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