Power ministry recommends importing coal for blending to meet demand

The Union Power Ministry has recommended the import of coal for blending up to 10 per cent to ensure adequate stocks for uninterrupted electricity supply over the next few weeks when power demand is expected to rise further.

It has also allowed tolling which essentially would mean giving electricity producers access to coal near a plant rather than transporting it from allocated mines that may be in far away areas.

The measures follow coal inventories dropping to their lowest pre-summer levels in at least 9 years and the electricity demand is expected to increase at the fastest pace in at least 38 years.

In a statement, the ministry said that tolling will be allowed for state power generating companies (gencos) to optimally utilise linkage coal. "In order to avoid long-distance coal transport in respect of certain state gencos, tolling facility would be allowed up to 25 per cent of linkage coal".

"This would enable states to optimally utilise their linkage coal in the plants nearer to the mines as it would be easier to transmit electricity instead of coal transport to far off states," the statement said.

This follows Union Power Minister R K Singh reviewing the operation of imported coal-based plants and the import of coal for blending by the states.

The tolling system allows gencos to use coal from linkages available to them to supply to any independent private power producer on a competitive bid basis. The independent power producer can then produce power and supply it to the state which originally has the coal linkage.

Tolling, Singh said, would enable states to optimally utilise their linkage coal in the plants nearer to the mines as it would be easier to transmit electricity instead of coal transport to far-off states.

"The minister took a review of the operations of imported coal-based plants and directed all the procurer states to ensure that all Imported Coal Based (ICB) plants are operational at fair and reasonable tariffs. It was decided to resolve all the operational issues in ICB plants and make them fully functional," the statement said.

Keeping in view the rapidly increasing demand for power, it was recommended that all gencos should endeavour to import coal for blending up to 10 per cent. State-wise and genco-wise targets were fixed and it was urged to ensure delivery of coal for blending purposes before the onset of monsoon as domestic coal supply gets affected during the rainy season.

Power plants' inventories had an average stock of only nine days at the beginning of April, the lowest since at least 2014, as against the norm requiring power plants to maintain an average of at least 24 days of stock.

During the review, a list of targets for states and generation companies was drawn up to ensure the delivery of coal for blending purposes.

The statement said the meeting, which was held in view of the rising power demand, was attended by principal secretaries and senior officials from states, independent power producers and representatives of ICB plants, along with Union Power Secretary Alok Kumar, Additional Secretary Vivek Kumar Devangan and the heads of central public sector enterprises from the sector.

The government is looking to avoid a repeat of last year when several states saw power cuts due to depleting coal stocks. This time around it is working on different aspects of the supply chain of fuel as supplies have not been able to catch up with the growing demand and international coal prices continue to soar.

With thermal coal generating around 75 per cent of India's electricity, the government is prioritising supplies to the power sector and pushing other sectors to scale up output from their captive power plants.