India's thermal power plants that import coal are concerned that more restrictions from Indonesia, a key supplier, will put more pressure on electricity generation, which is already suffering from problems including fuel scarcity. Power producers are concerned as the economic counsellor at the Indonesian embassy in India, Otto Riadi, was quoted in an agency report as saying that exports of some grades of coal would not be allowed and the fuel would be used to generate power in Indonesia. This would be applicable to traders, not companies that have mines, the diplomat clarified.
A power sector executive said Indian companies have not received any such indication from the Indonesian government about the restrictions, but the Association of Power Producers is worried. "Earlier, Indonesia imposed minimum export price regime to create indices below which one cannot export coal. Now, it is yet another attempt to nationalize natural resources.
If the country finds exploitation of its natural resources, it will curb exports the way Australia introduced carbon tax on coal. The development affect Indian power sector as sizable power generation capacity requires Indonesian coal," the association's Director General Ashok Khurana said.
India has close to 18,000-20,000 mw of power generation capacity, including plants being built, that count on fuel supply from Indonesia, the world's biggest exporter. Power project developers such as Adani Power, Essar Power and Shapoorji Pallonji are banking on Indonesian coal supplies to fire their plants. Further, Coal India is importing coal from Indonesia and Australia to honour its fuel supply agreements as the government venture is unable to increase production from its own mines.
According to industry estimates, Coal India will also import another 30,000 mw of coal from various countries for supply to power firms. The government expects coal demand to grow at 11% during twelfth plan, while local production would rise 7%. India already has demand supply gap of 163 million tonne of coal.
Reliance Power, which plans to use Indonesian coal for the proposed 4,000 mw plant in Andhra Pradesh , declined comment. The Adani group, which operates 4,620 mw of capacity with Indonesian coal, also declined comment. Both Reliance Power and the Adani group have mines in Indonesia.
Other coal importers, particularly those who do not own mines in Indonesia, are also worried.. "It is not likely to happen in near term. We are surprised with this kind of development since Indonesian economy is largely dependent on coal exports. However, India must develop domestic mines to prevent any uncertainty of fuel supplies," said Alok Sanghi of Sanghi Cement.
He added that it is difficult to estimate but Indonesian coal dominates fuel basket of cement producers that also imports from Africa, Australia, Columbia and even USA. With limited domestic supplies, coal import is on rise in India. National Spot Exchange Limited (NSPL) has witnessed coal trading increasing to 60,000-70,000 tonne a month within three months of launch of contract.
It has already sold one shipment each from Indonesia and South Africa from Kandla and Mangalore ports. NSPL MD & CEO Anjani Sinha stated that his traders have not reported any development such as Indonesia's move to curb coal exports.