India: After shortage of coal, now a problem of plenty

After expedited efforts to import coal amid a fuel crisis earlier this year, Coal India Ltd, the country’s biggest coal miner, is now finding it tough to get buyers for its imported coal lying at the ports.

Coal India has so far imported 300,000 tonnes of coal out of a total tendered quantity of 6 million tonnes, said two officials.

“Contracts were done as per the indication of demand Coal India had received. Around 300,000 tonnes of the contracted amount has come, and even that is not being lifted (by power generation companies or gencos). Several of the gencos who showed interest in importing coal with Coal India have taken back their requests,” said one of the two officials.
The other official said the fall in demand for imported coal has come on the back of increased domestic fuel supplies and low operations of imported coal-based plants.

“Domestic supplies have increased. The imported coal-based plants, which produced 9 billion units (of power) maximum, are now producing 1.3-3.2 billion units. And even in this scenario, there were no blackouts. It has been managed because the power plants which were low in the merit-order despatch are now producing power by taking additional domestic coal from us,” said the official.

Queries sent to the ministry of coal, ministry of power and Coal India remained unanswered at press time.

This is the first time Coal India has taken to imports, as the government directed the company to source coal from abroad, given shortages in the country amid soaring demand for power in the April-June period.

The Centre had nominated Coal India as the nodal agency to boost supplies to state power-generating companies and independent power plants (IPPs) through imports when demand was high.

To stop the situation from worsening, the Centre also urged state gencos to buy imported coal for blending.

In June, CIL decided to float three tenders—one short-term tender for imports of 2.4 million tonnes and two medium-term tenders of 3 million tonnes, each with a scalable option of another 3 million tonnes for both the medium-term tenders, taking the total volume of medium-term imports to 12 million tonnes.

However, tenders were eventually placed for around 6 million tonnes as the one for 2.4 million tonnes was cancelled.

Cooling temperatures, calming power demand, and increased domestic production have also made other players rethink their import plans.

On 10 September, Mint reported that state-run power major NTPC’s coal imports in FY22 are likely to stand at 12 million tonnes, against a tendered amount of 20 million tonnes.

To be sure, another round of peak demand and coal crisis is generally anticipated in October, after the southwest monsoon, as witnessed last year. However, the second official mentioned above said that this year such a situation is unlikely with the rise in domestic coal production and the available imported coal in the country.

“For us, the unutilized imported coal means energy security. If there is a shortage, we will supply from there. There is unlikely to be a crisis in October. There is adequate stock this time around. If needed, we can also bring the rest of the contracted coal on short notice,” the official said.

According to data from the Central Electricity Authority (CEA), coal stocks across the 180 thermal power plants under the ambit of CEA stood at 25.59 million tonnes, 47% of the required stock of 54.16 million tonnes.

This is much higher than the 20% of the required stock in April-June. The peak power demand on 8 October stood at 174.8GW, against the record peak demand of 211.9GW registered on 10 June.
Source: Livemint