Centre asks states to import coal as rising demand stretches supply

NEW DELHI: The power ministry on Wednesday advised states to import coal for 10% blending with domestic coal at their power stations and ensure that all imported coal-fired plants, with whom they have agreements, are operational as rising demand for electricity stretched fuel supply and stocks at generation plants.

At a meeting to review the working of the imported coal based power stations, power minister R K Singh said mixing imported coal will allow state utilities to optimally utilise domestic coal in plants nearer to mines, which will help maintain adequate fuel inventory. It is easier to transmit electricity instead of coal to far off states, according to a ministry statement.

“In order to avoid long distance coal transport in respect to certain state gencos (generation companies), tolling facility would be allowed up to 25% of linkage coal,” the ministry statement said and recommended that gencos should limit blending with imported coal to 10%.

The minister also directed states with power supply agreements with imported coal-based plants to ensure such plants were operational at “fair and reasonable” tariffs. The ministry said all operational issues of such plants will be resolved to make them fully functional.

The ministry had recently asked all states with agreements with imported coal-based power plants to take all legal steps to ensure such plants do not stop operating on such ground as high cost of imported coal and then offer their capacity in the open market where tariffs had risen to Rs 18 before the CEA (Central Electricity Authority) capped it at Rs 12 per unit on the exchanges.

Though domestic coal production rose 8% and despatches by Coal India, which meets 80% of demand, registered a growth of 18% in 2021-22, fuel inventories at power plants averaged nine days against the CEA norm of 24 days. Industry players point to capacity constraints of railways and issues with quality of coal being supplied amid rising power demand as major reasons for the situation.

The low stock position has once again raised the spectre of a crisis this year, similar to last year when low stocks forced many power plants to shut in the August-October period after monsoon rains hit coal production and supply.