Adani Enterprises shelves plans to buy ships for moving coal
Friday, 30 December 2011 | 00:00
With the coal-starved thermal power plants across India worried for fuel, Adani Enterprises Ltd (AEL), the country's largest coal importer-turned-domestic private mine developer-cum-operator (MDO), has, apparently, shelved plans to buy cargo ships for coastal shipping of coal and opted to hire a logistics service provider (LSP) instead.
The original plan
Until recently, AEL, the flagship company of the Adani conglomerate, whose revenues were Rs 26,000 crore in 2010-11, was toying with the idea of having its own cargo ships to transport coal from the eastern Indian coal-rich States to the western States, provided that the company got fertilisers and other bulk cargo to take back on the return journey to make the integrated logistics business cost-effective, an official told Business Line. “We do not have any such plans now.”
The company recently floated international tenders for selecting an LSP who would be responsible for delivery of coal by rail-sea-rail route to various thermal power plants. AEL already has two cargo ships to import coal from Indonesia for the power plants of Adani Power Ltd and Tata Power Company at Mundra.
AEL had recently been appointed MDO for Machhakata coal block in Orissa by Mahaguj Collieries Ltd, the joint venture between Maharashtra State Power Generation Corporation and Gujarat State Electricity Cooperation Ltd. As MDO, the firm has been tasked with the delivery of coal at the thermal power plants of Mahagenco and GSECL.
The LSP will be required to obtain the necessary approvals and transport coal from the AEL coal washery to thermal power plants.
At peak production, AEL will be required to deliver 36 million tonnes per annum (mtpa) of coal, part of which would be transported through the rail-sea-rail route. The LSP will be appointed for a period of 30 years and transportation of coal would begin on November 1, 2013.
With the Centre providing access to private miners to the coal blocks reserved for cement, steel and power sectors, the logistics industry is set to expand manifold, particularly as most of the coal mines are in the eastern States, and the major consumers in the western States.
The Centre, which had disallowed private companies from commercial coal mining, is also looking at allotting captive coal blocks to those private miners who have tied up with end-users in core sector. Until recently, coal blocks were allotted directly to end-users, such as steel and power producers.
Major private players like AEL, which has coal mining interests in Orissa and Chhattisgarh, were also evaluating “point-to-point” coal transportation – from the coal mine to the end-user – using dedicated transportation facility as the location of both the buyer and its location are known.
Coal transportation by road or rail routes is twice as expensive compared to coastal shipping route. With a wagon's capacity of 20 tonnes, a goods train of 80 wagons can carry only 1,600 tonnes of coal at a time, unlike a cargo ship, which can carry 45,000-50,000 tonnes.
Moreover, since large volumes of coal are involved, a complete mechanisation of ports will have to be undertaken at terminals such as Mundra, Dahej, Hazira, Marmugao, and Visakhapatnam (all operated by the Adanis), as well as Ennore and Gangavaram. At present, the Mundra Port has the world's largest automated import coal terminal with a 60 mtpa capacity. This is set to be expanded to 100 mtpa in a couple of years as part of the Adanis' target of achieving 200 mtpa capacity by 2020.
Currently, Coal India Ltd produces 80 per cent of the country's coal, at 433 mtpa. India's total coal reserves and resources in 2009 stood at 267.21 billion tonnes. The country's total proven reserves of 105.8 billion tonnes of coal are the fifth largest in the world.
Eastern States such as Jharkhand, Orissa and West Bengal have almost 80 per cent of Indian coal reserves. The Planning Commission expects domestic demand for coal to reach 731.1 mtpa by 2012. India's production capacity by 2012 will be around 680 mtpa.
Source: The Hindu Business Line