCH
COALspot.com: The 24 September Supreme Court of India (SCI) decision to cancel almost every coal block allocation since 1993 will have a negative f ...
Friday, 26 September 14
U.S WEEKLY COAL PRODUCTION FELL 1.8% WEEK OVER WEEK, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.80 million short tons (mmst) of c ...
Friday, 26 September 14
ORACLE SIGNS EPC FRAMEWORK AGREEMENT WITH SEPCO FOR COAL MINE AND POWER PLANT IN PAKISTAN
COALspot.com: Oracle Coalfields PLC, the UK developer of a lignite coal mine and power plant in the south-eastern Sindh Province, Pakistan, has ann ...
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- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Agrawal Coal Company - India
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- The University of Queensland
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
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