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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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Friday, 19 September 14
PRICES FOR DRY BULK CARRIERS HAVEN'T CORRECTED ENOUGH, DESPITE LOWER THAN EXPECTED FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A lot has been said and written about the looming dry bulk market recovery over the past few months. However, even if this hasn’t been materi ...
Thursday, 18 September 14
INDONESIA'S JULY COAL EXPORT VOLUME DROPPED 5.13% M-O-M
COALspot.com: Indonesia, one of the world's largest coal producer and the global leading multi grade coal exporter shipped around $1.65* ...
Thursday, 18 September 14
PANAMAX : US GULF/CHINA FRONTHAUL ARE NOW PAYING TYPICALLY 14.5K + 450K BB - FEARNRESEARCH
Handy
We still see a firming tendency in the Atlantic and it is still ECSA and USG leading on. USG/Cont now up in about USD 17/18k for a Smax whi ...
Thursday, 18 September 14
ELECTRONIC BILLS OF LADING: A GUIDE TO PAPERLESS TRADING WHICH HAS TAKEN THE SHIPPING INDUSTRY BY STORM
Bimco has recently developed and published a charter party clause that specifically addresses the use of electronic bills of lading. Increasing use ...
Wednesday, 17 September 14
PANAMAX: LIMITED INTEREST IN BOTH BASINS; RISING TONNAGE - INTERMODAL
With the week starting off at a fast pace and with the positive momentum from the previous Friday seemingly sticking around for a bit longer, most ...
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- Videocon Industries ltd - India
- The University of Queensland
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- Kohat Cement Company Ltd. - Pakistan
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- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
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- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
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- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
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- Indonesian Coal Mining Association
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- India Bulls Power Limited - India
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- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Parliament of New Zealand
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
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- Karbindo Abesyapradhi - Indoneisa
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- Vedanta Resources Plc - India
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- Australian Coal Association
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- Thai Mozambique Logistica
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- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
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- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
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- SMC Global Power, Philippines
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Planning Commission, India
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- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
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- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
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- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Economic Council, Georgia
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- Global Coal Blending Company Limited - Australia
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- TNB Fuel Sdn Bhd - Malaysia
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