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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, 15 July 09
INDONESIAN FIRM SUBMITS LOWEST BID FOR NAPOCOR COAL
ABS-CBN News reported that, An Indonesian firm offered to supply 195,000 tons of thermal coal to top Philippine electricity producer National Power ...
Wednesday, 15 July 09
INDIAN COAL MINISTRY TO CONSIDER POWER PLANT ALTERATION PROPOSALS
PTI reported that the coal ministry has agreed to consider applications of power plants seeking long term coal linkage due to enhancement in electri ...
Wednesday, 15 July 09
SHENHUA STARTS WORK ON INDONESIA POWER PLANT
Bloomberg reported that China Shenhua Guohau Power a unit of China’s biggest coal producer started construction of a power plant and mine in I ...
Wednesday, 15 July 09
PLN OPENS TENDERS FOR SUPPLY OF LOW - GRADE COAL
The Jakarta Globe, a Indonesian new paper reported that, State power utility PT PLN has opened a tender for the supply of low-grade coal for the nat ...
Tuesday, 14 July 09
MMTC SAYS MAY RE-TENDER FOR 12.5 MLN T COAL
* KIS has demanded investigation into procurement
* MMTC says import delays could add to power shortages
Alibaba reported that, India's s ...
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- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Australian Coal Association
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Anglo American - United Kingdom
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
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