Coal India Ltd has cancelled its short-term tender for which Adani Enterprises Ltd emerged as the lowest bidder and plans to source more coal through a medium-term tender which is offering the fuel at a lower price, sources have told Moneycontrol.
The state-run Coal India, which accounts for almost 80 percent of the country’s output, issued a short-term tender that aimed at supplies for July-September in the current fiscal year and a medium-term bid for securing coal till mid-2023. This is the first time that India’s largest coal producer will import the fuel, as demand for electricity spikes.
“The rate at which Coal India is getting coal from the medium-term tender is significantly lower than the price quoted in the short-term tender, therefore the latter is being cancelled. The medium-term tender includes an option to double the quantity of import, which will be exercised to source more coal at better rates,” a source said.
Coal India is yet to make an official announcement and a company spokesperson declined to comment.
However, Adani Group's spokesperson, while reacting to the development, said, “We have learned that Coal India Ltd. (CIL) has cancelled the short-term coal import tender, where Adani Enterprises Ltd (AEL) was the lowest bidder. Cancellation of this tender is the prerogative of CIL.”
In June, the company floated international competitive bids to source coal for the short and medium terms. This included two international competitive bidding e-tenders for 3 million tonnes (MTs) each to source coal from abroad in the medium term, which had the option of increasing the bid quantity by 100 percent to 12 MTs. The last date for receiving the bids was July 5. Subsequently, PT Bara Daya Energy emerged as the winner of the two bids to supply a total of 6 MT by 2023.
The tender for short-term supply was to source 2.416 million tonnes and closed on June 29. Adani Enterprises Ltd emerged as the best bidder but the contract had not been awarded. After evaluation, Coal India decided to cancel the tender.
Press Trust of India news agency reported on July 18 that PT Bara Daya Energy had quoted Rs 2,000 per tonne less than the rate quoted by the Adani group firm.
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 record high temperatures and a pick-up in industrial demand.
The early onset of summer left power generators scrambling for fuel, forcing several states to undertake power cuts in March and April.
In view of the situation and domestic coal mining and supply getting disrupted in monsoon months, the government directed all states and power-generation companies using domestic coal to import at least 10 percent of their requirement for blending. The government also asked imported coal-based plants to scout for the fuel in the global market to run at full capacity.
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