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