By Sudarshan Varadhan
NEW DELHI (Reuters) – India’s top electricity producer NTPC Ltd’s coal imports this financial year will be the highest in eight years despite near-record prices, two senior officials at the company said, as it looks to address a domestic shortage.
The state-run utility, which produces over a quarter of India’s power output, will import 16 million tonnes for blending with domestic coal during the year ending March 2023, the officials said.
(Graphic: NTPC’s coal imports to surge after years of steady decline, https://graphics.reuters.com/INDIA-NTPC/IMPORTS/zdvxojjlkpx/chart_eikon.jpg)
“We have been directed by the Indian government to import 16 million tonnes, and we will be doing it to ensure the country’s energy security,” one of the officials said.
The rise in imports reflects strong growth in demand for power as India’s economy recovers after the pandemic and forecasts for a particularly hot summer.
India’s federal government has directed all utilities to cumulatively import about 33.5 million tonnes for blending during the year, the second official said, the highest in at least six years.
(Graphic: Indian utilities’ coal imports for blending set to rise after 2 straight years of decline, https://graphics.reuters.com/INDIA-COAL/IMPORTS/klpykjlekpg/chart_eikon.jpg)
Higher imports by India could put further upward pressure on global coal prices, which touched record highs in March in the wake of the invasion of Ukraine by Russia – Europe’s biggest supplier. Prices have cooled since, but are still much higher than average levels in 2021.
India is the world’s second coal importer, and counts Indonesia, Australia and South Africa as its major suppliers. Details on India’s coal import plans have not been previously reported.
India’s power generation surged at its fastest pace in three months in March, due to higher than normal temperatures for the month and increased activity following the relaxation of COVID restrictions, while power cuts hit the highest level since October.
State government-run utilities have been asked to import 8.75 million tonnes this financial year, private utility operators have been directed to buy 6.22 million tonnes while other federal government-run utilities will import 2.53 million tonnes for blending, the second official said.
NTPC has already awarded contracts to procure nearly 7 million tonnes, the officials said, adding all of it has been sourced from Indonesia at slight premiums to benchmark prices.
NTPC did not immediately respond to a request seeking official comment.
SURGING POWER DEMAND
Higher power demand has forced India to cut coal supplies to the non-power sector, and mothball plans for some fuel auctions, despite record production and supply by state-run Coal India Ltd, which produces over 80% of India’s coal.
Some of India’s non-power sector consumers, who largely use power generated from utilities not connected to the national grid, are also drawing expensive power from the national grid, adding to pressure on utilities with low coal stock.
The higher imports reflect the magnitude of India’s coal shortage heading into the summer, when power demand typically peaks due to increased air-conditioning demand and heightened industrial activity.
“We have done everything. Domestic coal production has risen. The whole crisis is because of the closure of imported coal-based power plants and gas-fired plants,” the first official said.
Nine of the country’s 23 imported coal-based power plants are shut and most of the gas-fired power plants are either not operating or at a lower capacity, government data showed, as industry officials say high global fuel prices have made these plants too expensive to run at full capacity.
(Reporting by Sudarshan Varadhan; Editing by Susan Fenton)
