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Indian major Coal India Limited’s (CIL) hopes of marking its maiden entry into coal exports is banking on the country’s largest power producer NTPC Limited.
NTPC Limited, the largest domestic customer of CIL, has signed an agreement to establish a thermal power plant in Bangladesh through a joint venture (JV), and the Indian miner is expecting the power company to source coal to feed the planned power plant in the neighbouring country, officials familiar with the development said.
The prospect of making its first shipments of coal to Bangladesh would ease pressure from mounting CIL pithead stocks and depressed demand for the fuel, responding to the Coal Ministry’s prodding to step up exports of Indian coal.
To date, CIL’s pithead stocks have been pegged at 69-million tonnes.
The officials acknowledged that although the relative volume of shipment to the Bangladesh thermal power plant might not be too large given the amount of surplus coal available, it would still be a significant step given previous setbacks in shipping Indian coal overseas.
The Indian government over the past few months has stepped up efforts to explore coal export options to enable CIL to cope with the problem of plenty in the domestic market. “The government is now looking for new consumers for the surplus coal,” Coal and Power Minister Piyush Goyal said at a recent statement.
“We are open to the idea of exporting coal. However, to export we have to address the issue of the quality of Indian coal that can be exported as pollution generated from Indian coal is higher,” Goyal said.
Late last year, the Coal Ministry started planning to enter international coal markets with shipments to neighbouring Nepal and Bangladesh. However, even a modest starting offer of 10-million tonnes failed to find takers in these countries, which were averse to buying low-grade, high ash content Indian coal.
It was acknowledged by the officials that a final decision on sourcing of feedstock for the proposed thermal power plant would depend on Bangladesh India Friendship Power Company, the 50:50 JV between NTPC Limited and the Bangladesh Power Development Board, which was constructing the 660 MW plant entailing an investment of about $2-billion.
Though the proposed plant sourcing Indian coal was not a done deal, CIL was optimistic of making this its first overseas shipment considering that the Bangladesh project was being bankrolled by credit from India’s Exim Bank and equipment supplied by India’s BHEL Limited.
A lurking deal breaker, the officials feared, however, would be Bangladesh demand for supply of washed coal, as last year the Bangladesh government had turned down offers for low grade and higher polluting Indian coal for its existing thermal power plants.
CIL had only a limited coal washery capacity of around 37-million tonnes a year for its total coal production of 554-million tonnes a year.
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