Coal India to import coal for first time in years as power shortages loom

The power ministry has sent letters informing states about the decision and has asked them to wait for price discovery by Coal India.

The coal will be imported on behalf of power plants, may of which earlier complained that tendering and coal imports was not their core expertise.

ET had on May 22 reported that state governments and power project developers have asked the government for coal imports through an aggregating agency, preferably Coal India, for ease in procurement and cost pass through, sources said.

Discussions were also held on socialising the imported coal costs through bundling costs of domestic coal with imported coal, a senior government official said.

Recovering the costs later from distribution companies will be easier, he said adding there was a similar direction in 2012.

The decision comes at a time when most states are finding it difficult to float tenders, find suppliers and negotiate for coal imports. Uttar Pradesh has advised all its power plants against coal imports citing higher tariffs.

Coal stocks at power stations registered a marginal increase to 22 million tonnes, adequate for eight days at the current rate of consumption. Power stations had 20 million tonnes as on May 20.

The Centre is relying on coal imports to build coal stocks amid high demand projections. It this week invoked an emergency clause to allow compensation to 32 Gw domestic coal-based power projects for higher costs due to blending of imported coal till March next year. On April 28, the power ministry had asked all power plants to import 10% of the coal they need to build stocks amid projections of record power demand.

Earlier in April 2012, a presidential directive to Coal India as per clause 37 of Memorandum of Association was issued to force it to sign long term fuel agreements with 78,000-Mw power companies to be commissioned before March 2015. The government had later allowed Coal India to import coal in order to meet the directive.

However, later the company’s independent directors sent a dissent note to the coal ministry saying Coal India may face losses if it implements coal pool pricing mechanism.