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