Requisition for less than a million tonnes despite shortage
While formulating its fuel supply agreements (FSAs) with power producers, state-run Coal India (CIL) was earlier forced to keep a provision for imports, after a directive from the Prime Minister’s Office (PMO) in 2012.
However, as CIL gets ready to make its maiden import, it is doing so for a requisition from only a handful of plants, with a total requirement of less than a million tonnes, even as power units are grappling with acute coal shortages.
“We have got requirements from only seven or eight plants,” said a top CIL official. The total import requirement is only about 80,000 tonnes.
MMTC, to import for CIL, has been asked to initiate the process. “MMTC would float a tender and tie-up parties. We hope for delivery of imported coal by year-end,” said the official.
The low import requirement was something CIL did not expect. “Before floating the expression of interest (for the import), we had meetings with power plants and the initial estimate was that we would have to import five million tonnes. Given the talks of low stocks, we thought it would go up. It has not happened. However, plants have the option to import on their own,” said another official.
This comes when the Central Electricity Authority had said of the 100 power plants monitored by it, 27 have less than four days of stock.
According to the FSA formulated in 2013, the company will offer 65 per cent domestic coal to the post-2007 plants and to meet the balance obligation of 15 per cent, CIL offered to import for willing power producers on a cost-plus basis.
CIL officials argue this low requirement for imported coal vindicates its stand that the primary reason for low stocks is power plants’ failure to make prior arrangements.
CIL was initially opposed to the idea of import. Even after the PMO issued a directive to make adequate coal supplies to power producers on its own or through import, the then head, Zohra Chatterji, said: “We are not in the business of importing coal... it is one of the ways to meet the demand, theoretically.”
On power producers’ dallying over imports, an industry source said, “International coal prices are higher than domestic coal, though this has come down significantly. But everyone wants to ensure their fuel requirements are fulfilled through more of domestic coal. Another reason could be that some are waiting for the international price to further go down.”
According to Rupesh Shanke, a senior analyst at Karvy, the price gap between domestic and international coal is still about 30 per cent.
While formulating its fuel supply agreements (FSAs) with power producers, state-run Coal India (CIL) was earlier forced to keep a provision for imports, after a directive from the Prime Minister’s Office (PMO) in 2012.
However, as CIL gets ready to make its maiden import, it is doing so for a requisition from only a handful of plants, with a total requirement of less than a million tonnes, even as power units are grappling with acute coal shortages.
“We have got requirements from only seven or eight plants,” said a top CIL official. The total import requirement is only about 80,000 tonnes.
MMTC, to import for CIL, has been asked to initiate the process. “MMTC would float a tender and tie-up parties. We hope for delivery of imported coal by year-end,” said the official.
The low import requirement was something CIL did not expect. “Before floating the expression of interest (for the import), we had meetings with power plants and the initial estimate was that we would have to import five million tonnes. Given the talks of low stocks, we thought it would go up. It has not happened. However, plants have the option to import on their own,” said another official.
This comes when the Central Electricity Authority had said of the 100 power plants monitored by it, 27 have less than four days of stock.
According to the FSA formulated in 2013, the company will offer 65 per cent domestic coal to the post-2007 plants and to meet the balance obligation of 15 per cent, CIL offered to import for willing power producers on a cost-plus basis.
CIL officials argue this low requirement for imported coal vindicates its stand that the primary reason for low stocks is power plants’ failure to make prior arrangements.
CIL was initially opposed to the idea of import. Even after the PMO issued a directive to make adequate coal supplies to power producers on its own or through import, the then head, Zohra Chatterji, said: “We are not in the business of importing coal... it is one of the ways to meet the demand, theoretically.”
On power producers’ dallying over imports, an industry source said, “International coal prices are higher than domestic coal, though this has come down significantly. But everyone wants to ensure their fuel requirements are fulfilled through more of domestic coal. Another reason could be that some are waiting for the international price to further go down.”
According to Rupesh Shanke, a senior analyst at Karvy, the price gap between domestic and international coal is still about 30 per cent.
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