In a letter to power producers written on Tuesday, the government asked power plants blending high-quality imported coal with domestic fuel to "make the best efforts to replace their imports with domestic coal."
The Union Power Ministry has asked thermal power plants to reduce imports of coal and to use more fuel from domestic suppliers, as coal stocks are piled up in pits and power plants are already loaded with fuel in the midst of low electricity demand.
In a letter to power producers written on Tuesday, the government asked power plants blending high-quality imported coal with domestic fuel to "make the best efforts to replace their imports with domestic coal."
Out of 198.5 gigawatts ( GW) of installed coal-fired power plants, more than 162 GW imported coal for power generation. However, 144.6 GW of this capacity imports coal for blending with the local variant, while 17.6 GW is designed specifically for imported coal. In FY20, 69.2 million tons (MT) of coal were imported by power plants in the country, up 12 percent annually. Of these, 45.5 MT were imported from plants intended to run on imported coal.
In the wake of the slowdown in demand for power due to muted industrial and commercial activities in the enclosure of coronavirus containment, power plants currently have about 50 MT of coal reserves, which can be maintained for 30 days. As power plants are not very eager to lift coal from now on, there is a risk that Coal India's (CIL) output will fall for the second year in a row. Coal companies have to moderate off-take production, as coal can not be stored beyond a certain quantity without the risk of fire. Lower offtake also increases the pilferage range.
If power plants agree to reduce imports at the government's behest, the CIL FY21 production target of 710 MT could be achieved. Building on the upward trend of several years, CIL 's output decreased by 0.8% annually to 602.1 MT in FY20, mainly due to excessive rainfall that hindered mining operations during the monsoon earlier this financial year. The drop in CIL production in FY20 would have been much lower had it not recorded an annual increase of 9.9 percent in the final three-month output.
