The Dubai-based Coal & Oil Group (C&O), one of the leading suppliers of imported coal, is proposing to tie up with three more state electricity boards (SEBs) as part of its plans to expand its presence in India.
“We have discussed supplies with the SEBs of Punjab, Andhra Pradesh and Tamil Nadu,” said Ahmed Buhari, president and chief executive, C&O. The company had earlier supplied coal to SEBs of Gujarat, Maharashtra and Karnataka.
A mechanical digger loads anthracite coal into a dump truck in Wales, UK
A senior Tamil Nadu government official, who did not wish to be identified, confirmed the development and said, “We are currently importing 20% of our coal requirements. It is met by Indonesian coal which we procure through the Minerals and Metals Trading Corp. (MMTC Ltd). Going forward, we would be looking for coal from C&O as well.”
India’s coal imports, currently estimated at 20 million tonnes (mt), are expected to double in the next five years as more thermal power projects become operational.
Even though 78% of India’s coal production is dedicated to power generation, projected supply of the fuel falls short of projected demand. The sector, excluding the ultra mega power projects, is expected to need 545mt of coal by 2012. However, domestic coal supplies are expected to provide only around 482mt, leaving a shortfall of about 63 mt.
C&O competes with PTC India Ltd and MMTC, among others, and at present has a 25% share in the Rs7,000 crore imported steam coal market in India. It also plans to acquire coal blocks in Indonesia and in Africa. In Indonesia, it faces competition from Indian companies such as Coal India Ltd, Lanco Infratech Ltd, NTPC Ltd and Madhucon Projects Ltd.
A senior Andhra Pradesh government official, who did not wish to be identified, said, “According to the Union power ministry, the coal produced in the country will be insufficient. We have been advised to develop our own stocks. We plan to import coal for our Krishnapattnam power project.”
Shubhranshu Patnaik, an executive director at audit and consulting firm PricewaterhouseCoopers, said, “A lot of these state power generation projects use imported coal to blend with the indigenous coal. There will be a demand for this purpose even as the companies are looking overseas for acquiring coal blocks.”
“Coal imports will obviously come down to the extent of ‘equity coal’ (taking equity stakes in coal blocks to ensure long-term supplies and price stability) supplies. However, not every company can venture out and spend a billion dollars like Tata Power, so there will still be plenty of imports. The concept of ‘equity coal’ is common in Japan and (South) Korea, but imports still flourish,” Buhari said.
The deal he was referring to was Tata Power Co. Ltd’s recent acquisition of a 30% stake in two coal mining units and a trading company from Indonesia’s PT Bumi Resources for Rs4,740 crore.