Tender; NTPC to invite Expressions of Interest for coal import

Tuesday, Dec27, 2011

KOLKATA: NTPC will invite expressions of interest next month for importing coal on a 10-15 years contract from foreign coal producers, chairman Arup Roy Choudhury said. The largest power generator hopes to start imports within the next financial year and will start with about 16 million tonnes. "To begin with, we will import about 15-16 million tonnes of coal through long-term contracts that we are planning to strike with overseas coal suppliers. This volume will increase gradually to about 24 million tonnes in the next few years as our requirement for coal increases," Roy Choudhury said.

"At present we require about 160 million tonnes of coal per year. This year we are importing about 16 million tonnes from the international spot market. However, as our capacity increases over the next couple of years, our requirement is expected to touch 240 million tonnes in the short run. The plan is to import at least 10% of our coal requirement through this contract," he said. Striking long-term import contract will help NTPC source coal at a price which is less than spot market prices.

It will also offer the company some sort of hedge against coal price fluctuation in the short term. This initiative will, however, go in tandem with its effort to acquire coal bearing assets in foreign countries. Coal India had also taken up a similar initiative where it intended to enter into 10-year contract with overseas suppliers for importing coal at a discount over spot market prices.

NTPC was one of the interested consumers and it wanted to take about 10 million tonnes of coal imported by Coal India. However, CIL's initiative did not yield much result as the prices offered by overseas companies turned out to be higher than spot prices. This forced CIL to put this venture on the back burner. "We had shown interest in sourcing coal from Coal India, but they did not get back to us with the final prices and other required details. Nevertheless, as CIL did not turn up, we have now decided to take up the initiative on our own although we would still want CIL to import coal for us," Roy Choudhury said.

"We would like to source around 70 % of our coal requirements from Coal India, 20% from our captive mines and about 10 % from imports. The mines we have been allotted has a reserve of 1.8 billion tonnes and production from some of these will start soon," Roy Choudhury said.

(sourced ET)