Continue importing 6% of coal needs till June, govt tells gencos

Logistical challenges, higher power demand nudge govt to extend import mandate

The government has directed all the power producers to continue importing 6% of their coal requirements until June 2024, as it expects power demand to hit a new high this summer. The weatherman too has forecast a “harsh” summer.

A notification to extend this mandate was issued by the Union power ministry on March 4. The ministry’s earlier mandate on coal import was to end this month.

In a recent note, the power minister has underscored that domestic coal availability would not be enough to meet the required demand.

“The status of power supply has been reviewed by the Ministry and as per the projections, the peak demand is likely to reach up to 250 Gw in summer season (April-June 2024). It has been further observed that despite the increase in loading of domestic coal rakes, the supplies of domestic coal will remain constrained due to various logistical issues associated with the railway network,” the recent directive said.

The ministry note said that in order to meet the power demand during the crucial summer months and to ensure uninterrupted power supply across the country, adequate coal reserves in domestic coal-based plants (DCBs) need to be maintained by all the central/state power generating companies (gencos) and independent power producers (IPPs). 

“All gencos are to firm up their imported coal contracts for ensuring supplies till June 2024. Further, gencos must also continuously review the stock positions of their domestic coal based plants and opt for blending as per the requirements so that the adequate coal stocks are maintained at the thermal power plant level,” said the directive.

In October, the imported coal based units were also asked to run an optimal capacity in order to meet the rising demand. This directive was also extended recently.

In 2022, the gencos were mandated to blend 10 percent of their coal requirement. It was later made voluntary for any genco, which faces a domestic coal shortfall.

In January 2023, the mandate was back with 6 per cent blending.

On September 1, it was reduced to 4 per cent. Following a steep reduction in domestic coal availability due to the extended summer in large parts of the country and festival demand, the ministry again increased the threshold to 6 per cent.

In 2023, highest ever peak power demand was witnessed in the country but post the usual high demand summer months.

During September the peak power demand of the country touched 240 Gw. This year it is expected to rise further to 250 Gw, while some estimates project it at 260 Gw.

The union ministry of coal which is responsible for domestic coal production is confident domestic coal would be enough to meet the demand.

The ministry in a public statement on Tuesday said, the cumulative coal production (up to February 2024) has touched 880.72 million tonne (Provisional) in FY’ 23-24 as compared to 785.39 MT during the same period in FY’ 22-23, showing a growth of 12.14 per cent.

The Union coal minister Pralhad Joshi recently said the ministry is confident of surplus coal stock by financial year 2025-26 when it estimates the country will have zero thermal coal imports.

The ministry is eyeing 1 billion tonne coal production by next financial year.