Keen on Coal Mines in Indonesia, South Africa: Tata Power

New Delhi: Leading private utility Tata Power has said to ensure future fuel supply, it will continue to look for coal mines abroad, as the domestic supply shortage has been impacting its operations. "We are already scouting for coal mines overseas. We are looking at Indonesia and South Africa for acquiring coal mines," Tata Power Executive Director for Operations S Padmanabhan told PTI in an interview here today. The price of imported coal is nearly the double the domestic rates hence companies are not keen on running their plants such coal supplies alone, as they are not able to pass on the price difference to discoms in most cases. While a tonne of imported coal is priced at USD 110, the same is available in the domestic market at half that cost. But the state-run monopoly Coal India is able to supply only around 70 percent of the domestic demand. Coal India currently produces only 440 million tonne, while the demand is 650 mt. Coal India is meeting the gap through imports. Explaining the rationale for owning more mines overseas, Padmanabhan said, "given the demand for the fuel for our power plants and the shortage of domestically produced coal, we have to depend on imports." Though he did not elaborate on the timeline for any such deal or the quantum of funds earmarked for this, he explained that this would not be an outright purchase but mostly picking up stakes in already operating mines. Currently, the company sources coal from four mines in Indonesia and two from Australia. Out of these four Indonesian mines, Tata Power already owns 30 percent stake each in two of them, with an offtake of a little over 40 mt annually from them. "Our current offtake from these mines is only 3 million tonne, while we can ship as much as 20 mt from each of them. But we don't do that since that will push up cost of power too high." The imported coal is used to fuel its plants in Trombay (1,580 mw) near Mumbai and the 4,000-mw ultra mega power project (UMPP) in Mundra in Gujarat. This March, the first unit of 800-mw of the Mundra UMPP was commissioned and it expects to commission the second unit of an equal capacity by August. As of March 12, the company had an installed capacity of 5,299 mw, which includes 447 mw hydel power, 28 mw of solar and 375 mw of wind mills and the rest come from mix of coal, oil and gas fired plants. Besides the Trombay and Mundra plants, Padmanabhan said the company is hopeful of commissioning its 1,050-mw Maithon plant in Jharkhand on schedule. The first unit (525 mw) of this plant was commissioned last September. On the company's generation target for this fiscal, Padmanabhan said, it is hopeful adding 1,425 mw this fiscal -- 800 mw at Mundra second unit; 525 mw from Maithon; and 100 mw from wind mills. The cost of imported coal shot over the roof after Indonesia had linked coal prices to international spot market last September, rendering redundant all the long-term contracts signed on by Indian power companies like Tata Power, Reliance Power , and JSW Energy . The policy change affected the viability of the Mundra project since Tata Power has worked out fixed tariff purchase agreements with five state electricity boards. While Indonesia imposed market linked-benchmark pricing, Australia resorted to a 30% windfall tax, which had a similar impact of making coal imported from its shores costlier.