Centre threatens to curb domestic coal supply if utilities delay imports

The power ministry has asked all utilities to ensure delivery of 50% of the allocated quantity by June 30

The Centre has asked state governments and the power generating companies (gencos) to import coal for blending purposes ahead of monsoons, acknowledging that domestic stock may not be not enough to meet the power demand.

The Ministry also warned that it would cut domestic fuel supply to state government-run utilities by 5 per cent if they do not import coal for blending by June 15. Accordingly, revised allocation of domestic coal from July 2022 will be conveyed based on the above methodology.

The order pertains to all – central, state and independent power producers (IPPs)/privately owned units.

The Ministry also said, "If the imported coal for blending purposes does not start arriving at the power plants by June 15, all the defaulter generating companies would have to import coal for blending purpose to the extent of 15 per cent."

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"Not much blending has taken place in the months of April and May," the Ministry said, adding that plants that have not yet started blending must ensure they use a 15 per cent blend of coal until October and a 10 per cent blend from November until March 2023.

The directive comes in wake of power stations facing acute coal shortage with an average stock of seven days across the country. Out of the 173 power stations, 97 have critical level coal stock (less than seven days of coal). As per the Central Electricity Authority report, around 50 units have less than four days of coal, some left with barely one day of coal.

"The ministry, in a letter written to State Secretaries/Principal Secretaries and all Gencos, has said that keeping in view the likely less materialization of coal supply from domestic sources as compared with the requirement to meet power demand, domestic coal will be allocated proportionately to all Gencos based on likely availability from 01.06.2022 and the balance requirement will need to be met from imported coal for blending purpose and target set for production in captive coal mines," said the statement.

The power ministry has directed all gencos to ensure adequate stocks at their power plants for smooth operation until October 2022.

"The import by States of coal for blending is not satisfactory. In 2018-19 a total of 21.4 Million Tonnes(MT) of coal were imported for blending. In 2019-20, the total import for blending was 23.8 MT whereas in 2021-22, it was only 8.3 MT. This is the cause of the stress in the availability of coal, said the statement.