India’s southern Andhra Pradesh has canceled bids for two separate tenders by India’s Adani Enterprises to supply imported coal because quoted prices were too high, two government officials told Reuters.
It is the first time in recent years that a major government tender for imported coal has been canceled because of high prices. Details of the cancellation have not yet been reported.
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India has asked utilities to increase coal imports to fill a domestic shortage. But expensive imports could add to the financial woes of state-owned, indebted electric utilities, which have nearly $15 billion in arrears on power generators.
Adani, India’s biggest coal trader, last month offered to ship 500,000 tonnes of South African coal at 40,000 rupees ($526.50) a tonne and another 750,000 tonnes at 17,480 rupees ($230.08) in January, officials said.
South Africa’s benchmark coal prices started rising in January, hitting a monthly high of $176.50 a tonne after an Indonesian export ban, extending the rise to a record $441.65 a tonne in March on the back of the Russia-Ukraine war.
Both tenders were canceled because the asking price was too high, officials said. Adani was the sole bidder for the 500,000-ton tender, while Agarwal Coal, which had also bid for the 750,000-ton tender, had offered a higher price than Adani, they said.
Adani and Agarwal Coal did not immediately respond to emails and calls seeking comment on Sunday.
India has cut supplies to the non-electricity sector as it faced two of its worst electricity shortages in years in October and March, despite record production from state-run near-monopoly Coal India Ltd.
One of the officials, B. Sreedhar, chief executive of Andhra Pradesh Power Generation Corp Ltd, said the current power shortage is not as bad as October’s but said the state is living hand to mouth.
“We couldn’t build up inventories. Although coal is available locally due to increased mining, transportation is an issue,” Sreedhar told Reuters.
Andhra Pradesh, which has faced a 7% electricity deficit for the last three days of March, this week issued a tender “for the urgent procurement” of 100,000 tonnes of imported coal, officials said.
The Indian state’s state-owned utilities could import at least 2.6 million tonnes in the coming months to meet summer electricity demand, equivalent to total purchases over the past 24 months, other state government officials said.
The western state of Maharashtra has held a tender to procure 2 million tons of coal, while the southern state of Tamil Nadu could hold tenders to procure 480,000 tons, senior officials there said.
The federal government-run NTPC Ltd last month issued a tender to import 1.25 million tonnes of coal.