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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, 08 June 12
MINISTER DENIES COAL EXPORT TAX PLAN, ENDORSES RESTRICTIONS - THE JAKARTA POST
The Jakarta post, one of the leading english news paper in Indonesia reported that, Energy and Mineral Resources Minister Jero Wacik has denied that ...
Friday, 08 June 12
NO IMMEDIATE IMPACT ON ADARO'S RATING FROM BEP TRANSACTION - FITCH RATINGS
Fitch Ratings has said that PT Adaro Indonesia's (Adaro, 'BB+'/ Stable) ratings are not immediately affected by its parent PT Adaro Energy Tbk's ...
Thursday, 07 June 12
DRY BULK MARKET FALLS FOR 10 STRAIGHT SESSION ON OVERSUPPLY PROBLEMS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A resurgence of oversupply, coupled with national holidays in various parts of the world has contributed to yet another fall of the dry bulk market ...
Thursday, 07 June 12
COAL EXPORT TAX NOT RATIONAL: MINISTER - THE JAKARTA POST
Trade Minister Gita Wirjawan has criticized as irrational the idea to restrict coal exports by imposing an export tax, According to The Jakarta post ...
Thursday, 07 June 12
BY 2022 PLN IS EXPECTED TO BURN AROUND 125 MILLION TONS OF COAL
COALspot.com - Indonesia's state owned electricity company's (PLN) coal consumption is expected to reach 125.7 million tons by 2012.
Nur Pamudj ...
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- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- VISA Power Limited - India
- GMR Energy Limited - India
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
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