Purchasing of Coking Coal by SAIL and RINL
Steel Authority of India Ltd. (SAIL) and Rashtriya Ispat Nigam Ltd. (RINL) are PSUs under the Ministry of Steel having a status of Maharatna and Navaratna respectively and enjoy delegated powers. The procurement of imported coking coal is a commercial decision of the companies and procurement is done as per their requirements under laid down policy through Long Term Agreement (LTA) and global tenders. As per international market practice, quantities under Long Term Agreements are settled annually by the Empowered Joint Committee (EJC) comprising representatives of both SAIL and RINL. EJC while negotiating quantities and prices with long term suppliers takes the FOB prices settled by Japanese Steel Mills and others as reported in the international coal journals as the benchmark. The annual requirement is tied up at the beginning of the year and the same is confirmed and received quarter-wise throughout the year.
As compared to 2009-10, the prices of imported coking coal in 2010-11 have increased by 75%, for steel companies all over the world. Therefore, depending upon the quantity of imported coal and other strategic raw materials, profit margin of all these steel companies was adversely affected by this rise in the coking coal prices.
A Committee has been constituted in the Ministry for looking into need for rationalizing the procurement procedure for coking coal, acquisition of coking coal mines abroad and optimizing the use of coking coal by the steel PSUs etc.
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