* Indian government plans tender for coal quality sampling
* Coal-reliant industry suffers from falling fuel quality
* China may soon ban low-quality coal imports
By John McGarrity and Malini Menon
LONDON, NEW DELHI, May 16 India is calling in
specialist quality control monitors to stop poor quality coal
imports getting through to its import-reliant power plants.
Indian utilities complain that poor quality coal reduces the
efficiency of power stations, requiring more fuel and an
increased need for the costly disposal of pollution.
Last month, India's largest utility NTPC refused to pay for
coal viewed as substandard, prompting Coal India to
respond by suspending supplies and raising concerns of
To address the problem, the government is planning a tender
for independent coal quality sampling by September, in which
international verification companies such as SGS and
Bureau Veritas are taking part.
"Coal India has had a long-standing Joint Sampling scheme in
place with their consumers which ultimately ended...We have
participated in the tender floated by Coal India for independent
verification of their coal supplied to their consumers," said
Erwin Oosterveen, business development manager with Bureau
Indian utilities have become increasingly reliant on
imported coal because domestic production is lagging demand, but
the quality of many of these imports is dropping.
Low quality coal exports (known as sub-bituminous supplies)
from Indonesia, the world's biggest exporter of thermal coal,
have risen steadily in the past five years, especially to China
India's government is desperate to avoid a repeat of a huge
blackout last year, when half of the country's 1.2 billion
people lost access to the power grid.
But with imported coal costing around 50 percent more, some
power companies are facing huge losses unless they push up power
customer prices, something state governments are resisting.
Last week, India's National Aluminium Company, which uses
large amounts of the fossil fuel for its power supply, said it
had started cutting output because of a lack of domestic coal
CHINA ALSO TAKES STEPS
Choking on pollution and keen for more efficient electricity
production, China also wants to improve the quality of its coal
In a move to reduce pollution and help domestic producers,
which have struggled to compete with Indonesian suppliers, China
may soon ban lower quality imports.
"This move does fit in with the policy of promoting 'more
efficient' growth. Also, the growing concern over pollution is
likely to have played a part," Australian bank Macquarie said.
"Blending of coal to meet minimum requirements should open
up large potential for traders," the bank added.
Coal is the dominant fuel to meet booming power demand in
most emerging markets.
Asia's two biggest coal users, China and India, with other
emerging economies have in recent decades ramped up coal use to
account for more than half of current global demand.
But the most economical reserves of the fossil fuel are fast
being depleted, leading to a drop in the quality of what
(Editing by Henning Gloystein and William Hardy)