KOLKATA (miningweekly.com) - Indian government-owned and operated thermal power companies will be among the largest importers of coal during the current financial year, as the country’s largest coal producer Coal India Limited (CIL) prunes its inward shipments in the year.

According to a forecast by the Central Electricity Authority (CEA), a consultancy under the Power Ministry, government thermal power companies would need to import 52-million tonnes of coal during 2015/16, as opposed to the 21-million tonnes of imported coal required by 25 thermal power companies in the private sector.

CEA, in a note to the Power Ministry, suggested that the government direct all thermal power companies to initiate the necessary planning to avoid bunching of contracts toward the close of the financial year after contracted domestic supplies were nearing completion.

However, despite the government thermal power companies’ dependence on imported coal, CIL, which accounted for 80% of domestic supplies, had cut down its planned shipments in 2015 to just two-million tonnes from five-million tonnes in 2014/15.

According to an official, CIL was cautious in committing supplies based on imported coal, as last year, despite planning to import five-million tonnes, it received orders for only 460 000 t from thermal power companies.

As CIL was essentially a miner and had limited experience in international trading, without import planning for the full year from consumers, the company was hamstrung in concluding import transactions within a short period of time, and as a result was exposed to rushed contracts which carried financial risks.

One of the reasons cited for the low demand for CIL’s imported coal was that most thermal power companies bunched their demand for shipments towards the end of the fiscal year, rather than spreading it out over the year. This, according to CIL officials, made it difficult to enter the international spot coal market and successfully conclude transactions, as offers tended to move up.

For example, NTPC Limited, the country’s largest thermal power producer, did not plan to use imported coal during the April to June quarter even though its total demand for imported coal for the rest of the year had been projected at 22-million tonnes.

India’s total demand for imported coal from all industrial sectors, including power, had been forecast to rise 10% during the year to 220-million tonnes, despite CIL having been set a production target by the government of 550-million tonnes, 8.5% higher than the previous year.

Last year the miner missed its production target by 3%, achieving 495-million tonnes, but had been able to start the current year on a positive note with a production growth of 11% during April at 41.42-million tonnes, compared to the corresponding month of previous fiscal period.

However, according to an official with NTPC, higher domestic production would not necessarily lead to lower imports as a slump in the global dry fuel market had made several grades of imported coal cheaper than that sourced from CIL.