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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, 25 October 21
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Monday, 25 October 21
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Friday, 22 October 21
THE BIG PICTURE: ENERGY MARKETS - BREAK WAVE ADVISORS
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- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- White Energy Company Limited
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Marubeni Corporation - India
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Australian Coal Association
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
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