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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, 02 February 22
COAL STORAGE IN CHINA’S POWER PLANTS NEAR RECORD HIGHS - XINHUA
Coal inflows into China’s power plants have picked up, bringing their coal storage to near record highs, the National Development and Reform ...
Wednesday, 02 February 22
MARKET INSIGHT - INTERMODAL
Oil prices have rallied to the highest level since October 2014 breaking above $90/bbl recently. November 2014 was the point when OPEC unleashed pr ...
Monday, 31 January 22
HOW INDONESIA'S COAL EXPORT BAN COULD IMPACT INDIA - IEEFA
What does it mean for power generation and energy security?
Not long ago, India faced coal shortages due to a decline in domestic co ...
Sunday, 30 January 22
AIR PRODUCTS' COAL GASIFICATION PROPOSAL TRIGGERS LOOMING POLICY DISPUTES IN INDONESIA - IEEFA
Plan to substitute Indonesia’s LPG imports with dimethyl ether may be hard to realize due to conflicting business interests
In ...
Sunday, 30 January 22
ENDGAME FOR NEW COAL POWER PROJECTS? - IEEFA INDIA
Retired coal units must be replaced only by assets that can provide grid flexibility
Reportedly, an expert committee appointed by th ...
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- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Mjunction Services Limited - India
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