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