Coal India to import coal for first time in 2013-14 .

New Delhi: State-run Coal India Ltd, which produces around 80% of the country’s coal, will import the fuel in 2013/14 for the first time, two senior company sources said on Thursday, after a pricing deal on its supply obligations with power producers.
The world’s biggest coal miner cannot produce enough to meet soaring power demand in Asia’s third-largest economy.

Under pressure from the prime minister, it promised to use imports to meet commitments but pricing issues had stalled purchases.

India, the world’s fourth-biggest importer of coal, will need to ship in 165 million tonnes in 2013/14 to meet a supply shortfall, the junior coal minister said on Monday.

During April-February, the country imported 122.62 million tonnes of coal, up 27.3% from a year ago.

“We will be importing coal in 2013/14. Actually as per the signed FSAs (fuel supply agreements), the imported coal content is coming to something around 5.8 million tonnes,” one of the sources told Reuters.

Coal fuels more than half the country’s power generation, which still falls short of consumption. Power cuts are frequent and last for hours in many areas, prompting industrial and commercial users to rely heavily on generators.

Coal India, which has struggled for years to meet output targets set by the government, came under pressure from the prime minister to improve supplies after the government faced sharp criticism from industry last year.

So far, the company has signed 61 FSAs, totalling 24,300 megawatts of power generation, with state-run and private companies, the second source said.

Both sources declined to be named, citing company policy.
Import volumes could increase if other state and private power producers also sign up with Coal India for supplies rather than buying imports direct.

On Monday, the government decided to throw out a pricing proposal which would have diluted costlier imports with domestic coal, which is about 50% cheaper, for supply deals signed after April 1, 2009.

Coal India can now price imports on a “cost plus” model, under which its customers need to pay taxes, insurance, and a 2 percent surcharge in addition to the import cost.

All FSAs signed before April 2009 will continue to get 90% of the fuel from domestic supplies.
Power producers who rely on coal imports can now either directly contract shipments, like state-run power producer NTPC Ltd does, or import through Coal India on a cost-plus basis.

“In either case, producers in many states will be unable or unwilling to pay for the high cost of large-scale coal imports,” global political risk research and consultancy firm Eurasia Group said in a note earlier this week.
Coal India will float tenders through state-run trading firms, said one of the sources, but he did not specify any timeframe.


Source : livemint.com