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