TPC in talks with Adaro

Mumbai: Tata Power Company Ltd (TPC), the energy arm of the Tata group, is in talks with the Indonesian coal major Adaro to acquire an equity holding in the latter.

"We have been sourcing coal for our power generation activities from two coal companies in Indonesia, Adaro and SaMtan. Recently, Adaro''s management approached us with a proposal for equity participation in the company. The proposal is under consideration," a TPC source said.

Adaro is the largest coal producer in Indonesia. It had sold 23 million tonnes of coal in the domestic and export markets in 2003. The source said high volatility in international oil prices has forced TPC to try different types of fuels and fuel mix at its Trombay thermal plant in order to maintain optimum fuel costs.

The Trombay plant is a major provider of electricity to the Mumbai city. The plant, though is a multi-fuel fired one with facilities for firing oil, gas and coal, is oil dominated, making it costlier compared to coal- fired plants. TPC is therefore making initiatives to bring down its dependence on oil.

The use of oil as fuel at the plant has been brought down from 73 per cent in 2002 to 54 per cent in 2004, while that of coal has been increased from 13 per cent to 32 per cent during the same period.

Enhancement of coal-firing limit by the government has given an impetus for upping the use of coal at Trombay, the source added. "Currently, we are procuring coal from Indonesia. The sulphur and ash content in the Indonesian coal is very low (0.1 per cent sulphur and two per cent ash) compared to that available from other parts of the world.

Since TPC has plans to convert other generation units to multi-fuel mix units, it makes sense for the company to acquire some coal equity abroad," a source close to the development said.

It may be noted that while other players in the industry have proposed a hike in power tariffs following fluctuations in the prices of coal, TPC has managed to keep its tariffs constant.

According to TPC officials, the multi-fuel technology has helped the company to realise savings of Rs 188 crores during the fiscal year ended March 2004. "TPC is relatively shielded against the vagaries of fluctuating coal prices as it has long-term agreements to source imported coal to mitigate the risk of price volatility and fuel availability," an official said.