Power price rates to rise by around 20%
Indian Power generation companies are facing an unexpected situation after they heard the plans of Indonesia, about them putting limitations to coal exports soon. Only now had the government approved import of coal, but unfortunately they may not have much coal to import as the largest supplier of coal, restricts its supply. This decision of Indonesia will create an impact on the giant power industries of India such as Tata Power, Adani Power, Lanco Infratech, GMR, Essar Power and NTPC. This in turn will raise the power generation cost for the power producers which will thus increase the power rates.
Indonesia’s Ambassador to India, Rizali W Indrakesuma, said, “It is imperative for Indonesia to tighten its control on exports to secure long-term supply. As there is low domestic consumption of coal till date, the Indonesian government is still evaluating the new regulation that could ban the export of low-grade coal (i.e. below 5,100 kcal) by 2014.”
Currently, Indonesia takes care of around 70% of India’s thermal coal import which is around 110 MnT. Indonesia’s 78% of the total annual production which is around 304 MnT, is being exported every year to India, China, South Korea, Japan and Taiwan. If they continue to export in the same rate, they will soon have to start importing coal for fulfilling their requirement of 125 MnTPA for its local power industry.
Tata Power currently has a capacity of 8,521 MW, including the 4,000 MW Mundra projects, which is completely depended on imported coal. On listening to the shocking decision plans of Indonesia, Tata Power said, “Each sovereign government will take decisions specific to its priorities; we will abide by it. India will have to work on its energy security on the basis of robust options.” Tata Power is at present India’s largest private sector power producer.
Whereas, Lanco Infratech, another major power Indian power producer says that it would not be affected even if Indonesia implements its plans. T. Adibabu, Lanco’s Chief Operating Officer (Finance), said, “Our imported coal need falls in the high-grade range of above 6,300 kcal per kg. Therefore, this does not impact us. The companies would tweak the mix of low-grade and high-grade coal at power plants to tide over the impact.” The company operates 1,200 MW Udupi Power plant in Karnataka on imported coal.