Imported coal set to increase NTPC's final tariff by 50-70 paise

State-owned NTPC will see its fuel cost go up to Rs 7-8 per unit by importing coal against Rs 2 per unit by buying in the domestic market from Coal India (CIL). Senior officials said this would increase the final tariff of NTPC by 50-70 paise and it will be passed on to electricity consumers.

Senior officials said domestic coal shortfall led to the Centre urging the generators to sign last-minute coal contracts, which is currently at least 200 per cent costlier than domestic coal. Global inflationary pressures, largely due to the Russia-Ukraine war, have pumped up the price of coal in the overseas markets.

NTPC is in the process of placing orders for close to 20 million tonnes (MT) of imported coal for blending 10 per cent of the dry fuel with the existing domestic supply. The import target of the company has been increased following a directive by the Union ministry of power.

Acknowledging that domestic coal stock is not enough to meet the power demand in the country, the Centre last week directed all states and power generating companies (gencos) to import coal before monsoon sets in.

The power ministry warned gencos that the coal blending benchmark would be increased to 15 per cent from the current 10 per cent if they do not import coal by the end of this month. The directive also said that if blending is not started by June 15, domestic coal allocation of the defaulting thermal plant will be reduced by 5 per cent.

For the upcoming monsoon season, which is also the time when coal mining activity is reduced, NTPC is shoring up its own reserves.

A senior executive said 2.5 MT of imported coal has arrived at NTPC’s plants and 1.6 MT is at the ports. “The company has placed an order for 10 MT and would soon go for Board approval for placing an order for another 5 MT,” said the person.

The person added that it has paid CIL in advance to build up a stock. NTPC currently has an average coal stock level of 44 per cent across its power units, translating into 14 days of availability. Most of the pithead (closer to the mine) units have better availability of coal.

Additionally, company executives said NTPC is increasing production from its captive (self-use) mines. NTPC was allotted nine coal mines by the Centre, out of which four are operational and three have been surrendered.

“The company is aiming to increase production from its mines to 26 MT from 14 MT last financial year,” said an executive.

Senior officials said the ministry of power will facilitate land acquisition, clearances and approvals to assist the company in ramping up production from its mines.

As hydro units start supplying more and with the beginning of wind power season, it is expected that the pressure on coal-based power generation units will abate, said executives.

“Coal units are currently meeting 75 per cent of India’s power demand. Supplementary resources would share the load but coal would be the backbone. NTPC plans to have tie-ups for coal supply,” said the executive.

Against all-India power generation growth of 13 per cent, NTPC has registered a 15 per cent growth. The plant load factor (PLF) or operating ratio of the plants has increased to 75 per cent. It was 56 per cent last year.