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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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Thursday, 13 September 12
PANAMAX: THE NEGATIVE TREND, POOR SENTIMENT CONTINUES - FEARNLEYS AS
Handy
Lack of cargoes and a growing list of available ships is causing rates to slip for all Atlantic trades.
The only trade keeping somewhat s ...
Thursday, 13 September 12
FUEL EFFICIENT SHIPS MAY BE MORE EXPENSIVE, BUT THEY MAKE FINANCIAL SENSE SAYS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The latest trend in shipbuilding is the so called "Eco" ship, i.e. ships which offer much better fuel consumption and are more cost-effect ...
Wednesday, 12 September 12
INDIAS COALGATE: TIME FOR A ROOT CANAL
A recent report from India’s Comptroller and Auditor General (CAG) pertaining to the allocation of coal blocks has created a political storm i ...
Tuesday, 11 September 12
CLOUDY AND POLICY RISK INDONESIAN COAL INDUSTRY
COALspot.com - Bahana Securities in its latest coal outlook, commented on the Indonesian coal market, with economic slowdown in the four largest coa ...
Tuesday, 11 September 12
SHIP OWNERS KEEN ON SECOND HAND VESSEL PURCHASES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With most ship owners back from their summer rest, things are starting to pick up again in the second hand vessel market, with more and more deals b ...
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- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Australian Coal Association
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
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