Govt extends mandatory blending of imported coal in thermal power plants till March 2024

Though the Railways is making progress in resolving infrastructural issues, yet there are some bottlenecks which may take some more time to resolve, the Ministry of Power said

As the country witnesses peak power demand and peak shortage soaring to new highs, the government is taking steps to mitigate the problem of coal shortage to prevent blackouts in the country. The Ministry of Power has extended the mandate to generating companies (gencos) for blending imported coal in thermal power plants till March 2024 instead of September 2023.

While extending the rule, the government also revised the blending percentage of imported coal to 4 percent from the current 6 percent. The order for 6 percent blending was issued by the ministry on January 9 to avert a coal crisis during the peak summer season.

"It has been noted that despite the increase in domestic coal supply during Q1 of FY24, it fell short of meeting the requirement. In August 2023, the gap between coal consumption at domestic coal-based (DCB) plants and receipt of domestic coal was about two lakh tonnes per day. The gap was partly made up with import of coal without which coal stock would have declined to critical levels," read the order issued by the Ministry of Power on September 1.

The latest rule will have to be followed by all thermal power plants - Central, state gencos and independent power producers (IPPs).

In line with this, the Central Electricity Authority has estimated a domestic coal requirement of about 404 MT between October 2023 and March 2024. "However, due to various logistical constraints associated with the railway network, the availability of rakes during the second half of FY24 will be sufficient for loading and dispatch of only 397 MT of domestic coal," the ministry stated in its order.

Power demand hovered above 200 gigawatts (GW) on almost all the days of the month of August. During that month, the peak demand touched 236.6 GW, which was around 21 percent higher than the peak demand in August 2022.

The trend is similar in September this year. In fact, the peak power demand met during the day hit a record high of 240 GW on September 1. While the exact peak demand was 239.978 GW (239,978 megawatt) at 12:22 pm, the peak power shortage or the demand that could not be met was as high as 10 GW.

The All India Power Engineers Federation (AIPEF) said putting an "additional burden" on thermal power plants due to constraints on the part of the Railways for transportation of coal is "unfair" and would result in increased power tariffs for consumers.

"The price of imported coal should be given by the Union government. If the government does not provide this amount, then this price will be recovered from the discoms by the power generating houses of the states and ultimately the burden will fall on the common consumer which will be unfair," said Shailendra Dubey, chairperson, AIPEF.

"Grid India has projected continuation of elevated power demand levels throughout the current fiscal year... In the light of a scenario where energy demand is increasing and the increase in the supply of coal is not commensurate with the coal requirement, the need has arisen to continue the use of imported coal for blending purposes," the ministry said in its order.