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Wednesday, 07 September 11
INDIA HIT BY INDONESIAS COAL PRICE - TEMPO INTERACTIVE


TEMPO Interactive, an Indonesian online news portal reported that, The Indian government has complained about the price increase of Indonesian coal, saying the hike has affected the operations of its power plants. “Some electricity companies are now having problems due to this,” said India’s Energy Minister K.C. Venugopal, quoted by the Press Trust India, last week.

Although Indian electricity companies own some shares and manage coal mines in Indonesia they cannot get a lower coal price, especially after the Indonesian government set a price margin for coal.

The government’s regulation has been deemed too strict and has forced businessmen to adjust their contracts in line with the rate increase.

The Indian government calculates power plant operations on an annual basis, taking into account the company’s performance, maintenance programs and the company’s contribution to the state electricity supply.

Two Indian electricity companies, Tata Power and Power Reliance, have sent letters to the ministry to mediate the problem between electricity buyers from the Mundra (Gujarat) and Krishnapatnam (Andhra Pradesh) projects with regards to the price increase. Both companies asked the government to allow them to increase the project value.

On a separate occasion, Indonesian Geothermal Association executive-director Supriatna Sahala said the problem began in September last year when a ministerial regulation set the lowest coal price reference.

Before the regulation, Indian companies always bought the coal below the reference price. The price of 4,200 calorie coal, which they bought for US$30 per ton, has increased to US$53 per ton with the new reference price.

As for Indonesian coal businessmen, the policy is advantageous. They are not concerned they will lose business as most coal exported to India is low-calorie.

In terms of volume, coal exports to India are relatively high, reaching 35-36 million tons per year. Japan is also a valuable export market for 6,500-calorie coal from Indonesia.
Source:
Tempo Interactive (By Gustidha Budiartie)



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