Coal India to Import for the First Time Since 2015 Amid Looming Power Crisis

A report by the Centre for Research on Energy and Clean Air said that India is expected to face a wider coal shortage from July to September, due to expectations of higher electricity demand.

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New Delhi: The world’s largest coal miner, Coal India Limited, will import the fuel for the first time since 2015, to avoid a repeat of April, when India faced its worst power cuts in more than six years.

In a letter dated May 28, the Union power ministry said that the decision to import coal via Coal India was taken after nearly all states suggested that multiple coal import tenders by states would lead to a confusion. Therefore, they sought centralised procurement through the public sector undertaking.

Imported coal is five times costlier than domestic fuel. That’s why state governments are wary of paying for imported coal, which will increase electricity costs. For instance, ETEnergy reported that imported coal will come at a cost of more than Rs 1,000 crore of public money in Madhya Pradesh. The import of coal is likely to make government-owned thermal power stations idle and also making energy costlier by Rs 1 per unit.

The power ministry said, “The tenders under process by state generators and IPPs [independent power producers] for importing coal for blending may be kept in abeyance to await the price discovery by Coal India through government-to-government route, so as to procure coal at least possible rates.”

A report by the Centre for Research on Energy and Clean Air (CREA) said that India is expected to face a wider coal shortage from July to September, due to expectations of higher electricity demand.

Last year, the month of October recorded the highest power shortage in over five years due to a shortage of coal stocks. This happened due to the inaction of power plant operators to stock adequate coal before the onset of the southwest monsoon. Monsoon floods coal mines, hampering their production and transport to power stations.

Also read: Rural Himachal Pradesh, Urban J&K Saw Most Power Cuts in 2021-22: Govt

That means increasing power demand and a coal shortage appear to be an annual affair. According to the CREA report, inefficient distribution and official apathy are also worsening the problem of power shortage in the country.

India’s coal production this year was the highest in its history. However, millions of people were left vulnerable to power cuts amid severe heatwaves. The Indian Express reported on May 22 that out-patient clinics, routine surgeries, and admission of critical patients remained affected at Dr Baba Saheb Ambedkar Hospital in Delhi’s Rohini for at least two days due to power cuts.

The newspaper reported that patients coming to the OPD clinics were turned away at the gate as there was no power. The computers for registration of these patients were also not functioning.

Meanwhile, the CREA report highlighted that the onset of the southwest monsoon – which is three days ahead of its schedule this year – will further hamper mining and transportation of coal from mines to power stations.

Separately, the Union government said it has planned to reduce power generation from at least 81 coalfired utilities over the next four years, Reuters reported. The decision aims to replace expensive thermal generation with cheaper green energy sources. The Union power ministry, in a letter dated May 26, said, “The thermal power plants in future shall operate up to the technical minimum to accommodate cheaper renewable energy when it is available.”

Livemint reported, citing latest Central Electricity Authority data, that the total coal stock in the 173 power plants under its ambit stood at 21.16 million tonne as of 26 May, which is 33% of the required inventory of 66.49 million tonne. As many as 82 power plants based on domestic coal and 10 imported coal-based plants are surviving on critical stocks – less than 25% of the required quantity.

India is the world’s second largest consumer, producer and importer of coal, and the fuel accounts for nearly 75% of annual electricity generation. It is also the world’s third largest greenhouse gas emitter, which is currently 37% short of its end-2022 green energy target.