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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, 16 April 10
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- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Australian Coal Association
- PTC India Limited - India
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- The University of Queensland
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Economic Council, Georgia
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- London Commodity Brokers - England
- Eastern Coal Council - USA
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
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