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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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Wednesday, 30 June 21
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- Australian Coal Association
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
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