State-owned MMTC Ltd, Adani Enterprises Ltd and Knowledge Infrastructure Systems Pvt. Ltd (KISPL) are among the firms in the fray for supplying 7 million tonnes (mt) of imported coal estimated to be valued at around Rs. 4,500 crore to NTPC Ltd.
The tender for the largest such package in the current fiscal year was called by NTPC, India’s largest coal consumer, which has a coal requirement of 166.7 mt in the year to March.
Of this, 150 mt is to be supplied by state-owned Coal India Ltd (CIL) and Singareni Collieries Co. Ltd; the balance 16.7 mt is to be sourced from overseas. NTPC has already ordered for 9.7 mt with the price bids opened for the balance 7 mt this month.
“This 7 mt is being sourced through four separate tenders for which the price bids have been opened. They are under evaluation,” said a senior NTPC executive requesting anonymity.
Another NTPC executive confirmed that MMTC, Adani Enterprises and KISPL were in the fray for supplying fuel to India’s largest power generation utility.
The utility has the capacity to generate 42,454 megawatts (MW) of electricity with 17 coal-fuelled projects. The demand for coal will increase with the utility setting a target of becoming a 128,000 MW power producer by 2032. Of this, 56% or 71,680MW will be coal-based.
“Notice Inviting Tender (NIT) for imported coal procurement was notified in newspapers and is currently under evaluation therefore the information sought can not be shared at this stage,” an NTPC spokesperson said in reply to emailed queries.
Queries emailed to the spokespersons of MMTC and Adani Enterprises on Wednesday remained unanswered as of press time on Monday.
“We are one of the participants in the recent NTPC tender for imported coal,” a KISPL spokesperson said in an emailed response. “We are awaiting formal announcement and award of contract by NTPC.”
Analysts said NTPC must improve procurement efficiency.
“The negotiated route with coal miners in select geographies such as Indonesia, South Africa and Australia may have greater procurement efficiency given that the volumes are large and the miners may favour long-term contracts in view of uncertainties ahead, but these need to be weighed against the established procedures and objectives of transparency,” said Dipesh Dipu, a partner at Jenissi Management Consultants, a Hyderabad-based resources-focused consultancy.
“In future, adopting a globally accepted standard contract of coal trade may also enhance procurement efficiency,” said Dipu.
NTPC, India’s largest power generation utility, has been allocated six captive coal blocks by the government and aims to mine 15 million tonnes per annum in three years. However, it has not been able to make them operational yet.
“India has a strong structural demand for coal, given the country’s reliance on thermal power. We expect the country’s thermal coal-based power capacity to increase from an estimated 123GW at the end of FY13 to ~150GW by FY16,” UBS Global Equity Research wrote in a 18 December report.
“Thereby, we expect the total coal demand to increase from~720 mt in FY13 to 920 mt in FY16. However, we expect the domestic coal supply to only cater to 76% of the FY16 coal demand, with rest of the requirement being filled up by imports,” it said.
NTPC’s orders comes at a time when demand for the fuel in the country is expected to grow from 649 mt per year now to 730 mt in 2016-17, and its failure in securing coal assets overseas.
Of India’s current capacity of 227,356.73MW, 58.6%, or 133,188.39MW, is fuelled by coal.
NTPC has an 18.29% share of India’s installed power generation capacity.
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