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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, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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- Central Electricity Authority - India
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- McConnell Dowell - Australia
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
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