New Delhi: The Union coal ministry has proposed to the power ministry the mandate of blending 10-15% domestic coal with imported coal for power plants, according to sources familiar with the matter.
This move comes as domestic coal production increases, aiming to reduce reliance on imported low-grade Indonesian coal and transition to using more domestic coal.
“The coal ministry has suggested that the power ministry consider starting with a 10-15% blending ratio. No significant modifications to the current ICB plant boilers would be necessary as 15% is a manageable amount,” said one of the sources.
This is part of the government’s initiative to minimize coal imports for power generation
This initiative aligns with the government’s plan to eliminate coal imports for power generation.
“The high cost of imported coal makes import substitution a key focus for the ministry,” added the other source.
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For example, the price of Indonesian coal (ICI 5) is ₹5,198 per tonne, while the equivalent Indian G14 coal produced by Coal India Ltd costs around ₹1,600 per tonne.
Similarly, the ICI 1 Indonesian coal price is about ₹12,620 per tonne, whereas the Indian G3 grade costs approximately ₹4,900 per tonne, considering taxes and other charges.
Recent data reveals that in the last fiscal year (FY24), India imported 261 million tonnes of coal, with 65.73 million tonnes allocated for power generation.
Compared to the previous fiscal, coal imports for power generation in FY24 increased by 18.15% to 65.73 million tonnes.
However, due to the expensive imported coal, coal imports by ICB plants decreased by 15.63% to 23.93 million tonnes in FY24.
With the anticipation of high power demand and reducing coal prices, ICBs imported 4.58 million tonnes of coal in the first month of this fiscal, a significant increase from April FY24.
In April, the power ministry instructed ICB plants to operate at full capacity until September to meet the escalating electricity demand, extending Section 11 of the Electricity Act accordingly.
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To prevent crises witnessed in previous periods, the power ministry has mandated blending of 6% imported coal by all domestic coal-based power generators until the end of June.
Issuing advisories and directives, the ministry aims to avoid coal shortages experienced in September-October 2021 and April-June 2022 due to low domestic coal availability and high international coal prices.
The coal ministry and state-run coal companies, including Coal India, have ramped up production to meet the escalating power demand, reflecting a 8.05% increase in production to 246.63 million tonnes by June 25 in FY25 compared to the same period in FY24.
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Data shows that domestic coal-based plants possess 44.67 million tonnes of fuel, a notable increase from the 33.57 million tonnes in the previous year.
Inquiries sent to the coal and power ministries were unanswered at the time of reporting.
