India's Tata Power puts on hold 2400 MW project

MUMBAI, June 14 Thu Jun 14, 2012 2:24am EDT

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MUMBAI, June 14 (Reuters) - India's Tata Power has put on hold its imported coal-based 2400 megawatt project in the western state of Maharashtra until it gets more clarity on the re g ulatory environment in the country and exporting nations, its chief financial officer said.

The company does not plan to start any new project based on imported coal for now but plans to press ahead with its only imported coal-fired project, a 4000 MW plant in Gujarat state, hoping the government eventually allows it to raise tariffs to reflect higher import costs.

A change in Indonesia's mineral export rules has pushed up the coal cost for Indian buyers, who source 70 percent of their coal imports from the Southeast Asian nation, making unviable about 9000 MW of imported coal-based projects in the country, including Tata's Gujarat plant.

The projects were originally bid for at a fixed tariff.

"As of now we have put all our imported coal plans on hold," Tata Power CFO S. Ramakrishnan told Reuters in an interview.

The expansion will be "subject to the (Indian) government coming out with an appropriate policy on how the issue of imported coal price will be handled and how the export restrictions that are being brought in by the export countries ultimately settle," he said. (Reporting by Sanjeev Choudhary)

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