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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, 08 April 19
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Sunday, 07 April 19
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KNOWLEDGE TO ELEVATE
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- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- VISA Power Limited - India
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Australian Coal Association
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- MS Steel International - UAE
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
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