Power projects that had planned to buy coal from Indonesia are yet to find a solution to a new law (which took effect on 26 September) that increases their costs and upsets their viability calculations.
The new regulation says coal sold from Indonesia is to be indexed to the international price and revised annually. Among the high profile projects facing uncertainty is TATA Power ultra mega power project in Mundra, which is to commission its first unit of 800 MW this month. Reliance Power UMPP at Krishnapatnam where site work is yet to begin is also awaiting clarity on what to do. Both companies have made representations to the power ministry. Adani Power’s 4000 MW project at Mundra would also see cost escalation on the fuel side.
Estimates say projects of this size will lose INR 2000 crore annually due to fuel price fluctuations. The ministry of power has yet to come up with a decision on a request made by the Association of Power Producers to allow them to pass on increased fuel prices to buyers. Senior electricity authorities say a decision on this matter now rests with individual power procurers, which are mostly state-owned power utilities.
