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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, 25 March 20
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- The University of Queensland
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
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