Tata Power eyes Aussie, Indonesia coal mines
Thursday, August 3rd 2006
Indian utility Tata Power Co. Ltd. is in talks to buy coal mines in Australia, Indonesia and South Africa to tie up fuel supplies for its proposed 15,000-megawatt capacity expansion, a top official said.
The company, which supplies power to the financial hub of Mumbai, India’s capital New Delhi and to smaller cities, is pursuing projects that will be fired by a hybrid mix of fuels such as coal, natural gas, water and other liquid fuels.
“We want to get into coal and in India the coal sector has not yet been privatised so we are looking overseas,” Adi Engineer, a director at Tata Power, told Reuters in an interview on Thursday.
The company has tied-up with Tata Steel Ltd., India’s largest steel producer, to hunt for coal mines overseas.
Shares in Tata Power rose more than 2 percent to 509.90 rupees on the news in a firm Mumbai market.
Tata Power, India’s oldest privately run power utility that generates 2,300 megawatts, did not say how much the expansion would cost but analysts estimate it would be about $13 billion.
The company plans to fund the expansion from internal cash flows and by debt of up to 100 billion rupees.
“We are looking for coal mines with Tata Steel because they have interest in coking coal while we are looking for thermal coal,” Engineer said.
Rival Reliance Energy Ltd., controlled by India’s Anil Dhirubhai Ambani Group, has also announced investments of up to $13.7 billion on projects for 16,000 megawatts.
Tata Power, which owns hydro-electric stations, prefers coal over natural gas as it helps to produce cheaper electricity, Engineer said.
“There is an energy crunch in the world today and as a power company you are nowhere if you don’t have any kind of fuel linkage,” Engineer said.
The company is building four coal-fired projects with a total capacity of about 3,250 megawatts – three 1,000-megawatt and one 250-megawatt.
The smaller project is under construction near Tata Power’s 1,350-megawatt multi-fuel power plant near Mumbai and will be ready within 26-28 months.
The company will import an additional one million tonnes of coal from Indonesia from 2009, to the two million tonnes it buys now, Engineer said.
Coal is India’s dominant commercial fuel, generating 70 percent of its power. India is world’s third-largest coal producer, after China and the United states.
WIND POWER
Engineer said Tata Power plans to increase renewable energy generation such as wind power from the present 17 megawatts.
“There is lot of potential in wind power and we have opened our score with plans to add 50 megawatts more,” he said. The company aims to generate 100 megawatts annually after 2008.
“I am looking at wind power as a responsible power entity and would like to generate clean power without any carbon emissions.”
Separately, a consortium of Tata Power, state-run gas transporter GAIL (India) Ltd. and Australia’s Arrow Energy has been shortlisted by the Indian government for acquiring two coal-bed methane gas blocks.
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