CIL may go in for direct imports from next year

To source via MMTC, STC this year; levy 2% service charge

The government might have shelved the idea of pooling the price of imported and domestic coal but Coal India Ltd (CIL) is bracing up to the task of getting coal for power companies opting to take its services for importing.

The monopoly coal producer also plans to directly import coal for power plants from the next year after gauging the domestic market through a tie-up with MMTC Ltd and State Trading Corporation this year.

CIL would be taking a 2% service charge on arranging for imports.

“We have made production and transportation programme and a stock programme. Initially, we have asked MMTC and STC to do back to back imports on our behalf. But we think we should take the responsibility eventually,” S Narsing Rao, chairman, Coal India Ltd, told Business Standard. The company would need to import 10 million tonne for using as a filler this year.

Rao said besides importing the company wanted to gain experience of dealing with consumers this year. “Though it is not our core job but it our responsibility. When there are smaller companies who do imports on behalf of others, a company of our size can also to do it.”

For the current year, power producers would need to give indent for imports detailing the quantity required by them. Typically, once indent is received MMTC and STC would indicate price and terms of condition. They need to confirm the price and make 90% up-front payment. Within 60 days, coal would be delivered. The balance payment would be made once coal is delivered. Based on the experience, CIL would want to develop its own system.

The sale would be on the basis of delivery at the power plant. “We do not want to get into port level issues, railway and quality. Similarly, if we were to give a global tender ourselves, we will say so much quantity is needed to be delivered at designated plants,” explained Rao.

Power companies would need to make an assessment of how much coal should be imported but since this assessment was based on the availability of domestic coal, CIL would make an assessment every two to three months on how much domestic coal would be supplied to each one of them. Then it would be left to the power plants to choose if they would want to import or forgo.

The purpose of asking CIL to import coal is to meet the demand of power plants with some 60,000 Mw capacity. CIL has to ensure that 80% of their coal requirement is made available either through domestic production or imports, with a guarantee that at least 65% comes from domestic supply. This commitment is for power plants post-2009.