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Coal India to appoint agency to import coal

State-run Coal India said it will soon appoint an agency to import coal for its consumers even though it is yet to receive a firm fuel commitment from power producers.

A presidential directive earlier this year mandates Coal India, the world's biggest coal producer, to meet the fuel supply gap for power producers through imports. Following the directive, the company had asked for preliminary commitments from power firms for coal imports.

Although about 50 companies had agreed, none of them has intimated its commitment, which includes payment of an advance for imports.

"We have not yet received firm commitment for coal imports," a senior Coal India executive said.

Coal India recently invited expressions of interest from public sector agencies for importing coal on its behalf. "While earlier it was planning to import 8 million tonne through these agencies, it has now decided to import only 5 mt, which is estimated to be valued around Rs 3,000 crore," the official said, adding that it will import coal only if it has received the full cost in advance. The firm had invited expressions of interest from foreign producers for importing and supplying to its consumers for 10-years at a row.

However, the price quoted by foreign traders and producers turned out to be more than the price at which its largest consumer, NTPC, was importing. The power producer had shown interest in sourcing 10 mt of imported coal through Coal India.

"The foreign companies were asking a premium on the market price because it had to commit 10 years of supply. NTPC did not agree to the premium and the arrangement did not work," the Coal India executive said.

Source: The Economic Times