Coal imports planned for small power producers

The power trading unit of Tata Power Co Ltd, India’s largest private-sector utility, is looking to help arrange coal supplies from Australia, Indonesia and Africa for small power producers amid a growing shortage of the resource in India.

“I am exploring the possibility of getting imported coal through our own international contacts for our suppliers,” Amulya Charan, managing director of Tata Power Trading Co said in an interview on Tuesday.

“My requirement is about 10-15 million tonnes of coal in another five years.”

New line

More than half of India’s power generation is coal-fed, but demand for the resource outstrips supply which means India has to depend on foreign markets to keep its power sector growth on track.

Tata Power Trading buys electricity from about 100 power producers and sells to transmission companies and other firms.

The firm’s move to help its suppliers get coal speaks for the urgency in the power sector to secure the resource, which will also boost the power trading business.

“I have added this as a new line of business,” Charan said. “Few deals are likely this year, maybe four or five. It is very difficult to say as the availability is also becoming tight.”

Bigger gap

India has been facing a shortfall of 12.6 per cent of peak power demand, data from the Central Electricity Authority shows, and coal shortage is one of the main reasons.

“Power producers sometimes operate with just a week’s supply,” Charan said. “Sometimes there is coal available, but there are no railway rakes to move it.”

An estimate by Karvy Stock Broking shows India may need 595 million tonnes of coal by 2012 for its power needs.

“If the economy gallops, the gap becomes bigger,” Charan said.

Tata Power Company has stakes in coal companies owned by PT Bumi Resources in Indonesia.