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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, 10 October 14
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- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- The University of Queensland
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
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