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India Extends Validity of Coal Import Directives



September 5, 2023 - India's federal power ministry has extended the validity of directives to utilities to raise imports and boost electricity generation to meet an anticipated increase in power demand in coming months.


The ministry has issued two separate orders recently, extending the validity of its previous directions to imported coal-fired utilities and domestic coal-based power plants. Under Section 11 emergency clause of India's Electricity Act, 2003, the ministry has asked utilities which burn only imported coal to keep power generation levels high until 31 October to cater for the strong electricity consumption, according to its order dated 23 August. The directive, which was issued in February and original valid until 15 June, was previously extended until 30 September. The latest extension notice was sent to 15 imported coal-based plants, which have a combined generation capacity of 17.5GW, accounting for under 10pc of India's overall coal-fired generation capacity.

The ministry issued another directive on 1 September ordering all domestic coal-fired utilities to continue to import coal for blending purposes until 31 March, although the blending percentage was lowered to 4pc from 6pc of their thermal coal requirement by weight. The order on blending was first issued in January and was valid until September. The move comes as domestic coal supplies have been estimated to be insufficient to meet the surge in power demand, led by growth in the economy.

The country's coal-fired generation — which meets the bulk of India's power requirements — rose to 103.94TWh in August, from 97.95TWh a year earlier and 98.21TWh in July. Power demand has been hovering above 200GW over most of August and touched the highest ever peak demand of 236.6GW during the month, the ministry said. This was around 21pc higher than the peak demand of August 2022.

The gap between coal consumption at domestic coal-fired power plants and receipts of domestic coal has been about 200,000 t/d in August, partly met by imported coal, the ministry said, adding that stocks would have declined to critical levels without imported coal. The Central Electricity Authority (CEA) has estimated utilities' domestic coal requirements at about 404mn t in October-March, but supplies have been factored in at 397mn t, citing various logistical constraints associated with the railway network and the availability of rakes to move coal cargoes. The Ministry of Railways is making progress in resolving infrastructural issues, but there are some bottlenecks which may take some more time to resolve, the power ministry said.

The decisions to extend the directives underscore the Indian government's resolve to ensure stable power generation to meet any spike in electricity consumption in the coming months and avoid what happened in the summer months of March-June 2022, when a post-pandemic demand surge and severe heatwave brought the country to the brink of a power crisis.

The latest move could support India's receipts of seaborne coal in coming months. Indian thermal coal imports fell by 7.04mn t on the year to 11.51mn t in July, according to shipbroker Interocean's data. Demand from India in the seaborne market has been steady lately, driven by steady interest from utilities and industrial consumers such as cement makers.