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