Power Ministry orders Coal India to import fuel for first time in years

"Coal India would import coal for blending on government-to-government (G2G) basis and supply ... to thermal power plants of state generators and independent power producers (IPPs)," the Power Ministry says in the letter.

New Delhi: Coal India, the world's largest coal miner owned by the Indian government, shall import the fuel for use by utilities for the first time since 2015, as reportedly ordered by the Power Ministry. In a letter dated May 28, the Power Ministry cites that the shortage of fuel has raised concerns regarding the renewed power outages, thereby hinting at the import directions. The recipients in the letter include all utilities and the top Central and State energy officials, including the Coal Secretary and the Chairman of Coal India.

"Coal India would import coal for blending on government-to-government (G2G) basis and supply ... to thermal power plants of State generators and independent power producers (IPPs)," the Power Ministry says in the said letter. It further clarifies that the ministry has reached such a decision after thorough contemplation, with nearly all states suggesting that multiple coal import tenders by states would lead to confusion, thereby seeking a centralised procurement through Coal India.

The move has come after the country has recently been facing a severe coal shortage, laying grounds for higher electricity demand coupled with widespread power outages. The country is rather expected to face a wider coal shortage during the third quarter of 2022 if the situation doesn't improve. The Centre has also recently started pressuring the utilities to increase imports to blend with local coal, warning of cuts to the supply of domestically mined coal if power plants did not build up coal inventories through imports.

But the Power Ministry on Saturday asked states to suspend tenders that are "under process". "The tenders under process by state generators and IPPs for importing coal for blending may be kept in abeyance to await the price discovery by Coal India through G2G route, to procure coal at least possible rates," the ministry said.

This will be the first time in the last seven years that Coal India has imported the fuel -- presumably an effort by the Centre and the States to stock up to avoid what had happened earlier in April when the nation faced the worst power cuts in the past six years. Moreover, the coal inventories at power plants have also reported a 13% decline since April to the lowest pre-summer levels in years.