NTPC may issue 2.5 mt coal import tender by mid-September

NTPC, India’s largest power producer, is planning to issue a tender for import of 2.5 million tonne of coal by mid-September to cater to the growing power demand in the country. The PSU last imported coal three years ago.

Gurdeep Singh, chairman and managing director of NTPC, said the imports would be through a competitive bidding. The coal will be utilised by our coastal power projects in Simhadri, Kudgi and Farakka,” he said.

According to industry estimates, the imports are likely to cost NTPC around Rs 1,372 crore with the coal price at $80/tonne after discounts.

India’s power demand grew an annual 6% in the January-July period and 7.5% in July alone. “Overall, the power demand is growing every month and now its moving to industrial as well, along with residential segment, which is a very healthy sign,” Singh said.

In FY18, the company consumed around 168 million tonne of coal while in the April-June quarter of this year the consumption grew around 17% year-on-year to 43.1 million tonne. The power producer’s power generation in three month ended June has increased 7.5% y-o-y to 69.2 billion units, while the plant load factor (PLF) of the company at 77.9% has stayed way above the national average of 63%.

NTPC’s average tariff in April-june was `3.36 per unit. (The company did not disclose the average cost of power generation)

In a report, Edelweiss Securities said getting full coal allocation for plants, despite it being accorded priority, will be challenging for NTPC. Hence, to resolve its fixed cost under-recoveries due to coal shortage, the company is likely to resort to imported coal.

“With access to electricity increasing, as Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) and Saubhagya Scheme light up each and every house in the country by end-2018, the power consumption will increase further,” Singh said.

To provide fuel security and self-reliance to the national power producing behemoth, the government awarded Pakri Barwadih, Chatti-Bariatu, Kerandari, Dulanga, Talaipalli and Chatti-Bariatu (South), Banai, Bhalumunda and Mandakini B coal blocks. These mines carry total geological reserves of around 7.15 billion tonnes and have a production potential of 107 mtpa that can cater to requirements of 20,000 MW.

According to an estimate, India’s thermal coal import in 2018 is likely to grow to 145 mt y-o-y from 137 mt a year ago.