Govt pushes states, gencos to import coal before monsoon to offset shortage

The union ministry of coal, while acknowledging that domestic coal stock is not enough to meet the power demand, asked state governments and the power generating companies (gencos) to import coal before monsoon season sets in. The ministry has warned the gencos if they do not import coal for 10 per cent blending in their fuel demand by the end of this month, blending benchmark would be increased to 15 per cent.

The order pertains to all – central, state and independent power producers (IPPs)/privately owned units. It also said, if blending with domestic coal is not started by June 15th, domestic allocation of the concerned defaulter thermal power plants will be further reduced by 5 per cent

The directive comes in wake of power stations facing acute coal shortage with average stock of 7 days across the country. Out of the 173 power stations, 97 have critical level coal stock (less than seven days of coal). There are around 50 units which have less than 4 days of coal, some left with barely 1 day of coal.

“If the orders for import of coal for blending are not placed by gencos by 31.05.2022 and if the imported coal for blending purpose do not start arriving at the power plants by 15.06.2022, all the defaulter gencos would have to import coal for blending purpose to the extent of 15 per cent in the remaining period upto 31.10.2022,” said the directive.

In a letter by R K Singh, union minister for power to the state governments, he said they should urge their state gencos to take immediate steps to import coal for blending in order to meet their requirement during monsoon season.

“Due to increase in demand and consumption of electricity, the share of coal-based generation has increased and the total coal consumption by power plants has also increased. Materialisation of domestic coal is only about 88 per cent of total requirements. In order to ensure minimum required coal stocks in power plants before the onset of monsoon, thermal power plants owned by state gencos and IPPs must use all the sources to maintain adequate coal stock,” the minister said in his letter.
 

The power ministry has directed all gencos to ensure adequate stocks at their power plants for smooth operation until October 2022. The ministry last week directed all the imported coal-based plants to start running. It however said the, import by states of coal for blending is not satisfactory.

The directive is a stark retraction from the union government’s earlier stance under its 'Aatmnirbhar Bharat' initiative to reduce coal import. Union minister for coal Pralhad Joshi said India would have zero coal imports by 2023-24, according to a press release by PIB in February 2020.

The union power ministry has now said that declining coal imports is the reason for the current crisis. In 2018-19, 21.4 million tonne of coal was imported for blending, 23.8 million tonne in 2019-20 and in 2021-22, it fell to 8.3 million tonnes. “This is the cause of the stress in the availability of coal,” power ministry said in a public statement.

In October last year India’s largest power generator NTPC limited issued invitation for bids' (IFB) for procuring 2 million tonne of imported coal. NTPC issued IFB to import coal after a hiatus of at least two years, as it was directed to stop coal imports by the Centre.

Of the 173 power generating units in the country, 14 are based on imported coal. Apart from this, NTPC typically blends 8-10 per cent of imported coal at its coastal units. Privately owned domestic coal based gencos do not import coal as it increases their cost. Senior executives said they have urged the government to reconsider as this will escalate their cost and would require tariff revision.

“Most of the IPPs meet the shortfall from linkage coal from participating in e-auction of coal done by Coal India. Smaller players do not even have that much capital, so they are completely reliant on domestic linkage coal,” said an executive with an IPP.

Last year in August too, the Centre had asked thermal power generators to import coal for at least 10 per cent blending, citing shortage of domestic coal supply. Only NTPC imported a meagre 2 million tonne coal back then.