After launching its maiden tender for coal imports, Coal India is gearing up to launch a second tender soon, which will look at securing coal in the year till mid-2023, said two sources in the know.
Coal India, the state-run near-monopoly, has approvals to issue a short-term and a medium-term tender. The short term tender, which aims at coal supplies for July-September in the current fiscal year, has already been launched. Sources said the second tender may be launched between June 11-13.
A Coal India spokesperson declined to respond.
While Coal India has little experience in importing coal, the government has roped it in to import coal to supplement coal availability after the country faced a power outages in parts in March-April due to fuel supply constraints. While the situation has eased since then, there are concerns that September-November may be challenging again as coal supply gets impacted in the monsoon months. Hence, the government is pushing states and generators to import coal and do that soon so that stock piles are available before the rains.
The current short-term tender for import of coal, for the second quarter of FY’23, is source agnostic. The last date for the receipt of bids is June 29. There is an option of pre-bid meeting on June 14 to seek clarification on any nuances of the tender.
“Though coal import is an uncharted terrain for CIL, within a week of receiving indents from the 7 State Gencos and 19 IPPs, for a total of 2.416 MTs of coal, the company on a war footing has finalized and floated the tender,” Coal India said.
Why is Coal India importing with urgency?
The power purchase agreements between the discoms and imported coal-based power generators do not allow for passing on the entire increase in international coal price. This has forced them to either shut the plants or run them at low capacity to avoid losses.
Of the total 15 imported-coal based power plants in the country of a total capacity of around Rs 17,600 megawatt (MW), 10 have critically low coal. Almost 7,600 MW of this capacity have not been running and the government is keen to get them to start generating in view of the escalating demand for power.
India’s power demand hit an all-time high of 210.8 gigawatts (GW) on June 9, driven by a spike in demand from households amid an ongoing heat wave and a pick-up in industrial demand. Power generators were left scrambling for fuel, leading to many states being forced to undertake power cuts.
In view of the severity of the situation, all states and all power generation companies using domestic coal as feedstock were directed to import at least 10 percent of their requirement of coal for blending. The government also asked imported coal-based plants to scout for coal in the global market to run at full capacity.
On June 7, Power Minister RK Singh said that electricity generation companies have started the process of importing coal, in order to meet the rising demand for power in the country. According to the minister, the reserve stock of coal was 24 million tonnes on April 1, which came down to 18.5 million tonnes on May 31.
But it will be an uphill task for the states and generators as the country was focusing on domestic production and trying to reduce import of coal- a strategy which worked when power demand was flat in the last few years. But the power demand had been on a rise this year and ahead of the onset of summer, in the 11 months between April 2021 to February 2022, imported coal volumes for thermal power plants were at 24.2 million tonnes (MT), down 43 per cent on year.
After months of low imports, India faces the challenging task of increasing coal imports at a time when the prices are high and other countries are also in the race to secure coal supplies as industrial activities pick up after the COVID impact amid disruption in coal supply due to Russia’s attack on Ukraine and its aftermath. Therefore, much rides on the success of Coal India in securing imported coal soon.
Moneycontrol has been doing a special series on the power crisis and the fundamental issues in the power sector — the PowerShock.
ALSO READ: PowerShock: There are no free lunches—how the politics of free power is killing discoms
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