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