India has shelved a proposal to make power plants import coal to replenish dwindling stockpiles, as elevated international prices and a weaker rupee have increased the cost of overseas shipments, Bloomberg reported on Monday, citing people familiar with the discussions.The government had recently considered asking power plants to blend imported coal with domestic supplies to ease the fuel shortage. However, the proposal was put on hold because of the high cost of imports, the report said.Policymakers have instead asked state-owned Coal India Ltd to increase production and the railways to ensure timely transportation of coal to power stations, according to Bloomberg.The decision comes as coal inventories at Indian power plants have fallen to their lowest level in nearly five years, with higher electricity demand and reduced hydropower generation putting pressure on domestic supplies.
Coal stocks remain under pressure
Nearly half of India’s power plants had critically low coal inventories as of October 17, with stocks below a quarter of their required levels, according to data from the power ministry.A poor monsoon has kept temperatures elevated beyond the summer months, increasing electricity consumption for cooling and irrigation. Below-normal rainfall has also reduced hydropower generation, increasing the burden on coal-fired power plants and depleting their reserves.India’s electricity deficit surged in September, marking the worst power shortages for the month in nearly a decade.However, the pace of coal stock depletion has slowed in October. According to Bloomberg’s calculations based on power ministry data, domestic coal-burning power plants recorded an average daily inventory decline of around 48,000 tonnes during the first 17 days of the month, about a fifth of the rate seen in September.The government expects electricity consumption to ease as temperatures decline and coal inventories begin to recover.Average temperatures are forecast to fall slightly over the next two weeks, although they are expected to remain above the 30-year normal, according to the European Centre for Medium-Range Weather Forecasts.
High import costs discourage overseas purchases
India has previously required power plants to import coal to supplement domestic supplies during shortages. However, benchmark thermal coal prices are currently at their highest level in three years.The weaker rupee has added to the cost of imports, while higher oil prices have increased India’s energy import bill, making overseas coal purchases less attractive.The government had opted to focus on increasing domestic production and improving transportation instead of mandating imports.The development follows an order requiring more than 100 captive coal-fired power plants to operate at maximum capacity from October 1 until the end of the year to meet an expected rise in electricity demand.
Government says coal supplies have improved
The coal ministry had said earlier this month that daily coal supplies to the power sector had increased by around 36 per cent from September levels and that the pace of inventory depletion had moderated.According to a ministry statement, the designation of a plant as having “critical stock” serves as an early warning and does not necessarily mean that it is running out of coal or faces an imminent shutdown.The ministry said plants with low inventories were being monitored closely, with supplies redistributed to support uninterrupted electricity generation.Data from the Central Electricity Authority showed that 87 of 190 coal-fired power plants had critical stocks as of October 8, compared with 50 in the first week of September.These plants held 20.6 million tonnes of coal, equivalent to 33 per cent of the recommended stock of 61.2 million tonnes.The ministry also said rail loading had strengthened, averaging more than 465 rakes a day in October, with the target of 470 rakes achieved on three consecutive days. Supplies through road and other modes had also improved.It said sustained coal transportation of 465-475 rakes a day should help stabilise inventories and support stock rebuilding ahead of festive-season, winter and subsequent summer demand.
