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Coal India receives first consignment of imported coal of 1.7 lakh tonnes from Indonesia

Coal India's efforts to import coal have borne fruit after nearly four years, with the first consignment of about 1.7 lakh tonnes reaching Mundra Port from Indonesia recently.

The imported coal, handled by MMTC, will be supplied to Neyveli Thermal Power in Tuticorin and two independent power producers in Punjab — Talwandi Sabo Power and Nawa. The state-run monopoly miner was initially hoping to import about 5 million tonnes of coal for its consumers. However, it ended up placing an order for 0.5 million tonnes due to lack of interest among buyers.

"We had placed an order for some 0.5 million tonnes of coal for four companies — two private and two public sector. Another company had placed a small order with us, but the size was small and it didn't find any overseas seller. The first consignment of this coal has arrived at Mundra port," said a senior Coal IndiaBSE 0.59 % official, who did not wish to be identified.

The rest of the ordered volume, about 3.3 lakh tonnes, will be imported during this financial year, the official said, adding, "We hope the import volume will rise as demand for coal rises with more thermal capacities coming up."

Coal India has been given the responsibility of importing coal on behalf of its consumers to meet the nation's demand for the fuel. It had decided to place orders only for companies that would pay in advance.

Although 40-50 companies had shown interest in the beginning, only five placed firm orders. The miner spent a couple of years trying to enter into a longterm contract with overseas coal producers in lieu of strategic stakes in these companies. However, this did not materialise as the prices quoted for the coal being supplied worked out to be more than the prevailing market price. Besides, its largest consumer NTPCBSE -0.49 %
backed out since it did not want to buy the coal at higher prices than prevailing market price.

NTPC had earlier shown interest in sourcing 10 million tonnes of imported coal through Coal India, but it backed out when the prices quoted were higher.

"The foreign companies were asking for a premium on the market price because they had to commit to 10 years of supply. NTPC did not agree to the premium and the arrangement didn't work out," a Coal India official said.

Source: Economic Times