Indonesia has circulated a draft decree seeking comments on
imposing a ban on export of coal below 5,100 gross kilo calories per kg from
2014.
A few months ago Jakarta brought in regulations that called
for all coal exports to be benchmarked to international prices. The regulation
also set aside all prior agreements and understanding mining companies had
entered into.
This put Indian power companies such as Tata Power and
Reliance Power in a dilemma as they had bid aggressively for thermal plants based
on their deals in Indonesia.
With coal prices soaring, Both Tata Power and Reliance Power
have sought a review of the tariff structure stating that the current coal
prices would make their projects unviable.
According to Mr James O' Connell of Platts International,
the Indonesian decree would bring down exports by 120-130 million tonnes if
implemented and India would have to bear the brunt of the scarcity.
India imports coal grades from 5,000 Kcal/ kg to as low as
3,500 kcal/kg from Indonesia. As Indonesia wants about 82 million tonnes or a
fourth of the production in the country – for its own plants in 2012, such a
move will cap exports to ensure a greater availability for domestic
consumption.
A Standard Chartered report said assuming India sourced 60
per cent of coal it requires from its own mines, it would still need to build
an additional 106 million tonnes of coal capacity in the next five years. This
is double of Australia's planned expansion over the same period and two-thirds
of Indonesia's planned growth. This shows why Indian consortia are spending so
much money buying coal projects in Indonesia, Australia and Mozambique, the
report said.
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