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India asks utilities to import coal amid short supply

A worker carries coal in a basket in a industrial area in Mumbai. (Representative image)

CHENNAI: India has urged utilities to import coal despite having the world’s fourth-largest reserves, with several power plants on the verge of running out of fuel due to a surge in power demand.
Coal-fired power accounts for more than 70% of electricity generation. Electricity generation makes up three-fourths of coal consumption.
“Thermal power plants, which may import coal for blending, may explore (ways) to enhance imports of coal to tide over the current crisis,” the power ministry said in an August 30 notice seen by Reuters.
Data from the Central Electricity Authority showed over half of the 135 coal-fired power plants had less than a week’s supply of coal left, of which 50 plants had fewer than three days of coal left. Six plants had run out of coal.
Overall electricity generation rose 16.1% in August, while coal-fired power output rose 23.7% from a year earlier, a Reuters analysis of daily load despatch data by federal grid regulator POSOCO showed.
India, the world’s second biggest coal importer, mainly imports from Indonesia, Australia and South Africa. The government has been seeking to cut imports.
Rise in coal use
In the first eight months of 2021, coal-fired electricity generation jumped 19.3%, faster than the 14.5% growth in renewable energy generation, POSOCO data showed.
The share of coal-fired generation in the period rose to 72.9%, in line with 2019 levels but above the 69.2% in the same period of 2020. Overall power use tumbled in 2020 amid coronavirus lockdowns but has surged as restrictions have eased.
A power ministry official said the installation of new renewable power sources had been slower than expected, at a time when power demand had risen more 13%.
Trading volumes in India Energy Exchange (IEX) rose 74% to a monthly record in August.
“High cost of imported coal and LNG as well as lower wind power generation led to the increase in the electricity prices,” IEX said in a statement.
LNG and petcoke
Coal imports by utilities rose 3.4% in the June quarter, while LNG imports fell by a fourth and petcoke imports fell by a third, government data showed.
Traders say lower shipments of LNG by utilities and petcoke were driven mainly by higher prices, further pushing up coal imports.
Vasudev Pamnani, director of consultancy Lavi Coal, said he expected imports to return to pre-pandemic levels by the end of the year.
“Absence of new investment in coal mining and closure of many mines around the world have pushed prices up,” Pamnani said.
However, higher prices could weigh on Indian imports of coal. For instance, the price of better burning US-origin coal in north Indian retail markets have risen about 80% from the same time last year, according to Delhi-based online coal marketplace Coalshastra.
“In the next few months, elevated prices of foreign-origin coal and petcoke is likely to push cement companies to buy petcoke from domestic refiners,” Kirit C Gandhi, joint president at Indian cement firm Shree Cement said.

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