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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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Wednesday, 15 July 09
INDONESIAN FIRM SUBMITS LOWEST BID FOR NAPOCOR COAL
ABS-CBN News reported that, An Indonesian firm offered to supply 195,000 tons of thermal coal to top Philippine electricity producer National Power ...
Wednesday, 15 July 09
INDIAN COAL MINISTRY TO CONSIDER POWER PLANT ALTERATION PROPOSALS
PTI reported that the coal ministry has agreed to consider applications of power plants seeking long term coal linkage due to enhancement in electri ...
Wednesday, 15 July 09
SHENHUA STARTS WORK ON INDONESIA POWER PLANT
Bloomberg reported that China Shenhua Guohau Power a unit of China’s biggest coal producer started construction of a power plant and mine in I ...
Wednesday, 15 July 09
PLN OPENS TENDERS FOR SUPPLY OF LOW - GRADE COAL
The Jakarta Globe, a Indonesian new paper reported that, State power utility PT PLN has opened a tender for the supply of low-grade coal for the nat ...
Tuesday, 14 July 09
MMTC SAYS MAY RE-TENDER FOR 12.5 MLN T COAL
* KIS has demanded investigation into procurement
* MMTC says import delays could add to power shortages
Alibaba reported that, India's s ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- The University of Queensland
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- White Energy Company Limited
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
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