CIL may spend Rs 1,800 cr on coal imports in 11th plan

Coal India (CIL) will have to spend around Rs 1,800 crore for importing over 200 million tonnes (mt) of coal valued at current international prices to meet domestic demand during the 11th Five-Year Plan period, according to the public sector behemoth's latest estimates. The imports are necessitated due to a number of letters of assurance (LoA) issued by the coal ministry recently. The LoAs have been issued to different independent power producers, captive power producers, cement and sponge iron units. CIL's estimates, worked out on the basis of applications received by way of LoAs issued to different coal consumers, reveal that the total domestic coal demand during the 11th plan period would be around 773 mt as against the projected production of 520 mt. CIL has received 400-odd applications for the 11th plan period, taking the total coal demand figure to around 773 mt. This leaves a shortfall of over 200 mt to meet domestic requirement. However, the state-run company has also worked out a second conservative estimate of 706 million tonnes for the period. This estimate is based on the feedback that some power units may not be able to commence production during the period. Highly placed CIL sources said, "A necessity for imports is genuinely felt if actual demand and supply are taken into consideration during the 11th plan. Talks on imports have just begun and we have to work out the issue in the shortest possible time to cater to requirements.' For the first time, the new coal distribution policy, announced a few months ago, has kept provisions for meeting domestic coal demands through imports and that might have prompted CIL to work out its internal assessments till 2011-12. The imports would come mostly from Indonesia, South Africa and Australia. Internationally, prices of non-cocking coal are ruling at $90 a tonne. The average domestic price of the product is Rs 800 a tonne. According to CIL estimates, the major part of the domestic demand for coal would come from power plants, taking up about 533 million tonnes, followed by sponge iron, cement and captive power units. Till date, the coal ministry has issued LoAs to 64 new and upcoming units.

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