Coal imports have shot through the roof amid a severe supply crunch in the domestic market. According to government data, in the last seven months (April-October), the country imported around 21 million tonne coal worth $10 billion, which is 51% more than what it did in the same period last year. In October, the import surge was particularly evident. Coal imports grew 105% to $1.4 billion in October this year compared to the same month a year ago.
A commerce ministry official said the higher imports were mainly on accounts of low domestic production. ?…Our power companies are facing (an) acute shortage of coal. Even steel firms import maximum coking coal. It’s natural that the import numbers have hiked,? he said.
Most power plants in India are coal-based. Around 80% of the domestically produced coal is used by power companies. The shortage of coal is so severe that power companies feel they would not be able to meet the 11th Five Year Plan target of generating 78.7 gigawatt (gw) power.
Steel companies import over 90% of their coking coal requirements from various parts of the world. For those who do not have a captive mine, the import component is even more. For instance, Rashtriya Ispat Nigam imported 3.5 million tonne coking coal to produce the same amount of steel. This will grow further as the company adds more capacity to produce steel. Its import bill has gone up by Rs 2,500 per tonne.
India is the third-largest producer of coal. However, coal production has dipped in the recent past. In September it dropped 17.8% against 1.8% last year. The demand for coal usage has been growing as both steel and power sectors grow over 6%. The coal import last year was 93 million tonne.
Coal imports traditionally grow more in the last quarter of the financial year. With steel companies looking forward to increase their capacity and power companies to generate more power, imports are likely to rise significantly.