CORRECTED-UPDATE 2-India's Adani Power puts 6,500 MW expansion plan on hold
(Corrects name and size of project to Bhadreshwar in paragraph 7)
* Waiting for coal allocation for 3 projects - CEO
* Will resume building once coal supply in place
* On track to have 6,000 megawatts in operation by March
MUMBAI, Dec 27 (Reuters) - Indian utility Adani Power has put on hold its plans for capacity expansion of 6,500 megawatts because of a lack of clarity on coal supplies, but is confident of having 6,000 MW of operational assets as planned by March, CEO Ravi Sharma said.
The company, which currently operates 3,300 MW, is waiting for the federal government to allocate coal to three of its planned projects, Sharma told reporters on Tuesday.
State-run Coal India, which supplies coal to power companies and other users after approval from the federal government, is unable to meet its annual targeted growth in production, forcing power producers to look overseas.
As generation projects face a shortage of coal, pricing uncertainty is forcing companies to refrain from inviting bids for long-term power purchase contracts, Sharma added.
"The moment this coal linkage issue is sorted out...the moment these tenders (for power purchase) are out, which we feel should be out soon, we will take up that job," he said.
Land and water supply agreements are in place for Dahej and Bhadreshwar projects in Gujarat and the Chhindwara project in Madhya Pradesh, Sharma said.
Environmental clearance is in place for two of the projects. The company is awaiting approval for the 3,300 MW Bhadreshwar project from the Environment Ministry, he said.
The combined coal requirement of the three projects is about 25 million tonnes a year, he said.
Despite of these coal-related issues, Adani plans to expand its capacity to 10,000 MW by fiscal year 2012/13 and 20,000 MW by 2020, Sharma said.
Adani, which has been counting on Indonesian and Australian coal mines to meet some of its needs, is likely to feel pressure on margins because of higher prices for Indonesian coal after a change in the pricing mechanism, Sharma said.
The rising cost of imported coal, coupled with a weakening rupee, could force some Indian power projects to default on their debt obligations, ratings agency Fitch had said earlier this month.
Coal accounts for 55 percent of India's power generation capacity of 182,344 megawatts.
In the past year, the Adani group acquired stakes in Australia's Galilee coal project for $2.7 billion and Abbot Point Coal Terminal for $2 billion, joining a growing number of Indian companies acquiring overseas mining assets.
India holds 10 percent of the world's coal reserves, but power companies struggle to access local supplies because of environmental and land acquisition delays, forcing expensive imports.
Asia's third-largest economy, where blackouts are common, faces a peak power shortage of 13 percent as rising demand from industry, homes and shopping malls outstrips capacity growth, but investments into the power sector have been slowing.
Shares in Adani Power, valued at $2.8 billion by the market, closed 1.5 percent down at 67.10 rupees. The Mumbai market closed down 0.6 percent. (Reporting by Ketan Bondre,; Additional reporting Prashant Mehra; Editing by Ted Kerr and Rajesh Pandathil)
- French warplanes search Mali desert for crashed Air Algerie plane |
- At least 15 killed by shelling of Gaza school; toll exceeds 760 |
- Exclusive: Ukraine rebel commander acknowledges fighters had BUK missile
- U.S. House panel votes to authorize lawsuit against Obama
- Lawyers call for outside probe of 'bungled' Arizona execution |