India backs down from coal import targets for utilities, notice shows

• India has eased coal import targets for utilities, setting aside a target for them to import 10% of their coal needs.
• This follows two of India’s worst recent electricity crises.
• The power ministry announced in May that it would cut domestic fuel supplies to state-run utilities.

According to a notice from the power ministry reviewed by Reuters, India has eased coal import targets for utilities, setting aside a target for them to import 10% of their coal needs, marking yet another shift in energy policy.

According to the notice, which was sent to government officials and private utilities on August 1, state government-run utilities and private power producers should instead decide for themselves how much coal they need to import.

“From now on, states/independent power producers and the Ministry of Coal may decide the blending percentage after assessing the availability of domestic coal supplies,” the power ministry said.

The power ministry announced in May that it would cut domestic fuel supplies to state-run utilities if they did not import 10% of their coal needs for blending with domestic coal.

Following two of India’s worst recent electricity crises, in October and April, the federal government reversed a long-standing policy of lowering coal imports.

In a separate notice sent on August 1 to the federal government-run NTPC Ltd (NTPC.NS) and DVC, the power ministry asked the companies to reduce their blending percentages to 5%.

“If stocks begin to deplete at any time, the blending percentage may be reviewed again,” according to the notice to NTPC and DVC, which also instructed the companies not to place new orders and to instead use imported coal that had already been delivered.

India’s annual power demand is expected to grow at its fastest rate in at least 38 years, while global coal prices are near record highs.

Due to this year’s unrelenting heatwave, demand for air conditioning has skyrocketed, while economic recovery as COVID restrictions ease has pushed power demand to all-time highs.

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