Ministry wants blending of domestic coal by imported coal-based power plants

New Delhi: The Union coal ministry has suggested to the power ministry that it should consider mandating blending 10-15% domestic coal by imported coal based (ICB) power plants, said two people in the know of the developments.

The move comes against the backdrop of an increase in the domestic production of the mineral. The government is looking at reducing the import of the low-grade Indonesian coal and eventually substituting it with domestic coal.

“The coal ministry has recommended to the power ministry to look into the prospect of 10-15% blending to start with. There would be no requirement of making changes to the boilers of the current ICB plants as 15% is not a significant amount,” said one of the two people mentioned above.

This is part of govt plan to stop importing coal for power generation

This is part of the government’s ambitious plan to stop importing coal for power generation.

“The price of imported coal is very high and import substitution is the top priority for the ministry,” said the other person. 

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The price of the Indonesian coal grade (ICI 5 on the Indonesian Coal Index) is ₹5,198 per tonne, while the India equivalent produced by Coal India Ltd, known as G14, costs about ₹1,600 per tonne.

Similarly, among the higher grades, the ICI 1 Indonesian grade of coal costs about ₹12,620 per tonne (including insurance and freight), while the equivalent G3 grade produced in India costs around about ₹4,900 per tonne including taxes and other charges.

Official data showed that in the last financial year (FY24), India imported 261 million tonnes of coal, out of which 65.73 million tonnex was used for power generation.

The import of 65.73 million tonnes of coal in FY24, was 18.15% higher than 55.63 million tonnes in the previous fiscal.

However, the import by ICB plants declined 15.63% to 23.93 million tonnes during the financial year ended March 2024 due to high price of imported coal.

With easing prices and anticipation of high power demand, ICBs imported 4.58 million tonnes of coal in the first month of this fiscal, compared with 2.36 million in April FY24.

In April, the power ministry directed ICB plants to operate at full capacity till September to meet rising demand for electricity. The power ministry had said in a statement that it will extend Section 11 of the Electricity Act till the end of September. So far, the mandate is in effect till June. 

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The power ministry has been taking precautionary measures including mandating blending of 6% imported coal till the end of June by all domestic coal based (DCB) power generators. 

The ministry has been issuing advisories and directive to power plants in order to avert a crisis, as witnessed in September-October 2021 and April-June 2022 due to low availability of domestic coal and low import of coal by ICBs due to high international prices.

The coal ministry and state-run coal companies including Coal India have increased production to cater to the growing power demand. As of 25 June, India’s production in FY25 was 246.63 million tonnes, 8.05% higher that 228.26 million tonnes in same period of FY24.

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Data from the coal ministry also showed that domestic coal based plants have a total of 44.67 million tonnes of the fuel, compared with 33.57 million tonnes in the year ago period.

Queries sent to the ministries of coal and power remained unanswered till press time.