For the first time in four years, state-owned NTPC Ltd, the country’s biggest power generator, has floated tenders seeking to import a total of 2.5 million metric tonnes (MT) of coal. The two tenders for coal shipments — equivalent to about 4.5 per cent of total coal imported by the country’s power stations last year — come at a time when utilities are facing coal shortages at some of its plants as production at Coal India Ltd (CIL) has failed to keep pace with surging demand on account of higher electricity generation. Bottlenecks in transporting coal from pitheads to power stations has further exacerbated the situation. The shortages, though, are not limited to just power stations. Coking coal, used in steel-making, has seen a sharp surge, reflecting both a surge in domestic steel production as well as shortage of Indian supplies of this higher-grade coal variant. Incidentally, the rebound in the country’s coal imports come at a time when prices for thermal coal have surged to the highest levels in over six years on the back of robust Chinese imports triggered by a hot weather spell and some output restrictions in some of the mines there. After a dip in FY17, overall coal imports increased nearly 10 per cent in FY18 and are projected to surge this fiscal, with tenders such as the ones put out by NTPC on Tuesday stoking demand for overseas coal shipments. Within the different coal segments, coking coal imports have seen a sharper 14 surge in FY18 and fresh data for the first two months of this fiscal indicates that coking coal imports could be headed to a new high this year. This comes at a time when the country’s electricity demand rose nearly 6 per cent in the first 4 months of the current fiscal as against the corresponding period last year, according to data compiled by the Central Electricity Authority (CEA). Industry players have indicated that while coal imports by operators of large power plants that are connected to the grid have actually seen a dip, the surge in demand is being reported by utilities operating captive electricity generation stations that are attached to manufacturing units such as cement plants and aluminium smelters. India’s captive capacity is estimated at upwards of 30,000 MW. Indian Coal, due to its drift origin, contains higher percentage of ash as compared to imported coal, resulting in lower heat value per tonne of coal. Officials in the Ministry of Coal indicated that coal imports have fallen from 217.78 MT in FY’15 to 190.95 MT in FY’17, following which imports showed a rebound to 208.27 MT in FY’18 “due to increase in demand by the consuming sectors”. “While there is a slight increase in import, due to the enhanced domestic coal supply to power plants, the coal import by power plants has reduced from 80.58 MT in FY16 to 56.41 MT in FY18 while in FY19 (up to June 30, 2018), the coal import by power sector is 14 per cent less than the import in the corresponding period of last year,” an official said. Private sector players, however, indicate that demand from those operating captive power plants has been driving up thermal coal imports and orders from utilities such as NTPC signals a broader uptrend, the surging global prices notwithstanding. Government officials contend that since the entire demand of coking coal is not met indigenously, as the supply of high quality coking coal (low-ash-coal) in the country is limited, there is no option but to resort to import of coking coal. They claim that CIL has a plan to augment supply of coking coal through washed coking coal. Currently, 11 Coking coal washeries having a total capacity of 20.58 MT are in operation by CIL, which plans to construct another nine new washeries with a capacity of 28.10 MT by the year 2020. Rating agency Crisil said in a report Monday that the power sector imports are projected to cross 75 MT by FY23, driven by demand from imported coal-based plants as their plant load factors (PLFs) improve following growth in power demand, even as non-power sector imports are expected to decline to 70 MT due to improvement in domestic supply post linkage auctions and development of key captive blocks allocated to the non-regulated sector.
