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