Date:03/05/2005 URL: http://www.thehindubusinessline.com/2005/05/03/stories/2005050300601700.htm

Back KPCL plans to import coal for Raichur station

C. Shivkumar

Bangalore , May 2

IN a bid to maintain power supplies, the State-owned Karnataka Power Corporation Ltd (KPCL) proposes to import coal.

The utility plans to import 40,000 tonnes of coal per month. International bids for the same are expected to be floated for supply of imported coal, sources said.

Indonesia, which has coal with low sulphur content, is a preferred source.

According to the sources, KPCL has decided to import coal in view of severe shortfall in domestic supply.

KPCL's annual coal requirement for its 1,470 MW Raichur Thermal Power Station (RTPS) is in the region of 6.7 million tonnes, all of which is sourced from domestic mines.

RTPS has a coal stock position for about 10 days, unlike early this year, when it had stocks for just about two days.

In addition to the technical parameters, pricing is a critical factor for importing the coal, the sources said.

Steam coal in the international markets currently costs about $47 per tonne on c.i.f (cost, insurance and freight) basis, which in rupee terms is slightly over Rs 2,000 per tonne.

On the other hand, power-grade coal from domestic collieries is priced around Rs 1,700 per tonne after the last revision in July 2004.

This price is on f.o.b (free on board) basis.

Inclusive of transportation by ship to the Ennore Port on the East coast and by rail to the power stations, the cost is likely to be close to Rs 1,900 per tonne to power plants in the Southern region.

On the face of it, domestic coal appears to have the advantage of price.

However, the sources said, steam coal from either Indonesia or Australia has much higher heat values than domestic coal.

Imported steam coal has a caloric value of 6,100 kilocalories (Kcals) per kg.

Domestic coal, on the other hand, has calorific value of only 3,000 Kcals per kg.

Consequently, blending the coal allows power plants to improve the technical parameters without any major cost increases, they added.

Most stations are preparing to import coal to capitalise on the price and technical advantages.

Besides, the sources said, blending of domestic and imported coal allows power plants to partly absorb the hike in the price of domestic coal.

This would also allow them to pass only a small component of the increased operating costs on to power tariffs.

With international coal prices expected to drop in the coming months, when Chinese demand tapers off, utilities hope to stave off increases in power tariffs.