Coal India to import fuel to avoid power cuts, First such move in years

The world's largest coal miner, Coal India will import fuel amid rising concerns over power outages. India is likely to face higher demand for electricity and a wider coal shortage in the third quarter of 2022. This is the first time since 2015 the government-owned entity resorted to importing fuel.

A letter by the Power Ministry said that the state and central officials are stocking up coal to avoid the kind of power cuts India faced in April, reported Reuters. The letter was sent to all utilities and top energy officials including the Coal Secretary and the Chairman of Coal India.

The Centre recently pressured utilities to increase imports to blend with domestically mined coal to build up inventory.

The Power Ministry said Coal India will import coal for blending on a government-to-government (G2G) basis and supply it to thermal power plants of state generators and independent power producers (IPPs). The decision was taken after nearly all states suggested a centralised coal procurement over multiple coal import tenders by states.

States on Saturday were asked to suspend tenders that are under process to await the price discovery by Coal India through the G2G route. This is to procure coal at the least possible rates, said the ministry.

A senior official told Economic Times that discussions on socialising the imported coal costs through bundling costs of domestic coal with imported coal were also discussed. Recovering the costs later from distribution companies will be easier as a similar direction was taken in 2012.

Coal inventories at power plants have declined by 13% since April. In May, a marginal increase to 22 million tonnes was registered. It will last for eight days at the current rate of consumption.