Genesis Energy axes Indonesian coal imports

New Zealand energy firm Genesis Energy, slated for partial privatization in the first half of this year, has paid to extract itself from contracts that saw it importing coal from Indonesian suppliers.

The only coal-fired power generator in the country will now rely on its own stockpiles and state-owned coal miner Solid Energy for its dwindling need to use coal to produce electricity, the company's chief executive, Albert Brantley, was quoted by New Zealand media as saying on Friday.

It has renegotiated a supply contract with Solid, which is seeking to rebuild its financial viability after crashing global coal prices and over-exposure to high-cost alternative energy projects forced a government and bank-backed bail-out over the last two years.

"Both moves will result in a reduced supply of coal to the Huntly power station and are a consequence of the company's decision to place a second of its older coal/gas generation units at Huntly into storage at the end of 2013," said Brantley.

He gave no figures for the cost of quitting existing commitments for coal supply from Indonesia, which have been controversial both because of the high carbon emissions profile of coal compared to other electricity fuel sources and because of the proximity of Solid Energy's Huntly East mine to the ageing coal and gas-fired Huntly power station.

Four 250 Megawatt units at Huntly are in the process of being decommissioned or placed in storage, with only two units currently available for service, leading to a decline in Genesis's demand for coal.

Its 2013 annual report shows that just 7.7 percent of its total electricity production of 13,057 Gigawatt hours came from coal, compared with 52.8 percent from the Tongariro and Tekapo hydro schemes, another 19.6 percent from both old and new gas-fired plant at Huntly, 13.6 percent from geothermal energy, and 4.8 percent from wind farms.

Its stockpiles of coal fell during the last financial year and were valued at $94.5 million at June 30, compared with $106.0 million in the previous financial year, and fuel inventories expensed during the year - a rough proxy for coal use - totalled $119.6 million, compared with $132.6 million the year before. (*)