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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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Friday, 03 August 12
INDIA - LIGHTS OUT! - SALVA
The Indian power sector hit global headlines this week for all the wrong reasons. Firstly, on Monday, over 350 million people lost power across nort ...
Thursday, 02 August 12
OIL & GAS COMPANIES TO MEET IN MYANMAR FOR UPDATES ON NEW ROUND OF BIDDING AND INVESTMENT POTENTIAL IN UPSTREAM OIL, GAS, AND POWER GENERATION
Press Release - 2nd MOGP Summit (Myanmar Oil, Gas & Power) will convene in Yangon from 3 – 6 September 2012, to unveil new round of biddin ...
Thursday, 02 August 12
DRY BULK MARKET RATES CONTINUE SLUMP AMID SLOWER DEMAND NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept on its downward path Wednesday, as the BDI (Baltic Dry Index) kept retreating to new lows. The index was down by 2.12 perce ...
Monday, 30 July 12
DRY BULK MARKET TO REMAIN UNDER PRESSURE FOR THE REST OF 2012 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In an interview with Hellenic Shipping News Worldwide, Mr. Yannis Pachoulis, President of the Hellenic Shipbrokers' Association, remains cautiously ...
Sunday, 29 July 12
FREIGHT MARKET MOMENTUM CONTINUES TO WEAK
COALspot.com - The freight market continued to soft this week with all the segments dropped and the BDI fell below 1,000 points and closed at 933 po ...
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- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- PTC India Limited - India
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
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