Andhra Pradesh cancels Adani bids to supply imported coal

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Andhra Pradesh has cancelled bids made for two separate tenders by Adani Enterprises to supply imported coal as the prices quoted were too high, two state government officials told Reuters.

It is the first time in recent years that a major government tender for imported coal has been cancelled over high prices. Details on the cancellation have not been previously reported.

India has asked utilities to step up coal imports to address a domestic shortfall. However, expensive imports could add to the financial woes of state government-owned, debt-laden power distributors, which have overdue payments of nearly $15 billion to power generators.

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Adani, India's largest coal trader, offered to supply last month 500,000 tonnes of South African coal at 40,000 rupees ($526.50) per tonne and another 750,000 tonnes at 17,480 rupees ($230.08) in January, the officials said.

Benchmark South African coal prices started rising in January to hit a monthly high of $176.50 per tonne in the wake of an export ban by Indonesia, extending the rise to a record $441.65 per tonne in March due to the Russia-Ukraine war.

Both tenders were cancelled because the prices quoted were too high, the officials said. Adani was the only bidder for the 500,000 tonnes tender, while Agarwal Coal, which had also bid for the 750,000 tonnes tender, had quoted a higher price than Adani, they said.

Adani and Agarwal Coal did not immediately respond to emails and calls seeking comment on Sunday.

India faced two of its worst power deficits in recent years in October and March amid surging power demand, despite record production by state-run near-monopoly Coal India Ltd.

One of the officials, B Sreedhar, managing director at Andhra Pradesh Power Generation Corp Ltd, said the current power shortage was not as bad as the one in October, but said the state was living a "hand-to-mouth existence".

"We have not been able to build up stocks. Even though coal is available locally because of more mining, transportation is an issue," Sreedhar told Reuters.