September 08, 2008

Indonesia renegotiating coal contracts

Economic Times reported that Indonesia’s proposed move to renegotiate coal contracts is likely to impact the future plans of Indian power players like Reliance Power and TATA Power which source coal from the South East Asian country. A renegotiation could lead to higher royalty payments.

Mr Purnomo Yusgiantoro energy minister of Indonesia’s said his government is in favour of a change in existing mining contracts after prices of various commodities, including coal and iron ore almost doubled in the past year.

According to the report, the move is aimed at boosting revenue from mines as user industries in China and India rush to buy coal for their projects.

Reliance Power, through its wholly owned subsidiary Reliance Coal Resources, recently acquired 100% economic interest in three coal concessions in Indonesia for about USD 1 billion to tie up coal availability for its 4,000 MW Krishnapatnam power project and 1,200 MW Shahapur coal project.