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