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Coal India to import for first time in years as power shortages loom

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Coal India to import for first time in years as power shortages loom

NEW DELHI: The world’s largest coal miner, state-run Coal India, will import the fuel for use by utilities, according to a power ministry document obtained by Reuters on Saturday, as shortages raise fears of new power outages.

It would be the first time Coal India has imported the fuel since 2015, reflecting attempts by state and federal officials to stockpile in order to avoid a repetition of April, when India had its worst power outages in more than six years.

“On a government-to-government (G2G) basis, Coal India would import coal for blending and supply… to thermal power plants of state generators and independent power producers (IPPs),” the federal Power Ministry stated in a letter dated May 28.

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The letter was issued to all utilities, as well as top federal and state energy officials, including the federal coal secretary and Coal India’s chairman.

Due to rising electricity consumption, India is anticipated to confront a greater coal scarcity in the third quarter of 2022, fueling fears of widespread power disruptions.

According to the letter, the decision was made after virtually all states expressed concern that various coal import tenders by states would cause confusion and requested centralised procurement through Coal India.

In recent days, India increased pressure on utilities to increase imports to blend with domestic coal, threatening supply cutbacks if power plants did not build up coal inventories through imports.

However, the power ministry requested on Saturday that states suspend tenders that are “in progress.”

“Tenders under consideration by state generators and IPPs for importing coal for blending may be postponed to await price discovery by Coal India through the G2G method, in order to buy coal at the lowest possible costs,” the ministry said.

Coal inventories at power plants have fallen by approximately 13% since April, reaching their lowest pre-summer levels in years.

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