India’s thermal coal imports rise this fiscal on procurement by ICB plants

New Delhi: Imports of thermal coal, used for power generation, have increased by about 9% in the April-November of the ongoing financial year (FY25) to 45 million tonnes, on higher procurement made by those power plants that operate solely on imported coal.

Data from the Central Electricity Authority (CEA) showed that imported coal-based (ICB) power plants imported 33.4 million tonnes so far in this fiscal, 29% higher than nearly 26 million tonnes a year ago.

ICB plants have been mandated to operate at full capacity since March this year amid high power demand. The Centre imposed Section 11 of the Electricity Act on these ICB plants, which allows the government to direct power plants to operate as per its directions in times of any extraordinary situation, in February with effect from 16 March this year and since then it has been extended.

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The country has 15 power plants which run on imported coal with a cumulative capacity of about 17GW.

Several of these plants may not operate in normal situations if the demand across the country is adequately met by the domestic coal-based (DCB) plants. Further, higher cost of the imported fuel also plays a role in its operation schedule.

However, post the crisis like situation in FY22 wherein availability of domestic coal was low and ICB plants operators did not purchase coal from the international market amid high prices, the Centre has been cautious and proactive in terms of operations of these imported coal-based plants, which play a key role in meeting the peak demand in the country.

The Economic Times on 28 December reported that the government has extended the norm of mandatory operations at full capacity till February. This extension comes amid the rising winter power demand. Heating requirements mostly spike up the power demand in winters. Amid the chilling weather across north India, the peak nationwide power demand has mostly remained above 200 GWin the past two weeks.

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The peak power demand reached a record 250GW on 30 May 2024 and is expected to reach further highs going ahead. According to the 20th Electric Power Survey the peak electricity demand on all-India may touch 277.2GW in the year 2026-27 respectively and 366.4GW by the end of the financial year 2031-32. For the past three years, the peak power demand in the country has been touching new record levels, the latest being 250GW.

Although the import of coal by ICB plants has witnessed a spike in the current financial year, the imports by DCB plants have declined due to a growth in local production of the mineral. The DCB plants imported 11.58 million tonnes coal during the first eight months of the fiscal, about 24% lower than 15.15 million tonnes imported in the year ago period.

These plants, which operate on locally produced coal, import the fuel for blending purposes. In a bid to ensure continuous supply of power and to avoid any shortage, the Centre has directed these plants to blend 6% imported coal for power generation. However, with the increased production in the country, this requirement has also declined.

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India has 167 DCB plants with a total power generation capacity of 193GW.

As of November, coal production in the country stood at 628.37 million tonnes, 6.26% higher from 591.33 million tonnes in April-November FY24. The annual production this fiscal is expected to surpass the 1-billion tonne mark for the first time.