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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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Tuesday, 14 December 21
COAL LOCK-IN IN SOUTHEAST ASIA PRESENTS A CHALLENGE FOR THE ASIAN DEVELOPMENT BANK'S COAL RETIREMENT PLAN - IEEFA
In August, the Asian Development Bank (ADB) announced an ambitious plan to buy high emissions coal-fired power plants in Southeast Asia and retire ...
Saturday, 11 December 21
BUNKER BUYERS LOSE UP TO $5/MT FOR NOT COVERING ENOUGH SUPPLIERS - INTEGR8 FUELS
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Tuesday, 07 December 21
SUPERCYCLE DEMAND: ARE WE THERE YET? - WOOD MACKENZIE
Taking young children on a long journey is fraught with challenges, not least the inevitable question a few minutes after leaving: are we there yet ...
Tuesday, 07 December 21
COAL WOULD REMAIN ENERGY LEADER FOR AT LEAST 15 YEARS - LIVEMINT
Coal India Ltd (CIL) has been in the eye of the storm after fuel stocks at coal-fuelled power plants depleted in October. Fuel stocks since are bei ...
Tuesday, 07 December 21
GLOBAL SHIPPING OUTLOOK TURNS STABLE FROM POSITIVE ON THE BACK OF PEAKING EARNINGS DURING 2021 - MOODY'S
The outlook for the global shipping industry is changed to stable from positive for the next 12 to 18 months due to demand slightly outstripping su ...
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- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Independent Power Producers Association of India
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Australian Coal Association
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
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