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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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Friday, 06 July 18
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- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- PTC India Limited - India
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Posco Energy - South Korea
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- The University of Queensland
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
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