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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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- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Australian Coal Association
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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