Power ministry asks plants to reduce coal imports

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Published: April 29, 2020 1:50 AM

In a letter to power producers written on Tuesday, the government has asked power plants which blend high quality imported coal with domestic fuel to “make best efforts to replace their imports with domestic coal”.

Of this, 45.5 MT were imported by plants designed to run on imported coal.Of this, 45.5 MT were imported by plants designed to run on imported coal.

The Union power ministry has asked thermal power plants to reduce coal imports and use the fuel more from domestic suppliers as coal stocks are piling up at pitheads and power plants are already loaded with the fuel amid low electricity demand.

In a letter to power producers written on Tuesday, the government has asked power plants which blend high quality imported coal with domestic fuel to “make best efforts to replace their imports with domestic coal”.

Out of the 198.5 giga watt (GW) of installed coal-based power plants, more than 162 GW import coal for power generation. However, 144.6 GW of this capacity import coal for blending with the local variant, while 17.6 GW are designed to run specifically on imported coal. In FY20, power plants in the country imported 69.2 million tonne (MT) coal, up 12% annually. Of this, 45.5 MT were imported by plants designed to run on imported coal.

In the wake of power demand slowing down due to muted industrial and commercial activities amid the lockdown to contain the coronavirus, power plants currently have coal stocks of about 50 MT which can sustain them for 30 days. Since power plants are not very keen to lift coal as of now, it raises the risk of Coal India’s (CIL) output coming down for the second year in a row. Coal companies have to moderate production according to offtake, as coal cannot be stockpiled beyond a certain quantity without the risk of catching fire. Lower offtake also increases the scope of pilferage.

If power plants, at the government’s behest, agree to reduce imports then CIL’s FY21 production target of 710 MT might become achievable. Bucking the upward trend of several years, CIL’s output declined 0.8% annually to 602.1 MT in FY20, mainly due to excessive rainfall hampering mining operations during the monsoon earlier this financial year. The drop in CIL production in FY20 would have been much lower had it not recorded a 9.9% annual rise in the final three months’ output.

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