Indian govt defends nod for coal imports to meet need for power

Stating that the government has no role to play in determining the cost of imported coal and the resultant power tariff, the Power Ministry has informed the Parliament that the issue is for the genco (generation company) and the regulators to look at.

Pointing out that the price of imported coal is not comparable with the price of domestic coal due to a difference in calorific value, the ministry said that the Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERCs) have already fixed guidelines which don’t allow power generators to inflate fuel costs.

The government added that the pricing of imported coal is linked with international indices like source of origin as well as other dynamic factors like ocean freight and insurance which vary with international demand supply scenario.

The government was responding to a parliamentary question by TMC MP Jawhar Sircar which had sought to know if “the report published by Financial Times on October 12, 2023 regarding the overcharging of coal imports by Adanis, directly or through associates or by other means” had been examined by the government, and whether the relevant costs of imported coal were compared with the prevailing international costs of comparable grades of coal.

The parliamentary question also sought to know if the government had found the additional outgo of foreign exchange due to over-invoicing, extent of loss to power plants who were compelled to mix imported coal, and the “action being done for this deliberate loss of foreign exchange and the overcharging of electricity bills by customers.”

The government responded that while every generating company imports coal as per its requirements, and the cost of generation of electricity is dependent upon the quantity of the imported coal used and its price. The Power Ministry reiterated the need to ensure sufficient availability of coal at thermal power plants (TPPs) to meet power demand.
Explaining its rationale on allowing coal imports, the government pointed out that the coal imports for blending varied between a peak of 47.6 MT in 2015-16 to 23.8 MT in 2019-20. In 2020, the Power Ministry advised states to reduce imports for blending, which then declined to 8.1 MT in 2021-22. However, due to increased power demand, in December 2021 the government advised state gencos and IPPs to import up to 4% and central gencos to import up to 10% of their coal requirements in 2022-23.

While the government stated that coal stocks in thermal power plants would have reduced to zero in September 2022 if imports for blending had not been made, its endeavour to ensure uninterrupted power supply prompted a direction to all gencos in October 2023 to continue importing coal for blending at minimum 6% by weight till March 2024.
Source: cnbctv18