Mumbai: Tata Power Co Ltd plans to have coal and transport linkages to get a firm grip on costs by acquiring strategic stake in foreign coal mines and by starting shipping operations, executive director S. Ramakrishnan told NewsWire18.

Tata Power plans to raise its electricity generation capacity to 12,861mw by 2012-13 (April-March) from 2,474mw at the end of the current financial year.

Most of the new capacity being added by the country’s largest private sector electricity generator will be fuelled by imported coal, largely from Indonesia.

The company’s annual requirement of imported coal is seen rising to 25 million tonne by 2012 from 1.8 million tonne, which will significantly drive up the cost of coal and also freight charges.

“The view that we have is that coal prices are going to stay high. They may not be $120-$130 per tonne, still they will be as high as $90-$95 per tonne,” Ramakrishnan said.

Fuel cost, which includes coal, oil and gas and transport cost, is the single largest cost component for Tata Power, accounting for 60-70% of the company’s total expenditure. “To ensure that we do get long-term supply at affordable prices, some equity stake has to be taken,” he said.

Tata Power has picked up 30% stake each in two coal mines in Indonesia. One of these mines will supply about 10 million tonne annually to Tata Power, which will take care of 50% of its coal requirement by 2012.

“We are looking wherever there is coal. Indonesia has a lot of coal opportunities but at the same time we need to think if we want to go 100% in Indonesia or diversify,” Ramakrishnan said, when asked if the company has identified any geography for coal mines.

Tata Power’s main business is electricity generation and its bulk supply for the Mumbai metropolitan area, which is regulated by MERC.

Source : DNA