India has dropped a plan to make power plants blend imported coal with local supply, Bloomberg reports. Seaborne coal is too costly and the rupee is weak, people familiar with the matter said. So the decision rules out a quick rise in India coal imports, even though plant stockpiles sit near a five-year low.
Why India coal imports were dropped
In past shortages, the government made plants accept imports. This time, however, benchmark thermal coal prices are at a three-year high. High oil prices have already raised India’s energy bill. Instead, officials asked Coal India to lift output and the railways to speed up deliveries.
The power ministry and Coal India did not reply to Bloomberg’s requests for comment.
How tight are stocks?
Nearly half of India’s power plants held “critical” stocks on 17 October. That means less than a quarter of the required level. A poor monsoon kept temperatures high and cut hydropower output, so coal plants ran harder.
Even so, the drawdown has slowed. Plants used up about 48,000 tonnes a day in the first 17 days of October, a fifth of September’s rate. Earlier, the coal ministry put stocks at 18.15mn tonnes on 5 October, about 6.5 days of use. At that point, 81 of 176 plants were critical. Meanwhile, NTPC plans to buy 10mn tonnes from captive and commercial mines.
Cooler weather should now ease demand. For context, read our analysis of coal’s share of India’s power mix.
