Power generators asked to import 4% coal till March next year

The Centre has directed all power generating companies to import four per cent coal by March 2024 to ensure the commodity’s adequate availability in view of an increasing power demand in the country, people aware of the development said.

Uttar Pradesh has been resisting the Centre’s directions for a year, arguing that the purchase of the expensive foreign coal will make power production costlier, which, in turn, might result in a higher tariff for the end users.

“Yet again, we have received the Centre’s instructions to import coal,” said a senior energy department official, adding, “We will soon refer the issue to the state government.”

The Union power ministry, in its orders to all government and private thermal power producers on September 2, said the blending of imported coal was essential to ensure the commodity’s availability in thermal plants since the power demand in the country was witnessing a robust growth.

“It has been noted that despite the increase in domestic coal supply during Q1 of FY 23-24, it fell short of meeting the requirement. This August, the gap between consumption at domestic coal based (DCB) plants and receipt of domestic coal was about 2 lakh tonnes per day. The gap was partly narrowed with the import of coal. Without that, the coal stock would have declined to critical levels,” the order pointed out.

The ministry also said in the light of the scenario where energy demand was increasing and the increase in the supply of coal was not commensurate with the requirement, the need arose to continue the use of imported coal for blending.

“State GENCOs and IPPs are directed to take necessary action/plan to import coal for blending at the rate of 4% (by weight) through a transparent competitive bidding process till 31st March, 2024 so as to have comfortable coal stocks at their power plants for smooth operations,” it said.

Responding to the development, All-India Power Engineers Federation (AIEF) raised questions about the latest government order and demanded that the Central government pay for the coal to be imported by generators.

“The Union Power ministry’s order clearly states that the main reason for the difficulty in the coal reaching power stations from the mines is... due to shortage of rakes and other logistical constraint on part of the Railways,” AIPEF chairman Shailendra Dubey observed here on Monday.

He added in such a situation there might also be an issue in the transportation of imported coal.

“In such a situation, the cost of imported coal should be borne by the Central government. If the government does not pay, then the price will be recovered from discoms and, ultimately, the burden will fall on the common user, which will be unfair,” Dubey pointed out.