CIL asked to relax bank guarantee clauses for import

Pratim Ranjan Bose Kolkata | Updated on November 10, 2017 Published on January 29, 2011

Coal mining underway in a CIL handout photo

Global coal miners have suggested amendments — especially with regard to the bank guarantee clauses — in the tender documents for participation in the 10-year thermal coal off-take (import) programme of Coal India Ltd (CIL).

The Indian coal major is expected to finalise the tender document by end-February, based on the feedback received at a pre-bid meeting held in Kolkata, on Saturday.

According to industry sources, almost all the companies that attended the meeting felt that CIL had proposed steep bank guarantee clauses which could prevent their participation in the proposed tender.

It is learnt that during the meeting, CIL placed a roadmap to import a minimum of 10 million tonnes (mt) of coal from Australia, Indonesia, South Africa and the US, beginning 2011-12.

The off-take quantity may increase up to 20 mt a year, depending on requirements of the Indian power sector.

While the actual value of the contract will be discovered through a competitive bidding process, the Indian major is looking forward to striking long term-agreements at a minimum of 10 per cent discount to the index-price – the benchmark price for global coal trades.

The pre-bid meeting was organised based on 29 select proposals (for long-term export agreements from specific assets in the said four countries) received from 15 companies. Three companies, including Foresight Energy, Alpha and Novem, reportedly skipped Saturday's meeting.

Among those who attended the meet are: India's Adani group, Rio Tinto, Xstrata, Anglo American, Peabody, Massey Energy, Arch Coal, Murray Energy and Sinarmas.

Adani group is a major Indian investor in the coal mining sector in Indonesia and Australia.

The group is actively pursuing a number of long-term coal supply proposals from its overseas assets to Coal India.

It may be mentioned that based on the EoIs received, CIL divided the proposals in to two categories depending on the calorific value of coal.

While the bulk of the proposals received were for supplies of coal below 5,000 kilo-calorie a kg, CIL would consider only higher heat value (over 5,500 kcal) coal for supplies from far-flung places to offset the high freight cost.

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Published on January 29, 2011
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