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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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Wednesday, 16 July 14
INDIA BUDGET HAS LIMITED SHORT TERM IMPACT ON POWER SECTOR - FITCH RATINGS
Fitch Ratings says that the measures announced relating to India's electricity sector in the budget for FY2015 are directionally correct but in ...
Wednesday, 16 July 14
WEEKLY SHIPPING MARKET INSIGHT - INTERMODAL
Wake me up when September ends - Theodore Ntalakos
Since last September most thought that the worst was behind us. It looks like the market de ...
Tuesday, 15 July 14
INDONESIA'S TOTAL COAL PRODUCTION REACHED ANOTHER HIGH DURING THE FIRST SIX MONTHS; GOVERNMENT EXPECTED TO RAISE ROYALTIES
COALspot.com: Indonesia's total coal production reached 213 million tons during January through June, up by 7.6 percent y-o-y. Coal output in I ...
Monday, 14 July 14
THE END OF THE ERA OF HEAVY FUEL OIL IN MARITIME SHIPPING - ICCT
KNOWLEDGE TO ELEVATE
Since the 1960s, heavy fuel oil (HFO) has been the king of marine fuels. Viscous, dirty, yet inexpensive and widely avail ...
Monday, 14 July 14
SGX SUB-BIT FOB INDONESIA COAL SWAP FOR Q4' 14 DELIVERY CLOSED AT $ 54.80
COALspot.com: Indonesian coal swaps for average Q3’ 2014 lost on day, week and on month according to AsiaClear OTC coal swap's reports re ...
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- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Planning Commission, India
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
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