Indonesian coal price hike raises cost of Indian power firms
ET reported that a sudden increase of about 30% in the price of Indonesian thermal coal has raised the cost for Indian power producers who depend on imports for more than half the generation in the country.Indonesia adopted a new pricing method last week, aligning its rates with international markets under the benchmark prices called the HBA Index, taking the price of coal above USD 100 a tonne.
Ms Kalpana Jain senior director at Deloitte India said that "Now, importers will have to renew short term contracts by paying higher prices. This will impact further buying quantity."
Mr Deven Choksey MD of KR Choksey Securities said that "Adanis have their own port and transportation facilities. They also own coal mines. Therefore, they have an advantage over the others."
India generates 55% of power through thermal coal and depends on Indonesia for 30% of its power generation. This year, India was tipped to increase its imports from 60 million tonnes and surpass Japan's 65 million tonnes to become the largest importer of Indonesian thermal coal. But this may not happen in a hurry now. More than 60% of India's coal imports are through spot or short term contracts and experts say the power producers are finding the sudden increase in price too sharp for comfort. Costlier imports are likely to impact the quantity of coal imported from Indonesia.
Ms Kalpana Jain senior director at Deloitte India said that "Now, importers will have to renew short term contracts by paying higher prices. This will impact further buying quantity."
Mr Deven Choksey MD of KR Choksey Securities said that "Adanis have their own port and transportation facilities. They also own coal mines. Therefore, they have an advantage over the others."
India generates 55% of power through thermal coal and depends on Indonesia for 30% of its power generation. This year, India was tipped to increase its imports from 60 million tonnes and surpass Japan's 65 million tonnes to become the largest importer of Indonesian thermal coal. But this may not happen in a hurry now. More than 60% of India's coal imports are through spot or short term contracts and experts say the power producers are finding the sudden increase in price too sharp for comfort. Costlier imports are likely to impact the quantity of coal imported from Indonesia.
- Umesh Shanmugam
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