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