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