Good news for Aussie thermal coalers...."there seemed to be...

Good news for Aussie thermal coalers...."there seemed to be another shocker waiting for them with Indonesia planning to restrict coal exports"

New fuel shortage threat looms on power firms

21 hours 10 minutes ago

Even as Indian power producers were thinking the government had resolved their problems by putting in place a pass through mechanism for imported coal, there seemed to be another shocker waiting for them with Indonesia planning to restrict coal exports. The proposed move is likely to jack up generation cost for half a dozen firms TATA Power, Adani Power, Lanco Infratech, GMR, Essar Power and NTPC leading to a rise in power rates.

Mr Rizali W Indrakesuma Indonesia's Ambassador to India said that “Indonesia accounts for 70% of India's annual thermal coal import of around 110 million tonnes. It's 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 (that below 5,100 kcal) by 2014."

Around 78% of Indonesia's annual produce of 386 MT coal is exported to China, India, South Korea, Japan and Taiwan. At this rate of exports by 2020, Indonesia will have to start importing coal to meet its 125 MT annual demand from its local power industry. The bulk of Indonesian coal imported by Indian power firms is in the range of 3,600 kcal per kilogram to 4,200 kcal per kilogram.

Reacting to the development, India's largest private sector electricity producer, TATA Power said that 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. The company has a current installed capacity of 8,521 MW including the 4,000 MW Mundra project, which is based on imported coal.

Mr T Adibabu COO (finance) of Lanco Infratech said that it would not be hit if the proposal was implemented. Our imported coal need falls in the high grade range of above 6,300 kcal per kilogram. 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.

Mr Kalpit Dubey analyst with commodity focused research firm Ore Team said that “There would be an immediate impact on the operational cost of producers. Considering that the ban is coming into play, costs could go up by 7% to 11% if low gross calorific value is substituted with higher GCV in Indonesia and 15% to 20% if companies look for other export destinations like Australia, South Africa and the US."

Source – Business Standard.com
http://www.coalguru.com/australia_india/new_fuel_shortage_threat_looms_on_power_firms/11118