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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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Monday, 10 August 09
POLICY HURDLES DELAY NALCO'S U$$ 4.166 BILLION OVERSEAS PROJECTS
National Aluminium Company Ltd's (NALCO) greenfield projects in overseas markets like Indonesia and Iran are in limbo because of political
...
Monday, 10 August 09
SAIL, TATA STEEL TO REDUCE COAL IMPORTS BY PARADIP PORT
World Shipping News reported that, Steel Authority of India Ltd (SAIL) and Tata Steel have scaled down coal imports through Paradip Port, hit by pre ...
Monday, 10 August 09
NTPC LIKELY TO SET UP POWER PLANTS IN NIGERIA AND SRILANKA
Economic time reported that, National Thermal Power Corporation Limited (NTPC), country's largest power utility, is likely to set up power plants i ...
Monday, 10 August 09
VINACOMIN TO SELL COAL AT MARKET PRICES TO DOMESTIC USERS
VNBusinessNews.com - Reuters reported that Vietnamese government has agreed to let coal monopoly Vinacomin sell coal at market oriented prices to do ...
Sunday, 09 August 09
TNEB ENNORE PORT CALLS TO TRIPLE COAL OUTPUT
World Shipping News reported that, the Tamil Nadu Electricity Board (TNEB) has asked Ennore Port Ltd (EPL) to increase the port’s installed ca ...
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- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Minerals Council of Australia
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
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