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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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Tuesday, 26 July 22
CAP RUSSIA'S OIL PRICE NOW - PROJECT SYNDICATE
Though the price of oil has declined in recent weeks, it is still through the roof, filtering through to gasoline prices, and causing economic and ...
Tuesday, 26 July 22
WILL SOUTH AMERICA’S WINTER DEMAND DRAW LNG CARGOES AWAY FROM EUROPE? - ICIS
South America is now in the middle of its winter demand season. Last year the region increased its share of global LNG imports in winter, with Braz ...
Monday, 25 July 22
GLOBAL 2021 COAL-FIRED ELECTRICITY GENERATION SURGES TO RECORD HIGH - REUTERS
By contrast, mine output was still fractionally below the record set between 2012 and 2014 because older and less efficient coal generators have be ...
Saturday, 23 July 22
THE EU HAS BEEN REDUCING IMPORTS OF RUSSIAN REFINED OIL PRODUCTS SINCE MARCH - BANCHERO COSTA
The European Union could now ban the import and transit of fuel oil from Russia around six months ahead of the planned deadline, an EU official and ...
Saturday, 23 July 22
INDONESIA CONSIDERING SCRAPPING DOMESTIC SALES RULE FOR PALM OIL EXPORTS - REUTERS
Indonesia is considering removing a domestic sales requirement for palm oil exports because high inventories of the vegetable oil have been holding ...
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- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- GMR Energy Limited - India
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- The University of Queensland
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- White Energy Company Limited
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
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