Coal news and updates

CIL floats NIT to select agency for procuring 5 mt imported coal

November 21: After initiating the process in July, Coal India Limited (CIL) recently floated a notice inviting tender (NIT) for selection of an agency from a government department or public sector entity for supply of 5 million tons (mt) (+/-30%) imported coal to its consumers till March 2015.

This means, private sector traders like Adani Enterprises, Coal & Oil etc would not be able to directly participate in the tender. However, they would be able to do so for tenders to be floated by a public sector entity which quotes the lowest margin to supply coal to CIL.

The company had a pre-bid meeting with three public sector entities – STC, PEC and MSTC – on August 8 to take their suggestions on how to go about the business. MMTC was also invited to participate in the meeting, but its representative could not be present.

An official from CIL said some of the suggestions from the August 8 meeting have been incorporated in the tender.

The contract will be awarded to one of the agencies on the basis of the lowest trade margin in Indian currency per ton quoted for supply of the imported inventory.

The tender documents would be available on the company's website (www.coalindia.in) from November 26 till December 13 and the last date for submission of bids is December 17.

Incidentally, companies like NTPC earlier used to procure imported coal through public sector companies like MMTC, STC and PEC which, in turn, used to float global tenders inviting offers from suppliers.

However, this process is no longer being followed from 2012-13 and power generators, including NTPC, are directly floating tenders for supply of coal in which even public sector entities compete with their private sector counterparts.

On November 5, ICMW had reported that CIL is looking to procure 5,500 Kcal/kg NAR coal for supply to power plants with whom it has signed fuel supply agreements (FSAs).

Despite the appointment of a government agency to import coal, CIL's move to go ahead with procurement and supply of imported coal to its consumers may meet with obstacles till their existing condition is not amended.

CIL's Director (Marketing) B K Saxena had earlier told ICMW that the company will not place orders for imported coal until and unless it receive advance from consumers.

"It is to be seen how many of CIL's consumers would agree to pay an advance to buy imported coal, especially at a time when they can get credit from private suppliers," an industry source said.