Indonesia cap on coal exports may hit Indian power sector

BL reported that Karnataka power sector is likely to be partially impacted by the Indonesian Government move to restrict coal exports.

Private sector power projects under implementation include the 600 MW Tornagallu project promoted by JSW Energy Ltd. This project’s imported coal requirements would be in the region of under one million tonnes a year.

Coal from Indonesia is of high quality with a calorific value of about 3100 kilo calories a kg. The first unit of the JSWEL project entered commercial operations late last month. The second unit of 300 MW is expected to enter into commercial operations this month.

Both these projects are unlikely to be impacted by the Indonesian government’s annual coal export cap of 150 million tonnes. Mr Krishna Deshika JSWEL’s joint group Chief Financial Officer said that “This cap will not have any effect on us or any of our projects.”

This was in view of the fact private sector buyers have already entered into long-term contractual purchases with suppliers. JSW Energy has 25 year agreement with coal suppliers, with prices linked to the Raymond Bay index.

However, the affected parties are likely to be importers such as Karnataka Power Corporation Ltd. Although KPCL’s current operating thermal power capacity is around 1,970 MW. Currently, coal supplies for the project are entirely from Coal India Ltd. But KPCL also imports coal for blending with domestic coal to contain fuel consumption.

Domestic thermal grade coal has a calorific value of about 6000 kilocalories. Consequently, coal requirements, if sourced from domestic mines, would be in the region of a little over 11 million tonne a year assuming a plant load factor of 85%. KPCL’s thermal units have been operating at these average PLFs for the current year so far.

Mr SM Jaamdar MD of KPCL said that “Blending of Indonesian coal brings down the consumption.

(Sourced from http://www.steelguru.com/news/index/2009/11/05/MTE4Nzgw/Indonesia_cap_on_coal_exports_may_hit_Indian_power_sector.html)

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