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For the first time ever, Coal India (CIL) has issued a tender for purchasing imported coal for power generating companies (gencos) in the wake of the Centre directing it to meet the shortfall in the domestic coal supply chain.
CIL has called for bids to supply 2.4 million tonnes (mt) of coal to be delivered for the July to September 2022 period. The estimated value of the contract is Rs 3,100 crore, CIL said in the tender document.
The imported coal would be supplied to state government-owned gencos and independent power producers (IPPs), 1.2 mt each. The IPPs include Sembcorp Energy, JP Power, Avantha Power, Lanco, Rattan India, GMR, CESC, Vedanta Power, Jindal India Thermal, among others. The states that will receive imported coal for their generating stations are Punjab, Gujarat, West Bengal, Tamil Nadu, Jharkhand, and Madhya Pradesh.
Last month, the power ministry directed CIL to import coal for state and private gencos. This came two weeks after state and private gencos were told to import coal for 10 per cent blending, but were later asked to keep their tenders ‘in abeyance’. Several states expressed reluctance to import coal and asked for CIL to arrange the dry fuel from global markets.
But as against the estimated demand of 38-40 mt from state and private gencos for blending, the total demand received by the CIL is 2.4 mt. CIL executives said for the upcoming season, only this quantity would be imported, as this is the final and only demand that has come to it.
In a statement, CIL said, after the price discovery, it would immediately execute a contract with the successful bidder for supply of coal. “Then the state-owned coal miner shall enter into a back to back agreement with state gencos and IPPs to whom coal has to be supplied,” it said.
Central government-owned NTPC is in the process of issuing tenders for 20 mt to meet its imported coal blending target. Business Standard recently reported that NTPC has awarded 6.25 mt of imported coal tender worth Rs 8,300 crore to Adani Enterprises.
Due to the high cost of imported coal, power tariff from NTPC units is scheduled to go up by at least 50-70 paise. This will have to be borne by consumers. As far as state and private gencos are concerned, they will need regulatory approval for transferring the additional cost of imported coal on to consumers. Invoking Section 11 of the Act again, the power ministry last week allowed state and private units to charge a compensation tariff in lieu of importing coal.
The coal ministry, on the other hand, has questioned the concerns over coal shortage in the coming months saying there is enough domestic stock available and it is up to power generators to stock up before the monsoon months. Senior coal ministry officials said there is a stock of 20 mt with power plants which is enough for nine days of operations.
