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India backs down from coal import targets for utilities, notice shows

India has eased coal import targets for utilities, according to a notice from the power ministry reviewed by Reuters, setting aside a target for them to import 10% of their coal needs and marking yet another reversal in energy policy.

State government-run utilities and private power producers should instead decide by themselves how much coal they need to import, according to the notice, which was sent to government officials and private utilities on Aug 1.

“It has been decided that now onwards, states/independent power producers and Ministry of Coal may decide the blending percentage after assessing the availability of domestic coal supplies,” the power ministry said.

In May the power ministry had said it would cut domestic fuel supplies to state government-run utilities if they did not import 10% of their coal needs for blending with domestic coal.

That move followed two of India’s worst recent electricity crises, in October and April, which forced the federal government to reverse a long-standing policy of lowering coal imports.

In a separate notice to federal government-run NTPC Ltd and DVC also sent on Aug 1, the power ministry asked the companies to lower their blending percentages to 5%.

“If stocks start depleting at any time, blending percentage could be reviewed again,” according to the notice to NTPC and DVC, which also instructed the firms to not place new orders and use imported coal already delivered.

India’s annual power demand is seen growing at its fastest rate in at least 38 years while global coal prices are trading at near-record levels.

Demand for air-conditioning has surged due to an unrelenting heatwave this year while economic recovery as COVID restrictions ease has pushed power demand to record highs.
Source: Reuters (Reporting by Sudarshan Varadhan; editing by David Goodman and Jason Neely)

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