It seems that cheap coal has no market in India. The reason: power producers are reluctant to take hit on their margins.
The recent tender for supplying cheap coal by Gujarat Urja Vikas Nigam Limited to the stressed power producers has failed to elicit even a single bid. The underlying objective of the tender was to reduce fuel costs for the ailing power companies, and at the same time dispose-off domestic coal.
However, the inherent condition in the tender played the spoilsport. According to the terms and conditions in the tender, the power producers buying this coal will have to sell power at INR 2.82 per unit or less. But, the power producers do not consider this tariff as viable for their business.
The last date for bid submission has, however, been extended by another 20 days.
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