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