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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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Thursday, 14 May 20
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- VISA Power Limited - India
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Edison Trading Spa - Italy
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- India Bulls Power Limited - India
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- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
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