Coal India Ltd. (CIL) has issued a tender for purchasing imported coal for power generating companies (gencos) in the wake of the Centre directing it to meet the shortfall in the domestic coal supply chain. CIL has called for bids to supply 2.4 million tonnes (MT) of coal to be delivered for the July to September 2022 period. The estimated value of the contract is Rs. 3,100 crore, CIL said in the tender document.

The imported coal would be supplied to state government-owned gencos and independent power producers (IPPs), 1.2 MT each. The IPPs include Sembcorp Energy, JP Power, Avantha Power, Lanco, Rattan India, GMR, CESC, Vedanta Power, Jindal India Thermal, among others. The states which will receive imported coal for their generating stations are Punjab, Gujarat, West Bengal, Tamil Nadu, Jharkhand and Madhya Pradesh.

Last month, the Ministry of Power directed CIL to import coal for state and private gencos. This came two weeks after state and privately-owned gencos were told to import coal for 10 per cent blending, but were later asked to keep their tenders ‘in abeyance’. Several states expressed reluctance to import coal and asked for CIL to arrange the dry fuel from global markets.

State and private gencos will cumulatively require 38-40 MT of imported coal for blending at 10 per cent. Central government-owned NTPC is in the process of issuing tenders worth 20 mt to meet its imported coal blending target. This paper recently reported, NTPC has awarded 6.25 MT of imported coal tender worth Rs. 8,300 crore to Adani Enterprises.

Due to the high cost of imported coal, power tariff (from NTPC units) is scheduled to go up by at least 50-70 paise. This will have to be borne by consumers. As far as state and private gencos are concerned, they will need regulatory approval for transferring the additional cost of imported coal on to consumers. Invoking Section 11 of the Act again, the power ministry last week allowed state and private units to charge a compensation tariff in lieu of importing coal.

The Union coal ministry on the other hand has questioned the concerns over coal shortage in the coming months saying that there is enough domestic stock available and it is up to power generators to stock up before the monsoon months. Senior coal ministry officials said there is a stock of 20 million tonnes with power plants which is enough for 9 days of operations.

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