LONDON (Reuters) - The world's largest coal miner, Coal India(CIL) , has been discussing importing up to 15 million tonnes of thermal coal with suppliers, but there are numerous obstacles to overcome before a tender can be issued, supplier sources said.
"Coal India is clearly under a lot of pressure to make up the shortfall in its own output but a lot needs to be covered before they can import," one Delhi-based source said.
CIL would have to revise the terms and conditions of its previous, cancelled tenders, because these were unacceptably imbalanced in its favour, potential suppliers said.
CIL is looking at a tender which would require suppliers to offer to individual power plants on a delivered to plant basis, a requirement likely to dissuade some large coal producers, suppliers said.
"Previous tender documents were onerous and one-sided," one supplier familiar with CIL's cancelled tender said.
Producers including Peabody and Xstrata did offer into CIL's cancelled tender but more may be tempted if the terms and conditions are more attractive.
India has been plagued by power shortages due to a lack of fuel, because it has not been able to produce enough of its own coal or import at target levels.
Coal India is being pressured to import coal at international prices but supply it at far lower domestic prices. The majority state-owned miner has been unable to supply tonnages contracted with domestic utilities and industries.
CIL wants to pass on the higher costs of international coal to its customers, the sources said.
By the time the company and the government clarify which of them will bear the brunt of higher coal costs and CIL settles contract terms acceptable to international suppliers, which could be many months, other Indian state importing entities are likely to have come to the market for speedy purchases, suppliers and Indian traders said.
"Coal India is a miner, not a trader or importer so why don't MMTC or NTPC come to the market and buy what is needed, they have the experience of doing so," one major Indian trader said.
(Source- http://in.finance.yahoo.com)
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