Bidding based on TANGEDCO indices to keep coal burning

CHENNAI: TANGEDCO has floated a tender to purchase five lakh tonnes of imported coal through e-reverse auction with a new index-based pricing methodology to protect itself from sharp rises or falls in coal prices.

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

To protect against volatile import coal prices, TANGEDCO for the first time has added a clause in the tender for index-based pricing methodology followed by Central Public Sector Undertaking NTPC and some state generating companies. The official said a variable pricing methodology would be adopted based on the coal index published by Argus or Platts or the modified composite index of CERC.

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

As on date, TANGEDCO has four days of coal stock to operate its own thermal power stations with a generation capacity of 4320 MW. TANGEDCO’s thermal power stations require 72,000 MT of coal per day for full generation (20 rakes/day). However, the utility is receiving 13 coal rakes per day as against 17 coal rakes as per the fuel supply agreement.

The demand for imported coal will increase with the 800 MW North Chennai Supercritical Thermal Power Station Stage 3 expected to be commissioned next year, the official said. “NCTPS Stage 3 will be operated with a 50 per cent mix of imported coal and domestic coal,” the official said.