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Additional levy imposed on coal block allottees is penalty, can't be passed on to end consumers: APTEL

Appellate Tribunal for Electricity (APTEL) recently held that the additional levy imposed on coal block allottees pursuant to the arbitrary allocation process was in the nature of penalty and could not be passed on to the end consumers (Jaiprakash Power Ventures Ltd vs MPERC &Ors). M/s Jaiprakash Power Ventures Ltd (Appellant) had filed an appeal under Section 111 of the Electricity Act, 2003 against an order passed by the Madhya Pradesh Electricity Regulatory Commission.

Before the Commission, the Appellant had argued that the additional levy raised by the fuel supply company i.e Madhya Pradesh State Mining Corp. Ltd (MPSPCL) on the Appellant was recoverable as variable (fuel) charges from the procurers of electricity. The additional levy was imposed pursuant to the direction of the Supreme Court cancelling several coal block allocations, and the provisions of

the Coal Mines (Special Provisions) Act, 2015. The Supreme Court had requested the Central government to direct allottees to pay an additional levy of Rs 295 per MT of coal, towards financial loss caused to the exchequer by illegal and arbitrary allotments. The Appellant said that additional levy formed part of the landed cost of fuel under Regulation 41 of the MPERC (Terms & Conditions for determination of Generation Tariff) Regulations, 2012 and was, thus, recoverable from the customers. APTEL dismissed the appeal and held that the Commission was correct in holding that additional levy was a penalty which could not be passed through to the Discom and the consumers.

Coal import prices volatile as China bans Australian import: Ind-Ra

The indefinite Chinese ban on Australian coal imports will keep import prices for India volatile over the near term, according to India Ratings and Research (Ind-Ra). Australia-origin coking coal import (comprising 67 per cent share in FY20) prices have remained subdued up to mid-December, providing respite to the spreads for domestic steel players while iron ore prices are soaring. The import prices of non-coking coal from South Africa and Indonesia (comprising 85 per cent share in FY20) have seen a strong momentum up to mid-December, making imported coal more expensive and thus, hitting the margins of domestic power sector participants dependent on imported coal. The Smart Electricity Conclave aims at providing a platform for digitalisation experts from around the globe to share best practices, chalk out a digital roadmap and act as a bridge between the industry and decision-makers for the success of November to 56 million tonnes, higher 2.6 per cent month-on-month and 6.2 per cent year-onyear, driven by an improving domestic power demand by 3.7 per cent y-o-y. Accordingly, domestic coal production continued to improve to 56.6 million tonnes, higher 11.6 per cent m-o-m and 2.2 per cent y-o-y.

Australia Gladstone port sends no coal to China in Nov

The Australian port of Gladstone in Queensland did not ship coal to China in November for the first month in nearly a decade, but exports stood at the second highest level this year as India and Japan led stronger buying. Gladstone's exports to China often ease in September-October as annual import quotas to China fill, before rebounding in December ahead of the start of new quotas for the new year. This is the first time since January 2011 that Gladstone did not send any coal to China in a month, following China's imposition of an import ban on Australian coal in October as tension between Beijing and Canberra intensified. Gladstone shipped around a third of hard coking, a third of semi-soft coking and a third of thermal coal in 2019 to global destinations, according to data from the Queensland government. Hard coking coal accounted for around a third of 11mn t that the port sent to China in 2019 and the rest was thermal coal, according to data from GTT. China purchased 10.1mn t of coal from Gladstone in January-November, compared to 9.63mn t as year earlier as it took more coal earlier in the year when other nations lowered imports. Coal shippers hope that exports to China will pick up in December ahead of the renewal of the import quotas, as they have in previous years. It will signal a major change in Beijing's policy if they do not. Despite the absence of buying from China, Gladstone shipped 6.24mn t in November, up by 7pc

from October and 6pc on November 2019 and stood at the highest monthly level since January. The increase reflected increased shipments to India, Japan and South Korea, after these countries cut buying in the middle of 2020 because of domestic Covid-19 lockdowns.

Indonesia sets December HBA thermal coal price at $59.65/ mt,up 7.1% on month

Indonesia's Ministry of Energy and Mineral Resources set its December thermal coal reference price – also known as Harga Batubara Acuan, or HBA – at $59.65/mt, down 10% year on year but up 7.1% on the month, according to a ministry official.

"The increasing demand from Japan, South Korea and India for Indonesian thermal coal shows

improvements in their domestic industrial activities," the official said. "Indonesia's commitment to increase its export to China has also strengthened positive sentiment for coal prices," the official added. The ministry had set the price for November 2020 at $55.71/mt, and for December 2019 at $66.30/mt. The HBA is a monthly average price based 25% each on Platts Kalimantan 5,900 kcal/kg GAR assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR) and globalCOAL Newcastle (6,000 kcal/kg NAR). In November, the daily Platts FOB Kalimantan 5,900 kcal/kg GAR coal assessment averaged $51.58/mt, up 1.9% from $50.63/mt in October. The HBA price for thermal coal is the basis for determining the prices of 77 Indonesian coal products and calculating the amount of royalty producers have to pay for each metric ton of coal sold. It is based on 6,322 kcal/kg GAR coal with 8% total moisture content, 15% ash as received and 0.8% sulfur as received.

Indonesia offers incentives to coal gasification plant

State-owned Indonesian mining firm Bukit Asam's coal gasification plant in south Sumatra has been designated a national strategic project by the government, giving it preferential treatment for permit applications and tax waivers on land and building acquisitions to lower project costs.

This is a sign of the national government's commitment to accelerate the development of Indonesia's emerging downstream coal industry. The policy is also aimed at boosting investment in the sector, following the approval of royalty exemptions for coal that will be used for downstream purposes.

Preparatory work at Bukit Asam's plant is currently under way. Infrastructure construction is expected to start in mid-2021 with an expected target completion date of 2025. Once operational it will consume 6mn t/yr of coal to produce 1.4mn t of dimethyl ether that can be used as a substitute for LNG.

Jakarta also listed the TanjungEnim industrial park in south Sumatra as a national strategic project. TanjungEnim is set to be the centre of Indonesia's downstream coal sector.

Indonesia targets coal output of 550 million tonnes in 2021

Indonesia has set its coal production target at 550 million tonnes for 2021, a figure unchanged from this year, due to the raging COVID-19 pandemic.

Coal business director Sujatmiko at the Ministry of Energy and Mineral Resources (EMR) told reporters at the 2020 Coal and Mineral Virtual Expo on December 10 that the target takes into account economic recovery, following the COVID-19 pandemic, for both the domestic and export markets.

Sujatmiko added that coal production had reached 513.6 million tonnes as of December 10 or 93 percent of this year’s target. The Indonesian government remains determined to meet this year’s coal production target, despite the lower demand. The Indonesian Coal Mining Association (APBI) previously said it expected coal demand to really start recovering in the second half of 2021, assuming that most of the world successfully distributes a COVID-19 vaccine by that time. Earlier this month, Indonesian President JokoWidodo ordered his cabinet ministers to set a target to reduce exports of unprocessed coal and accelerate plans to develop derivative industries for processing the fuel.

Cabinet clears pact between India, US for exchange of information in electricity sector

The Union Cabinet approved a pact between India and the US for exchange of information in areas of mutual interest in the electricity sector. "Union Cabinet, chaired by Prime Minister NarendraModi, has given its approval for the Central Electricity Regulatory Commission's (CERC) proposal for entering into an MoU...(with) the Federal Energy Regulatory Commission, United States of America, for exchange of information and experiences in areas of mutual interest," according to an official statement.

The memorandum of understanding (MoU) will help in improving regulatory and policy framework for developing efficient whole sales power market and enhancing grid reliability, according to the statement.

The activities to be carried out under the MoU include identifying energy-related issues and developing topics and possible agendas for the exchange of information.

It also includes to participate in seminars, visit and exchanges. It provides for development of programmes of mutual interests and where appropriate hold these programmes locally to enhance participation.

It also includes that when practical and of mutual interest, provide speakers on energy issues and other personnel (management or technical).

South Africa tribunal approves South32 thermal coal operations sale

South Africa's antitrust tribunal approved the sale of Australia's South32 S32.AX thermal coal business to Seriti Resources Holdings, clearing another hurdle in the miner's way to sealing the deal.

South32 announced the sale of South32 SA Coal Holdings Proprietary (SAEC) last year in November to begin its exit from energy coal, as investor pressure and climate change concerns prompt businesses to shift towards greener fuel sources.

The approval is contingent on Johannesburgbased Seriti meeting some conditions including employment terms and divestiture by SAEC of certain pending mining rights, the Competition Tribunal of South Africa said in a statement.

The deal has taken longer to close than anticipated, South32 said in October, and still needs to be approved by South African electricity generator, Eskom, the largest consumer of thermal coal in the country.

"While the transaction remains subject to material conditions, including approvals from Eskom, we continue to make progress in securing these and remain on-track to close during the March 2021 quarter," South32 Chief Executive Officer Graham Kerr said.