Tangedco bids by indices to keep coal burning

CHENNAI: Tangedco has floated a tender to procure five lakh tonnes of imported coal through an e-reverse auction with a new index-based pricing methodology to shield itself from a steep hike or fall in coal prices.

According to Tangedco officials, the bids for the coal import have been floated as per the direction of the Union Power Ministry which has mandated the blending of 6 per cent of imported coal with domestic coal in the thermal power plants for 2023-24. It would be procuring five lakh tonnes of imported steam coal for the December 2023 to June 2024 period.

To shield from volatile import coal prices, Tangedco for the first time has added a clause in the tender for an index-based pricing methodology followed by the central public sector undertaking NTPC and some state generation companies. The official said that a variable pricing methodology would be adopted based on the coal index published by Argus or Platts or CERC’s Modified Composite Index.

The change in the pricing methodology from fixed pricing to index-based was recommended by the Audit after the import coal price fell sharply from the contracted cost of 135 US dollars per tonne to 70 USD per tonne. In February this year, Tangedco procured 7.3 lakh tonnes of imported coal at $135 per tonne.

As of date, Tangedco has a coal stock of four days to operate its own thermal power stations with a generation capacity of 4320 MW. The full generation of Tangedco’s thermal power stations requires 72,000 metric tonnes of coal per day (20 rakes /day). However, the utility has been receiving 13 coal rakes as against 17 coal rakes per day as per the Fuel Supply Agreement.

The official added that the demand for the imported coal would go up with the expected commissioning of the 800 MW North Chennai Super Critical Thermal Power Station Stage 3 next year. “NCTPS Stage 3 would be operated with 50 per cent blending of imported coal and domestic coal,” the official added.