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Energy department plays down impact of Indonesian coal ban

July 11, 2016 | Editor

THE DEPARTMENT of Energy (DoE) and big coal consumers have downplayed the possible impact of the Indonesian ban on coal shipments to the Philippines, saying the country’s power sector sources its supply through big vessels bearing flags of different nationalities.

“Indonesia’s ban is on their vessels coming to the Philippines,” Energy Secretary Zenaida Y. Monsada said in Filipino during a press briefing on Monday.

She added that the big ships carrying the country’s coal imports were not those of Indonesia.

This comes after reports last Friday said Indonesia had decided to halt coal shipments to the Philippines after an Indonesian vessel and its seven crew members had been abducted within local waters.

Some of the country’s big coal users have supported Ms. Monsada’s assessment on the impact of the ban on the power sector.

Antonio R. Moraza, president of Aboitiz Power Corp., said the ban was for Indonesian ships and tug boats.

“We use neither,” he said, adding that the company uses “big ships” that are “very much less susceptible.”

“Ships we charter go through a different route away from where there have been incidents,” he said.

Joseph C. Nocos, vice-president for business development at Alsons Consolidated Resources, Inc., said the company “typically keep a 60-day inventory of coal.”

“Upon checking with our supplier, we learned that the ban covers barges delivering coal to the Philippines. Our coal comes in larger vessels, hence we are not covered,” he said.

“In the event that coal cannot be procured from Indonesia, our supplier is ready to procure coal from their other sources in Australia and other countries,” he added.

Luis Miguel O. Aboitiz, Aboitiz Power executive vice-president and president of the Philippine Independent Power Producer Association, also said Indonesia’s move would have “no impact” on the company.

Lawrence S. Fernandez, Manila Electric Co. vice-president and head of utility economics, said: “We are in close coordination with our suppliers to ascertain the impact, if any, and will work with them to ensure continuity of electric service to our customers.”

But based on latest DoE data, the country imported 17,407,089 metric tons (MT) of coal in 2015, the bulk of which or 16,555,968 MT came from Indonesia. The rest came from Vietnam, Russia and Australia.

“Of our importation of coal for power, cement and other industries, 96% of these come from Indonesia,” Ms. Monsada herself noted.

The country consumed 22,006,401 MT of coal last year, with power generation accounting for 79.77%, cement for 15.22%, and other industries cornering the rest.

“Possibly, coal demand now is bigger because of the entry of new coal-fired power plants,” Ms. Monsada said.

She said that coal importers usually have an inventory that could last for the next 20 to 30 days.

“What we want to see are the delivery schedules, if some were deferred,” she said, adding that her department was coordinating with the National Defense and Foreign Affairs departments.

She also cited a similar incident on March 26 when a coal shipment on its way to Batangas via a barge was hijacked, although the intention apparently was to take over a tug boat that went with the delivery vessel.

Another incident happened on April 9 after a delivery to Cebu, resulting in Indonesia calling for a ban on coal shipments to the Philippines using its vessels.

Still, if the recent ban causes disruption on supply, she said coal consumers have to negotiate new contracts with suppliers from alternative sources such as Australia, Russia or Vietnam.

She said coal trading goes through a broker who arranges the cost of imports plus freight, including the vessel to be used in the delivery. The distance from the supplier entails additional costs, she added.

Ms. Monsada said that imported coal is crucial for power plants because of its high heating value and sulfur content. Locally sourced coal, which is of lower quality, is blended with the imports.

Locally produced coal amounted to 8,173,078 MT last year, mostly coming from the Semirara coal mines.

Business World Online
By Victor V. Saulon
Posted on June 28, 2016
http://www.bworldonline.com/content.php?section=Economy&title=energy-department-plays-down-impact-of-indonesian-coal-ban&id=129617

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