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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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Tuesday, 29 November 22
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- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- The University of Queensland
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
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