Coal India Ltd (CIL), on June 8, 2022, floated its first-ever international competitive bidding e-tender seeking bids for coal imports.
According to a CIL statement, the Central PSU is seeking 2.416 million tonnes of coal, on behalf of state power generating companies (gencos) and independent power producers (IPPs). The coal is meant for use at thermal power stations during the July-September period (Q2) of the ongoing fiscal year FY23.
The successful agency, selected through the bidding process, shall deliver coal at the doorstep of the power plants of state gencos and IPPs. The coal imported shall be routed through nine ports located on east and west coasts of the country.
There is a provision in the tender to accommodate a variation of above or below 30 per cent of the bid quantity. The coal being sought is 5000 GAR [gross as received) thermal grade coal, CIL said.
It may be mentioned that the Central government has nominated CIL as a centralized agency to augment coal supplies to state gencos and IPPs through import of coal, at a time when the demand for coal is high.
Consequently, CIL’s board on June 2, 2022, gave its nod for the company to proceed ahead with the issuance of two international tenders—one short-term and one medium-term—for sourcing coal from overseas.
The current short term tender for import of coal, for Q2 of FY’23, is source agnostic. This means the coal can be sourced from any country.
Though coal import is an uncharted terrain for CIL, the company, within a week of receiving indents from seven state gencos and 19 IPPs for a total of 2.41.6 MTs of coal, finalized and floated the tender on a war-footing basis.
Timelines
The last date for the receipt of bids is June 29, 2022. There is an option of pre-bid meeting on June 14, 2022 to seek clarification on any nuances of the tender, After the price discovery, CIL shall immediately execute a contract with the successful bidder for supply of coal. Then the state owned coal miner shall enter into a back to back agreement with state gencos and IPPs to whom coal has to be supplied.
The rationale behind CIL’s tender
Due to rising coal shortages at thermal power plants this year, gencos and IPPs had approached the Union power ministry to appoint a “coal aggregator” to facilitate large-scale imports and at cost-effective rates. Coal India Ltd has taken the role of this aggregator. Meanwhile, earlier this year, the power ministry also directed Central Electricity Regulatory Commission (CERC) to allow thermal power plants (gencos and IPPs) to blend domestic coal with imported coal, to the extent of 30 per cent.
Also read: Coal India Achieves Record Output And Off-Take In FY22
Coal imports: A backgrounder
Though Coal India Ltd (CIL) has never imported coal, the current policy framework allows coal to be freely imported under the OGL (Open General Licence) by the end consumers. Coking coal is generally imported by primary steel producers like Steel Authority of India Ltd, Tata Steel, etc. On the other hand, non-coking coal is imported by coal-based power plants, cement plants, captive power plants, industrial consumers, coal traders, etc. Coking coal is that variety of coal that can be converted into “coke” that is used in coke oven batteries (COB) at metallurgical units. Some entities like pig iron producers and steel producers using mini-blast furnaces also import coke.
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