BS reported that domestic coal shortage has prompted state run power producer NTPC to buy coal through e auction, at rates lower than the market prices. The coal producer would have more than doubled its imported coal consumption by the end of the current financial year in over two years.

The two pronged approach to make up for the shortage will, however, become less aggressive once it is able to put its captive blocks into production.

NTPC has decided to fix a ceiling of 10% for using imported coal of the total requirement. The ceiling has been kept as the high amount of imported coal increases the cost of power and none is willing to buy high cost power.

The company started buying coal through e auction in 2010-11, but it constitutes a small percentage in its total consumption. NTPC enters into agreement for buying coal through such arrangement at rates below the market price since there is an assured buying of coal. These are agreements other than fuel supply agreements with Coal India and Singareni Collieries Company Ltd.

NTPC imported 6.3 million tonnes (equivalent to 10.14 million tonnes of domestic) coal in 2009-10 and it is expected to import 14 million tonnes (equivalent to 23 million tonnes of domestic coal) in 2011-12. The total coal consumption in 2009-10 was over 140 million tonnes and expected to reach 164 million tonnes by the end of this financial year.

(Sourced from BS)