Tata Power looks overseas to beat local roadblocks

Tata Power, India’s largest integrated private power company, will now look at bidding for more projects overseas to work around the constraints to growth in India, said chairman Ratan Tata.

Speaking at the company’s annual general meeting here on Wednesday, he said, “There are several external factors like environmental clearances, challenges on (coal) linkages, unavailability of gas and increasing cost of imported coal.”

The company is bidding for projects outside India to meet its growth requirement, he said.

Tata Power plans to take its installed capacity from the current 3,182mw to 25,000mw by 2017 at a cost of about Rs70,000 crore.

S Ramakrishnan, executive director, finance, in an interview to DNA in March had said the company is considering setting up a coal-fired plant in Indonesia and is studying the market, including its tariffs and payment guarantees.

Tata Power is currently in the exploration stage of a 240mw geothermal project it is executing in Indonesia with the country’s PT Supraco and Australia’s Origin Energy.

Talking of the recent decision of the Indonesian government to benchmark prices of exported coal to global market rates, Tata said the government could not be blamed.

The benchmarking will result in a cost increase for all power developers importing coal from Indonesia.

Tata Power has made a representation to the Union power ministry to revise tariffs for the power generated from its 4,000mw ultra mega power project in Mundra, Gujarat, which is based on imported coal and the first unit (of 800mw) of which is scheduled to be commissioned next month.

The company has in the past said it will henceforth only bid for UMPPs with domestic coal linkage.

While the domestic availability of coal for this year is said to be 554 million tonne, the demand is 142 mt higher, of which nearly 67 mt will be imported.

The shortfall is tipped to climb to 200 mt by 2017, when imports are slated to touch 100 mt.

Indian power developers are increasingly looking to acquire coal blocks overseas to meet their huge capacity addition ambitions. India has projected an addition of 100,000 mw between 2012 and 2017.

Tata Power through two special purpose vehicles holds 30% in two mines, PT Kaltim Prima Coal and PT Arutmin Indonesia, and a coal trading company, all owned by PT Bumi Resources Tbk.

Besides availability of coal, infrastructure companies have lately been plagued by environmental clearances or the lack thereof.