Miner Coal India Limited (CIL), which produces around 80% of the country's coal, is likely to issue its first import tender in 2013-14 for an initial 5 MnT, if its power producing customers place orders, a senior company source said.
The state-run company, the world's top coal miner, has been unable to dig up coal, which India has plenty, fast enough to feed Asia's third-largest economy's burgeoning demand for power.
As coal fuels more than half of the country's power generation, Coal India has been directed by the government to supply 80% of the fuel supply needs of its power station customers, even through costlier imports, given its inability to produce sufficient coal locally.
Coal India will hold a pre-tender meeting with state-run traders such as MMTC and STC on Friday to discuss the supply of imported coal to its power station customers with whom it has agreed to meet 80% of their fuel needs.
“As per the signed FSAs (fuel supply agreements), it (the coal import need) is just over 8 MnT now,Coal India has so far signed 82 FSAs with power producers for 34,793 MW capacity”, according to the coal ministry. Of these, it can only supply 65% using domestic coal, and needs to import to bridge the shortfall.
“Just over 8 MnT is the annual quantity now. This quantity has been indicated by the power plants. The present tender will be for more than 5 MnT,” the source said.
The miner is required to sign FSAs for about 78,000 MW in the next six years to 2015, as per the new coal distribution policy announced by the government.
“However, the final decision on the import tender quantity hinges on firm orders from customers, who are expected to pay for the shipments in advance”, the source said.
In April, the government decided to throw out a pricing proposal which would have diluted costlier imports with domestic coal, which is about 50% cheaper, for supply deals signed after April 1, 2009.
Following the move, Coal India can price imports on a “cost plus” model, under which its customers need to pay taxes, insurance, and a 2% surcharge in addition to the import cost.
There is no time frame for the tender issuance, the source said, adding the miner will route imports through state-run trading firms.
“The tender issuance will solely depend on when the power plants would give their firm commitments. We have taken the initial step. If tomorrow they say they want to import on their own, then we won't have to issue this,” company sources said.
– Sourced
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