NTPC to spend $15bn on coal imports over 10 years news.

Reluctant to sign a fuel supply agreement with Coal India Ltd, state-owned National Thermal Power Corp Ltd (NTPC), India's biggest power producer, said it plans to spend $15 billion over a decade to secure overseas coal supplies.

The utility may sign five- or 10-year contracts for the first time to import as much as 150 million tonnes of coal, chairman Arup Roy Choudhury told Bloomberg in a telephone interview on Tuesday. The cost will be $15 billion, assuming a rate of $100 a tonne, he said.
 
''With coal prices where they are, this could be a good time to lay our foundation for future imports,'' Choudhury said. ''If we need more, we'll buy it as we have in the past, four or five million tonnes at a time.'' International coal prices are ruling at a 19-month-low.

NTPC is one of the few power producers still refusing to sign a fuel supply agreement (FSA) with Coal India Ltd, the world's biggest coal producer whose output is nonetheless way below India's demand. The government had mandated that CIL must sign fuel supply guarantees with power producers to meet at least 80 per cent of their demand; even if it has to directly import coal to meet the requirements.

But power producers, especially NTPC, are dissatisfied with certain clauses in the FSA put forward by CIL, particularly those related to penalty in case of default. They say CIL will virtually go scot free if it fails to meet its supply obligations.

NTPC is seeking to tackle fuel bottlenecks after its failure to meet targets for generation and capacity addition sent its stock tumbling to a 42-month low last week.

NTPC posted its second straight drop in quarterly profit in the three months ended 31 March after fuel costs increased and its tax burden more than doubled. Power producers are paying almost double the price for imported coal to make up for the local shortfall, pushing up costs.

The power producer has targeted a 25 per cent increase in coal imports to 16 million tonnes this year. It currently has an installed capacity of 37,514 megawatts, 19 per cent of the country's total electricity output.

Source : domain-b.com