Relief on import coal blending rule on cards

The Centre is considering partially retracting the rule that required power plants to blend imported coal with domestic supplies to tide over the coal shortage. The relaxation would only be available to power-generating stations that have high coal stocks.

An order in this regard is likely to be issued by the power ministry in the next couple of days linking the blending requirement to the coal stock position so that only the plants that do not have adequate stock require blending, a government official said.

NTPC and DVC, which have already placed tenders for imported coal and have adequate stocks, are also likely to be asked to defer the shipments for use after the monsoons when the country sees high electricity demand.


“The coal stock situation is comfortable as of today. Had we not blended imported coal, we would have right now had 9 million tonnes of stock,” said a power ministry official.

“Blending is not being ruled out completely, but we can regulate it and the resulting costs since the power demand has moderated,” the official said.

Blending 10% coal raises power tariff by 50-60 paise. A coal ministry official said the total coal output in the country is at a record high with dispatches to the power sector averaging 1.9 million tonnes a day in July. High railway rake availability and moderation of supplies to the non-power sector helped as well.

Coal India production as of date is up 24% from a year ago. The coal stocks with Coal India and Singareni Collieries Company Ltd are at 40 million tonnes.

The power ministry had in April asked all domestic coal-fired power plants to import 10% of their fuel requirement for blending with domestic supplies as electricity demand hit a record high depleting coal stocks at a fast pace. The power-generating companies had subsequently placed large orders for imported coal.

NTPC and DVC have placed close to 23 million tonnes of contracts for the fiscal, majorly awarded to Adani Enterprises. Coal India early this month placed orders for 6 million tonnes of coal from Indonesia’s Bara Daya Energi.

Data available with the Central Electricity Authority (CEA) showed 30 mt of stock at power stations on Saturday. Electricity demand in July rose about 2.5% to 125 billion units till Saturday over the same period last year, well below the 18% rise in April-June. The average daily demand in the month rose to 4,148 million units compared to 4,049 million units in July 2021.

Power demand typically declines in July as compared to the April-June quarter but rises sharply post-monsoon. Last year, July and August witnessed a sharp surge in electricity demand due to less rainfall, which triggered a coal crisis.

“Note that July and August 2021 demand was relatively high due to abnormal heat plus opening up of the economy post second wave,” said DAM Capital’s senior vice president Mohit Kumar said. “In our opinion, demand is still very robust for the consecutive fourth month.”