Anil Sardana, managing di- rector of Tata Power Ltd, said there is an immediate need to improve coal mining methods in India. In an interview, Sardana said though India has 20 times more proven coal reserves than Indonesia, it is not able to meet its needs.
There was considerable excite ment in the markets and else where when the Prime Minister's Office directed Coal India Ltd to have fuel supply agreements. Are you saying that the fine print has left a lot of ambiguous issues that need clarification?
One could also say that it is not expected of a committee of secretaries to articulate language which would address those is- sues very accurately. One would, therefore, expect that when the professional set of notification comes in to execute this... at that time it will be very clear in terms of the clarity of the subject mat- ter. So, I won't say that there is ambiguity. I would say it would require some bit of clarification in terms of how things will get executed on the ground. To that extent, one is expecting those notification to come in the next few days.
I have spoken to the power minis ter on two occasions. He said the price passthrough cannot be worked out in the existing power purchase agreements because you will have to revisit the entire con tract and it might happen in the next financial year. As things stand right now, what is the situation on Mundra and if you don't get com pensation, how is it going to work out?
Mundra is not a similar case as any other imported coal-based project. It is different. Mundra had tied up its coal in exactly the same back-to-back arrangement as the bid was submitted for Mundra. Which meant that whatever was the scalable com- ponent in the Mundra bid, the same component was provided for in the coal agreement that was tied up in Indonesia. This back-to-back arrangement got reneged once the change in law in Indonesia happened. So, as far as Mundra is concerned, it is not an issue of higher coal price.
It is an issue with the fact that we cannot take deep discounts which we had contracted for the lifetime of the project. So it's not a problem Mundra can resolve on its own. The change in law will have to be compensated for.
If the beneficiary doesn't want to look into and change the law how can a developer solve this issue of change in law by a country. If somebody argues and says Indonesia is not the only country for you to go and source the coal, I say even Australia has changed the law. They have a carbon tax there now.
When you're dealing with an issue like power, there are multiple problems at different levels. You have issues in terms of coal sup ply. Somewhere down the line, Coal India is also caught in a bind because they've not been able to increase output as demand for coal that they produce has been going up. Hence, most of you had to go in for imported coal. Even if they were to agree to a 20year deal, everybody they have promised supplies to, can they do it in the current circumstances or are we moving into another form of crisis?
Instead of saying what Coal India can't do, let me give you an example of what we have learnt from our coal investment. We have had mines which are ready to export 63 million tonnes every year. These are the largest ex- porting mines in Indonesia or in the world. That kind of produc- tion we see coming out of spe- cialized agencies who work with our promotional investment.
These are called mine-develop- ment operators. They are spe- cialized agencies that bring in their own tools and equipment, their own people who are com- pletely specialized and this works not only on guaranteed output but guaranteed quality.
What we have seen over a period of time are these two impact fac- tors. There's neither a guaran- teed quality nor a guaranteed quantity. Therefore, it's impor- tant to reform the Indian coal sit- uation.We are 20 times more than Indonesia in terms of prov- en reserves. If they can export 400 million tonnes out of their country. A country which has 20 times more reserves should actu- ally be talking much more than that. But we are not able to meet our own needs.
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