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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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Monday, 02 December 19
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- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- PTC India Limited - India
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Economic Council, Georgia
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Energy Development Corp, Philippines
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