BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR PRIVACY & COOKIE NOTICE
X


India's Tata Power to seek coal from countries other than Indonesia after court order

New Delhi (Platts)--12 Apr 2017 656 am EDT/1056 GMT


Indian private sector power producer Tata Power will consider sourcing coal from countries other than Indonesia, to address under recovery at its imported coal based 4,000 MW ultra mega power plant at Mundra, in western India's Gujarat state, the company said Tuesday.

The Supreme Court of India set aside the previous favorable order of the Appellate Tribunal of Electricity, which had allowed compensatory tariff on account of force majeure conditions in Indonesia, Tata Power said in a regulatory filing to Bombay Stock Exchange.

The company will continue to pursue all alternatives at Coastal Gujarat Power Limited -- a subsidiary of Tata Power that owns the Mundra UMPP -- including sourcing of competitive coal from other relevant geographies that also use low grade and blended coal options, to contain the onslaught of under recovery at Mundra UMPP, Tata Power said.

Private power producers like Tata Power, Adani Power and Reliance Power had acquired coal assets in Indonesia to fire their thermal power plants in India.

Article continues below...


Request a free trial of: Coal Trader InternationalInternational Coal Report
International Coal Report

Platts Coal Trader International is the only daily publication where you can access Platts proprietary price assessments for coal trading in the Atlantic and Pacific markets, including FOB Newcastle 5,500 NAR; CFR South China 5,500 NAR; and FOB Kalimantan 5,900 GAR.

Every Friday, CTI includes a weekly biomass supplement containing a wood pellet market comment, CIF ARA industrial wood pellet price assessment and pellet generation spreads. Sign up for a free trial below.

Request a trialRequest More Information


In 2010, the Indonesian government changed the law by making coal exports expensive for these companies.

This impacted financial viability of the power plants operated by them because the electricity procurers -- state electricity boards -- were not willing to pay higher prices when the power producers increased the tariffs to offset high Indonesian coal prices.

Last year, the Appellate Tribunal for Electricity justified the hike in tariffs by the power producers in view of the change in regulation in Indonesia, and ordered electricity procurers to pay compensatory tariff for the 4,000 MW Mundra UMPP to offset escalation in the price of imported coal.

The power procurers then went to the Supreme Court against this and disallowed Tata Power from charging compensatory tariff.

The apex court ruling is applicable to Adani Power too, for its 4,600 MW imported coal based plant at Mundra.

Adani Power said in a statement Tuesday that the Supreme Court didn't grant relief for the increase in coal cost due to the change in the Indonesian regulation. The company would decide further course of action after going through the final order, Adani Power said.

From April 2016-February 2017, Adani Power imported around 14.5 million mt of imported coal while Tata's Mundra UMPP imported around 9.9 million mt, according to Central Electricity Authority data.

--Sapna Dogra, newsdesk@spglobal.com

--Edited by Geetha Narayanasamy, geetha.narayanasamy@spglobal.com

Platts Email




Copyright © 2017 S&P Global Platts, a division of S&P Global. All rights reserved.