According to some reports, imports by power stations fell about 15 percent from a year ago in the first two months of the fiscal year to March caused mainly by a 32 percent drop in overseas purchases by plants designed to use imported coal, according to calculations based on data from CEA, a unit of the power ministry. Higher coal prices and a weaker rupee forced them to cut generation. At the same time, plants that use domestic coal saw a 35 percent spurt in imports as they tried to bridge a shortfall in domestic supply. A court order last year barred some Indian power plants that use imported coal and have fixed-tariff contracts from passing on an increase in fuel costs to customers. Adani Power Ltd.’s 4.6 GW plant at Mundra in Gujarat, which runs mostly on imported coal, used merely 6 percent of its capacity during April and May, power ministry data show. Essar Power’s 1.2 GW imported coal-fired generator in the same state was closed during the months. Average thermal coal prices at Australia’s Newcastle port, considered an Asian benchmark, have risen about 25 percent in the period from a year ago. While the government seeks to discourage imports of thermal coal and sees the decline as an achievement, rising domestic supplies are failing to keep pace with demand. Plants designed to run on Indian coal are now increasingly importing the fuel for blending, as state miner CIL fails to meet requirements. The Power Minister asked state generators, who had earlier been advised to curtail coal imports, to buy from overseas if they needed to as shortages continued to persist. India’s power plants imported 8.64 mt of coal in the two months ended May, compared with 10.13 mt a year earlier. Plants that run exclusively on imported coal, accounted for most of the imports at 5.07 mt while those using domestic coal purchased 3.57 mt from overseas during the period this year.

The advisory from the power ministry to import coal comes in the wake of states demanding more coal to run their thermal units in face of growing demand. In Tamil Nadu, power demand shot up by 2383 MW this summer. If TANGEDCO is to import five mt of coal to meet the shortage, it would cost the state discom around $5,000. The coal consumption during April 2018 increased by 3.9% compared this year. TANGEDCO started importing coal regularly from 2004-05. The imports started in 2004-05 at one mt but as the demand for power increased and more thermal units were commissioned, the amount of coal imported also increased. In 2016, Coal India Limited requested Tamil Nadu government to advise TANGEDCO to stop imports and use indigenous coal available with CIL.

Increasing coal import by power plants to compensate for supply shortages by CIL would lead to a rise in electricity tariffs, analysts said. Absorbing higher imported fuel costs by electricity discoms, instead of raising tariffs, would add to losses of such state-owned entities. Reining in costs of electricity generation at state-owned power plants was a major factor which enabled discoms under the UDAY to halve their financial losses to ? 173.52 billion in FY18. Power plants which blend domestic and imported coal to increase efficiency imported 3.6 mt of coal in the first two months of FY19, which is 39% more than the same period in FY18. The development comes at a time when global coal prices have gone up by more than 23% CAGR from FY16 to about $100/tonne. Research firm India Ratings estimates that if there is a 6-7% rise in electricity demand, imported coal needs to increase to 62 mt in FY19 from 56 mt, even if coal availability to the power sector increases by the standard 4% rate. Overall coal imports are, however, lower than last year because a number of power plants designed to run only on imported coal have shut down their units after the Supreme Court ruled in April 2017 that imported coal price hikes cannot be passed on to discoms through higher tariffs. However, power plants with supply contacts with CIL can claim compensation for higher costs for coal imported due to less than contracted supply. CIL has increased its supplies to the power sector by 15.4% to 122.8 mt in the first three months of FY19, backed by a 15% growth in rake loading to 217 rakes per day. However, supply shortages remain. CIL said it has registered a 15.2 percent growth in coal production during the first quarter ended June 2018 to 136.87 mt.  While the offtake was spurred by higher rake loading, the overall coal offtake zoomed to 153.43 mt at the end of June, translating into a growth of 11.7 percent. CIL announced that the number of power stations having critical stock has come down from 30 at the beginning of the fiscal to 16 as of June 2018. Of the overall coal supplies of the company during the first quarter ending June, supplies to the power sector accounted for 80 percent and CIL said that a request has been made to thermal power plants to boost their coal stocksData available with the Central Electricity Authority shows that seven power projects have less than seven days coal, while eight are operating with less than four days stock.

Power sector accounted for 80 percent of coal supplies during the period. CIL has been working with the Coal and Railways ministries for enhanced rake loading of 217.04 rakes per day on an average to the power sector during the first quarter of FY'19 against 189.9 rakes in the same period last year, registering a growth of 14.9 percent. The company produced 44.88 mt in June 2018, reflecting an increase of 5.20 mt in absolute terms over corresponding month of last year. The company liquidated 16.56 mt of its pit head coal stock during the first three months of the current fiscal.

Ahead of the paddy season during which power generation at privately-owned case II projects has been hit by shortage of coal, the Punjab government has written to the union ministry of coal to consider these plants at par with the state-owned thermal stations while allocating the fuel stocks. The state government stated that being case II projects, the 1,400 MW Rajpura thermal plant and the 1,920 MW Talwandi Sabo thermal plant sell entire electricity generated to meet the state’s demand and forced shut down of these affects the availability of power forcing the corporation to go in for regulatory measures, including power cuts. Punjab State Power Corp Ltd has allowed the Talwandi Sabo plant and the Rajpura plant to import 3 lakh and 2 lakh metric tonnes of coals to meet the fuel requirements during the paddy season.

Delhi has warned of blackout in the national capital claiming that in Badarpur and Dadri I and II power plants just two days coal reserve was left. The railways and the Coal India were claiming that the fuel was being supplied. Load shedding faced in June was the "lowest" when the city's electricity demand hit an all-time high. The power subsidy scheme for tenants is also likely to be announced soon. Delhi's peak electricity demand had hit an "all-time high" of 6,934 MW this summer at 3:28 pm on June 8.   The city government has been planning to extend power subsidy scheme to tenants through "prepaid electricity meters". Under the power subsidy scheme, the Delhi government provides 50 percent subsidy on electricity tariffs up to 400 units on domestic electricity connections for all residents of Delhi.  About 600 transformers have been installed in and "150 more transformers would be installed till year end".

On the other hand MAHAGENCO, the state-run power generation company that regularly complains of coal shortage is now selling its share of coal to private companies. Its own plants are generating at half load even as private companies are making hay. These claims apart, four power plants of MAHAGENCO— Bhusawal, Nasik, Paras and Parli — have alarmingly low coal stock at present. When power plants have very less coal they do not generate at full capacity. Bhusawal has two days stock and its coal is being sold to private companies. Nasik has only one day’s stock. A public interest litigation in the high court on coal shortage in Mahagenco power plants, expressed shock over this revelation.

Customs, Excise and Service Tax Appellate Tribunal has set aside an order that imposed penalties of ? 175 million and ? 12.5 million on Delhi-based Knowledge Infrastructure Systems Private Ltd and its promoter respectively. They are accused of inflating the value of coal imports from Indonesia. In February 2017, the company appealed in the tribunal against the order passed by the adjudicating authority.

The GSPCB granted fresh consent to operate to SWPL, a unit of Jindal Steel Work, to handle 400,000 tonnes of coal per month at MPT. The board restricted Adani Mormugao Port Terminal Pvt Ltd to handle 400,000 tonnes of coal per month at the port.  The decision to allow coal handling was taken in view of the source appropriation study conducted by IIT-Mumbai to ascertain the cause of pollution in the port town. Coal operations should commence in the port town so that the cause of air pollution in Vasco can be ascertained. The board has permitted SWPL to handle 0.4 mt of coal for next nine months at berths 5A and 6. Adani will also handle 400,000 tonnes of coal at the port. Adani had never exhausted its permissible limit. Adani used to earlier handle 520,000 tonnes. The board has reduced 25% of coal handling of Adani, and they have approached the board to enhance their coal handling limit. The board allowed MPT to handle varied cargo at its offshore cargo handling facility, mooring dolphin, barring coal. GSPCB also allowed the port to handle varied cargo at berth 9. MPT used to handle iron ore at this berth and as a result of iron ore stoppage, the port had approached the board to grant them consent to operate other cargo for financial stability.

The government is planning to offload a stake in state-run CIL to speed asset sales. The Department of Investment and Public Asset Management is finalizing the amount of stake to be offered in the financial year ending March 31. If needed, the government could explore the option of staggering the sale offer in two tranches. The government’s plan to raise about $12 billion in the current year from asset sales is at risk after a high-profile plan to sell Air India ground to a halt as no prospective suitors emerged. CIL has reported strong shipment numbers in recent months due to demand from power plants. The government holds more than 78 percent in CIL. It had previously sold a 10 percent stake in January 2015, mopping up ? 225.5 billion.