indian coal demand & tata

it looks like a nice time to be trying to flog coal in India...

http://www.bloomberg.com/news/2012-02-15/coal-india-ordered-to-sign-first-contracts-in-three-years-to-ease-shortage.html

Coal India Ordered to Sign First Contracts in Three Years to Ease Shortage
By Rakteem Katakey - Feb 16, 2012 1:09 PM GMT+0800

Coal India Ltd. (COAL), the world’s largest producer of the commodity, will sign agreements with the nation’s utilities for the first time since 2009 to boost supplies to plants facing a shortage of the fuel.
Accords will be signed for projects due for completion by March 2015, according to a statement on the Indian Prime Minister’s website yesterday. The government has set a March 31 deadline for agreements for plants constructed by Dec. 31.

Billionaire owners of Indian utilities, including Anil Ambani, Chairman of Reliance Power Ltd. (RPWR), and Gautam Adani, Chairman of Adani Power Ltd. (ADANI), joined Tata Power Co. Chairman Ratan Tata last month in urging Prime Minister Manmohan Singh to ease fuel shortages and help increase generation. Companies have mothballed plans to spend a record $36 billion to build new capacity needed to spur expansion in the world’s second-fastest growing major economy.

“This is a very big, huge step in the right direction,” Ashok Khurana, director general of the Association of Power Producers, said by telephone. “This will help companies raise money for projects and boost the Indian economy. This will give confidence to investors, producers and bankers.”
The BSE Power Index (BSEPOWR), a measure of 19 Indian companies, climbed 2.3 percent to the highest intraday level since Aug. 12. Coal India dropped 3.5 percent to 328 rupees at 10:29 a.m. in Mumbai, the biggest intraday decline since Feb. 1.

Output Decline
The agreements will benefit power plants that will generate an estimated 50,000 megawatts, according to the statement. That’s equivalent to about 27 percent of the country’s current installed capacity. Coal India will arrange alternative supplies, including imports, if its domestic production isn’t enough to meet commitments.
“This is a shot in the arm for the power companies,” said K.K. Mital, a fund manager at Globe Capital Market Ltd. in New Delhi. “The government had shown its intent before and now that process of resolving the issues has started. The market will be very happy with this.”

The mining company hasn’t signed fuel agreements since April 2009 after saying it could supply only 50 percent of the requirement of power plants, according to the statement.
Asok Kumar Sinha, director of finance at Coal India, couldn’t be reached for comment after three phone calls to his office.

India’s peak power deficit was 13.1 percent in December, compared with 10.3 percent in January last year, according to the Central Electricity Authority.

Coal Demand
Coal India, which produces more than 80 percent of the country’s coal, reported a 2.8 percent drop in output to 291.2 million metric tons in the nine months ended Dec. 31, according to a Feb. 13 statement.
India’s coal demand is expected to climb 41 percent to 981 million tons in the next five years, according to estimates by the Planning Commission. Output may rise 28 percent to 715 million tons in this period.
Coal India “is being pushed hard to take immediate measures to enhance coal production,” K. Raja Gopal, Chief Executive Officer of Lanco Infratech Ltd.’s power business, said by telephone from the company’s headquarters in Gurgaon near New Delhi. “If they do not supply 80 percent of the fuel supply agreement, they will be penalized.”
India has never met its power capacity addition goals, mostly based on coal plants, since it started setting targets in 1951. India plans to add 100,000 megawatts of capacity in the five years starting April 1, more than half of which will use coal, according to the power ministry.
The nation had 187,549.6 megawatts of installed capacity as of Jan. 31, according to the Central Electricity Authority.