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