Power Generation Companies Urged To Import Coal For Blending To Ensure Sufficient Supply Ahead Of Monsoon

The Union Ministry of Power has recommended that power generation companies (GENCOS) should endeavour to import coal for blending up to 10 per cent to deal with rising power demand amid dwindling reserves of domestic coal.

This was communicated by R K Singh, Union Minister of Power and New and Renewable Energy while chairing a meeting on 13 April to review imported coal based (ICB) plants.

The ministry has fixed state wise and GENCOS wise targets for coal blending in order to make sure the imported coal supply is in place ahead of the monsoon as domestic coal supply gets affected during the rainy season.

Imported Coal

The country has currently 14 numbers of thermal power plants designed on imported coal and are referred to as ICB plants. These plants have a cumulative installed capacity of 16,730 MW.

The remaining plants which run on domestic coal, import coal to supplement domestic coal requirements through blending in line with a circular issued by the Centre. Blending requires high grade coal which cannot be substituted by domestic coal.

In view of the increasing demand for electricity and associated need of coal to ensure smooth functioning, as a short term measure, Ministry of Power on 7 December 2021 had permitted domestic coal based power plants to import coal to meet their requirements by blending with imported coal to the extent of 4 per cent by state GENCOS and independent power producers (IPPs). The Central government-run utilities — NTPC and DVC can import up to 10 per cent of coal required for ensuring 85 per cent declared capacity (DC) of its plants.

How Much Coal Is Being Imported?

According to a written reply in Lok Sabha on 23 March, the coal import by power plants in the country stands at 66.17 MT in 2016-17, 56.41 MT in 2017-18, 61.66 MT in 2018-19, 69.22 MT in 2019-20 and 45.47 MT in 2020-21.

The total coal import includes the amount imported by plants designed on imported coal and those imported by blended coal based power plants.

Further, during April 2021-January 2022, coal import by power sector has decreased to the level of 22.73 MT as compared to 39.01 MT during the corresponding period of previous year.

Coal Supply Policy

Domestic coal is supplied to thermal power plants (TPPs) in accordance with the linkages awarded to them by the government, for which fuel supply agreements (FSAs) have been signed. Besides, domestic coal is also supplied through e-auction and captive coal blocks.

For the power plants commissioned prior to 2009, the FSAs were signed based on the consumption pattern by the plants. Subsequently, linkages were awarded under the New Coal Distribution Policy (NCDP), 2007.

Under the NCDP, a system of issuance of letter of assurance (LoA) was introduced wherein requests for linkage/LoA are forwarded to the Ministry of Power for its recommendations. These recommendations were placed before the standing linkage committee (SLC) (long term) which authorised the issue of LoAs.

Presently, the TPPs secure linkages through a new policy named SHAKTI [Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India] which was issued by the Ministry of Coal in May, 2017.

Coal Import Policy

Demand for coal is higher than the current level of domestic supply of coal in the country. The entire demand of coal is not met from domestic production as the supply of high quality coal/coking coal (low-ash-coal) in the country is limited and thus no option is left but to resort to import of coking coal.

As per the current import policy, coal is kept under open general licence (OGL) and consumers are free to import coal from the source of their choice as per their contractual prices on payment of applicable duty.