Domestic thermal power plants consumed 34.6 percent (21.4 MMT) of 61.7 million metric tons (MMT) of coal imported for the power sector in 2018-19. Five years down the line, in 2022-23, imported coal consumption by domestic thermal power plants increased to 35.1 MMT, accounting for 63.1 percent of the total coal imports for the sector, data from the Ministry of Power showed.
The increase in consumption of imported coal by the domestic thermal power plants happened even as the overall import of coal for the power sector declined 9.8 percent from 61.7 MMT in 2018-19 to 55.6 MMT in 2022-23.
On the contrary, imported coal based (ICB) power plants, which cannot run on domestically produced coal, consumed 65.3 percent (40.3 MMT) of the total essential fossil fuel imported for the power sector in 2018-19. The same rather declined to 36.8 percent in 2022-23.
The reverse trend, where domestic coal based power plants are using more imported coal than ICB plants has happened due to a government policy which was first issued last year in May and again re-issued this year to avoid a coal crisis at thermal power plants and ensure continuous generation of electricity despite a steep rise in demand during the peak summer months.
This year, the government issued the order on January 9, where it asked all gencos to use imported coal to the extent of 6 percent of their requirement. This mandate will remain in effect until September this year. Power generation companies (gencos) failing to comply with the directive face restrictions on a pro-rata basis, as per the order.
The consumption by imported coal based power plants reduced over the years because most of these plants remained shut due to high international coal prices and their power purchase agreements (PPAs) did not have adequate provisions for pass-through of the increased cost of generation.
While there are at least 150 domestic thermal power plants, ICB plants are only 15. Some of these include Coastal Gujarat Power Ltd, Adani Power Mundra Ltd, Essar Power Gujarat Ltd, JSW Ratnagiri Ltd, Tata Trombay Ltd., GSECL Sikka Ltd., IL&FS Tamilnadu Power Company Ltd, Muthiara-Coastal Energen, Udupi Power and so on.
But since last year, the government has been invoking section 11 of the Electricity Act, 2003, under which these ICB plants have to mandatorily operate to meet the country’s increasing power demand. This year, the mandate will be in effect till September.
“As per the existing import policy, coal is kept under Open General License (OGL) and consumers are free to import coal from the source of their choice as per their contractual agreement on payment of applicable duty,” Union Minister of Coal Pralhad Joshi told the Lok Sabha on August 9.
Most of the requirement of coal in the country is met through indigenous production. “The focus of the government is on increasing domestic production of coal and eliminating non-essential import of coal,” the minister said.
In 2022-23, coal production in India increased by about 14.77 percent over the previous year. During the current year till July, 2023, domestic coal production has increased by over 9.2 percent compared to the same period of last year. The domestic coal production is estimated to increase to more than one Billion Tonne (BT) in the current year 2023-24, as per the ministry of coal.
