Union Minister for Power and New & Renewable Energy, RK Singh said that the government’s mandate of using imported coal for blending at thermal power plants played a crucial role in averting a major power crisis in India in September 2022.
“The gap between daily coal consumption and daily arrival of domestic coal ranged between 2.65 lakh tonnes to 0.5 lakh tonnes between the months of September 2022 and January 2023. If the imports for blending had not been made, the coal stocks in thermal power plants would have reduced to ZERO in September 2022 and would have continued so, leading to widespread power cuts and blackouts,” the minister informed the Rajya Sabha, underscoring the criticality of these imports in maintaining the country’s power supply.
To further ensure power generation amid rapidly growing demand, the Ministry of Power on January 9 this year directed all Central and state generating companies and Independent Power Producers (IPPs) to import coal at 6 percent by weight through a transparent competitive procurement for blending. This mandate has now been extended till March 2024.
Detailing the government’s policy on imported coal usage in thermal power plants, Singh explained that the continuous import of coal since 1993 under open general licence (OGL) has been a regular practice based on the plants’ requirements and commercial judgment. However, the import of coal for blending had been on a decline since 2019-20 due to increased domestic coal availability.
The situation changed in July 2021 when the consumption of coal in thermal power plants increased, resulting in a substantial decrease in coal stock from 28.7 million tonnes in June 2021 to just 8.1 million tonnes by September 2021. This prompted the Ministry of Power to advise state and independent power producers to import a specific percentage of their coal requirements, particularly to maintain sufficient stock during monsoon seasons.
Singh provided a detailed account of the coal import trends in the power sector over the past 14 years. He noted the significant gap between the receipt of domestic coal and its consumption, which persisted even with the decline in imports for blending. From April to September 2022, this gap necessitated partial reliance on imported coal to meet the shortfall.
Furthermore, Singh highlighted a 14% decrease in hydro generation in the first half of FY24 compared to the same period in FY23, primarily due to inconsistent monsoon rains. This decline in hydro power generation, coupled with the reduced domestic coal supply, necessitated the continued import of coal for blending.
Addressing concerns about the cost implications of importing coal, the minister assured that tariffs and pricing are regulated to prevent undue burdens on consumers. He emphasized that the responsibility of monitoring fuel costs and tariffs lies with the regulators, ensuring that generators do not pass excessive costs onto consumers.
