Coal India set to kick off import process

With its 2012-13 production target set to be missed and requests from power producers starting to pour in, Coal India is gearing up to initiate the process of importing coal.

The company currently has firm requisition for importing around 8 million tonne and modalities for executing the import is on, officials told DNA.

That quantity is expected to go up, with the country seen importing 115 million tonne of thermal coal next fiscal, more than the 110 million tonne likely this fiscal.
Coal India is set to miss its production target of 464 million tonne this fiscal by around 12 million tonne.

The actual import, however, will take some time. Though the Cabinet has given its approval to the concept of price pooling, the finer details, to be decided upon by the coal and power ministries, are still being worked out.

The proposal of price pooling, which is essentially a process of averaging of prices of domestic and imported coal to implement a uniform price for power producers, was approved by the Cabinet

Committee on Economic Affairs earlier this month, albeit with a directive that the coal and power ministries come back to the Cabinet with details of the process.
Several states, mostly coal bearing, have already objected to the concept of price pooling saying averaging high prices of imported coal with cheaper notified prices would only benefit the new private sector coal plants at the cost of older state-owned power producers which have coal linkages.

Being a public sector company, Coal India needs to be doubly sure of the processes it has to follow while importing coal, which might delay the process of finalising the modalities and actually executing the import.

“Coal India will follow the process of competitive bidding among public sector trading houses like State Trading Corp, MMTC or MSTC for identifying the best possible terms for their services and package supply of imported coal,” said a company official, requesting anonymity.

Coal India has already completed part of the preparatory work with the drafting of the separate model agreement for imports that has to be signed back-to-back along with the Fuel Supply Agreement with the power plants.

Under the pact, pricing would be based on a cost-plus model, and Coal India would charge a 2% service charge above applicable taxes and duties.
“The power plants need to indicate how much they would want Coal India to import and of what quality. Based on the feedback, Coal India will draw up an aggregate demand schedule for import,” the official said.

@SumitMoitra