Aug 24 2011 ,
By Vikas Srivastav
Mumbai:Tata group chairman Ratan Tata said the current Indonesian coal pricing
situation is acute and the company has approached the Indian government and the Indonesian government for a solution to keep the cost of power under control and make the upcoming ultra-mega power project in Mundra viable.
Addressing the 92 AGM of Tata Power, Tata said the higher price of coal from Indonesia is bound to impact the profitability of the firm’s projects. “I believe the blending of coal can offset the higher cost to some extent, but the situation is acute and we cannot blame the Indonesian government for being concerned about their country. I think Indian government will have to review the tariff structure. I think, the impact will be more on the power producers.”
“Although we have couple of mines in Indonesia and higher price of coal from these mines, in terms of operations, would mitigate the cost of power from Mundra project, but we need to reiterate to the government on tariff restructuring,” he said. Anil Sardana, MD of Tata Power, elaborated on the issue. He said the company plans to use low grade coal as an alternative to the higher priced Indonesian coal for its upcoming ultra-mega power project in Mundra. The company is already using the lower grade coal for its Trombay power plant. “We will source the low grade coal from Indonesia, Africa and our other existing mines and do the trial runs to find if they would be capable of reducing the cost of power from Mundra too as they have done at Trombay.”
In response to a question if they will be able to maintain the efficiency of their plants, he said, “these mines have sufficient amount of coal at their disposal and are willing to supply to us.”
As per the new formula notified by Indonesia’s directorate general of minerals, coal and geothermal, Indonesian coal producers will have to sell at prices notified by their government benchmarked against the international index. The benchmark price is to be based on a formula that refers to the average coal index price in accordance with international market mechanism.
According to market experts, due to the new pricing formula, price of Indonesian coal will go up by $30 a tonne and lead to a Rs 0.70 per unit increase in cost of electricity generation. Until recently, Indonesian coal producers had the freedom to sell their coal at their own price. All existing coal supply agreements with Indonesian coal mining companies will have to be modified to comply with new coal pricing regulations before September 23, 2011.
(sourced MyDigitalFC)
By Vikas Srivastav
Mumbai:Tata group chairman Ratan Tata said the current Indonesian coal pricing
situation is acute and the company has approached the Indian government and the Indonesian government for a solution to keep the cost of power under control and make the upcoming ultra-mega power project in Mundra viable.
Addressing the 92 AGM of Tata Power, Tata said the higher price of coal from Indonesia is bound to impact the profitability of the firm’s projects. “I believe the blending of coal can offset the higher cost to some extent, but the situation is acute and we cannot blame the Indonesian government for being concerned about their country. I think Indian government will have to review the tariff structure. I think, the impact will be more on the power producers.”
“Although we have couple of mines in Indonesia and higher price of coal from these mines, in terms of operations, would mitigate the cost of power from Mundra project, but we need to reiterate to the government on tariff restructuring,” he said. Anil Sardana, MD of Tata Power, elaborated on the issue. He said the company plans to use low grade coal as an alternative to the higher priced Indonesian coal for its upcoming ultra-mega power project in Mundra. The company is already using the lower grade coal for its Trombay power plant. “We will source the low grade coal from Indonesia, Africa and our other existing mines and do the trial runs to find if they would be capable of reducing the cost of power from Mundra too as they have done at Trombay.”
In response to a question if they will be able to maintain the efficiency of their plants, he said, “these mines have sufficient amount of coal at their disposal and are willing to supply to us.”
As per the new formula notified by Indonesia’s directorate general of minerals, coal and geothermal, Indonesian coal producers will have to sell at prices notified by their government benchmarked against the international index. The benchmark price is to be based on a formula that refers to the average coal index price in accordance with international market mechanism.
According to market experts, due to the new pricing formula, price of Indonesian coal will go up by $30 a tonne and lead to a Rs 0.70 per unit increase in cost of electricity generation. Until recently, Indonesian coal producers had the freedom to sell their coal at their own price. All existing coal supply agreements with Indonesian coal mining companies will have to be modified to comply with new coal pricing regulations before September 23, 2011.
(sourced MyDigitalFC)
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