Steep rise in bunker prices has hit Indian power plants reliant on coal imports from Indonesia and Australia.Bunker is a maritime term for fuel used by ships.
Shipping Corporation of India (SCI) official said the bunker costs have gone up steeply since October last year by over $ 200 a tonne. Bunker costs in Mumbai Port that is served by Bharat Petroleum Corporation
was presently about $706 a tonne. But the officials said, “The costs are pass through, unless otherwise specified in the contract. So bunker price increase does not really impact the shipping firm.”
Among the companies hit by steep increase in bunker prices include JSW Energy that imports coal for its thermal plants in Bellary, Karntaka and Ratnagiri, Maharastra. JSW already has 15 a year time charters with German shipping company, OldenDorff Carriers GmBh and Japanese shipper Kawasaki Kisen Kaisha that were signed in during the second half of 2009 and January 2010 respectively.
The basic freight rate inclusive of the time charter ranged between $ 6.65 a tonne to $9.65 a tonne, depending on the port of delivery. But JSW Energy chief financial officer, Sheshagiri Rao said, “We now have to bear to cost of incremental cost of fuel as well under the terms of the time charter arrangement.” This increased bunker costs now essentially meant that the freight cost would rise to over $ 10 a tonne.
JSWEL is not alone in facing cost escalation. Some state government-owned power plants, including the Karnataka Power Corporation’s thermal plants also import steam coal. These imports though are on a voyage charter basis.
Voyage charters, however, are far more vulnerable. Indian National Shipowners Association chief executive Anil Devli said, “Unlike time charters, voyage charter rates are far more volatile.” Voyage charter freight rates are presently closer to about $12 a tonne.
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