NTPC jettisons import deal with Coal India

NTPC Ltd, India’s largest power producer, has scrapped a deal with Coal India Ltd to import fuel to feed its power plants.

NTPC, which all along been importing coal through state-owned trading houses, was enthused by Coal India’s intent to undertake import on its own on a large scale at competitive prices — even below prevailing global prices — from various overseas suppliers.

But the near-monopoly miner has now communicated to NTPC that it will no longer be able to have the fuel delivered at the doorsteps of its various power plants.

“We have been planning to import about 6-7 million tonne (mt)  through Coal India but it now appears that they are not in a position to fulfill the commitment,” an official of NTPC told DNA.

Coal India officials blamed lack of logistical infrastructure for this.
The company’s attempt to set up a joint venture with the Shipping Corporation of India for imports remains a stillborn. And attempts to rope in Indian Railways have also failed.

“We are not in a position to ensure end-to-end service to those who would be importing coal through us. As for the Railways we are finding it difficult even to move our own domestic production; expecting their assistance to transport imported coal now appears far-fetched. We have communicated this to NTPC as well as other prospective clients,” a Coal India official said on the condition of anonymity.

On its part, NTPC is gearing up to invite bids to import 4 mt. It usually does this through canalising agencies such as State Trading Corporation and MMTC. The power major needs to import about 18 mt of coal this year against 14 mt carted in the last, to meet domestic shortfall.

On the back of NTPC’s commitment to source a significant part of its import requirements, Coal India had offered to wheelbarrow the fuel in for other domestic customers as well. It went through an elaborate process of inviting expressions of interest from suppliers across the globe, shortlisting them and inviting price bids, and even reworking tender documents to meet vigilance guidelines.

The massive effort, it now appears, has gone to waste — after evaluating 19 proposals from 5 companies.

“India is likely to be the world’s fastest growing coal importer,” Peabody Energy, the world’s largest private sector coal miner, recently said. “Indian imports are expected to increase to 200 million tonne a year over five years.” India is likely to import about 83 million tonne of coal this year.