Coal India might opt for direct imports next year

This year, Coal India plans to gauge the domestic market through a tie-up with MMTC and State Trading Corporation

Though the government has shelved the idea of price pooling of imported and domestic coal, Coal India Limited (CIL) is bracing to secure coal for power companies opting to take its services for imports. From next year, CIL plans to import coal for power plants directly. This year, it plans to gauge the domestic market through a tie-up with MMTC and State Trading Corporation (STC).

For its services for imports, CIL would take a two per cent service charge. "Initially, we have asked MMTC and STC to do back-to-back imports on our behalf. But we think we should take the responsibility eventually," S Narsing Rao, chairman of CIL, told Business Standard.

The reason behind asking CIL to import coal is to meet the demand of power plants with an additional capacity of 60,000 Mw. CIL has to ensure 80 per cent of the coal requirement is made available, either through domestic production or imports, with a guarantee that at least 65 per cent comes from domestic supply. This commitment is for power plants started after 2009.

This year, the company would have to import 10 million tonnes. Rao said beside importing this year, the company wanted to gain experience in dealing with consumers. "Though it is not our core job, it is our responsibility. When there are smaller companies who import on behalf of others, a company of our size can also to do it."

For this year, power producers would need to give indents for imports, detailing the quantities they need. Once an indent is received, MMTC and STC would indicate the price and terms of condition. Companies would have to confirm the price and pay 90 per cent up-front; the coal would be delivered within 60 days. The remaining amount would be paid once the coal is delivered. Based on the experience, CIL would develop its own system. The sale would be on the basis of delivery at power plants. "We do not want to get into port-level issues, railways and quality. Similarly, if we were to give a global tender, we would specify the quantity needed to be delivered at designated plants," Rao said.

Power companies would have to assess how much coal should be imported. But as the assessment is based on the availability of domestic coal, CIL would carry out an assessment of the domestic coal to be supplied to each power company, once every two to three months. Then, it would be up to the power plants to decide whether they would want to import or forgo.