The Centre has shelved a proposal to make power plants import coal to replenish dwindling stockpiles as elevated international prices against a weakened rupee have increased the cost of overseas shipments, as per reports citing people familiar with the discussion. The government had recently considered urging 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 mentioned.
Instead, the state-owned Coal India Limited has been asked to increase production and the Railways to ensure timely transportation of coal to power stations. 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 pressing the need for domestic supplies.
According to data, 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. A poor monsoon which kept temperatures elevated beyond the summer months, increased electricity consumption for cooling and irrigation thereby, reducing hydropower generation and, 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 a month in nearly a decade. The pace of coal stock depletion slowed in October. As per calculations based on the Power Ministry’s data, domestic coal-burning power plants recorded an average inventory decline of around 48,000 tons 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. Temperatures are expected to fall slightly over the next two weeks, although they are expected to remain above the 30-year normal.
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 has 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 this year to meet surging electricity demand.
As per data from the Central Electricity Authority, 87 of 190 coal-fired power plants had critical stocks as of October 8, compared with 50 in the first week of September. Those plants held 2.06 million tons of coal, equivalent to 33% of the recommended stocks of 61.2 million tons.
The ministry further said that 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 elaborated that sustained coal transportation should help stabilise inventories and support stock rebuilding during the festive season, winter and the subsequent summer demand.