Coal Shortage: Centre ponders letting power plants use 10% imported coal blend

The government may allow power plants facing fuel shortages to blend up to 10 per cent imported coal and run their plants at optimal capacity to prevent any outages.

As part of the exercise to prevent power plants from reducing their supply due to rising demand, the government, as per reports, has decided to allow coal-based plants to import fuel and blend it up to 10 per cent of the total requirement.

Blending local coal with imported ones has been practised in the past to get better caloric value and improve the efficiency of power plants. The country's largest power producer NTPC has also used blended coal at its power plants to offset lower heat generated by the high ash content of local coal.

Power sector analysts, however, said that with imported coal prices touching the roof, with widely-used Indonesian coal's prices soaring from $60-70 in April to about $180-190 a tonne now, it would be tough for power generators to use this expensive coal without getting to raise the electricity tariff to offset the higher cost. One of the reasons for brimming power crisis in the country is reduced coal imports due to exorbitantly high prevailing prices.

The development on coal imports comes at a time when Coal India Ltd said that its dispatches are higher than last year and the problem of shortages being reported in the country would be addressed in a few days.

As part of the exercise to deal with the crisis, the Centre on Tuesday also warned states of snapping their share of unallocated power if this is not being used to meeting the needs of consumers but being sold on power exchanges at a higher rate for gains.

Several states including Tamil Nadu, Punjab, Delhi, Rajasthan, Assam, and Madhya Pradesh are reporting severe stress in their power situation in wake of fuel shortages at coal-based plants while an unprecedented increase is seen in demand due to the post-pandemic rapid recovery in economic activities.

A Power Ministry statement said that it has been brought to its notice that some states are not supplying power to their consumers and imposing load shedding. At the same time, they are also selling power in the power exchange at a high price. The fresh action on unallocated power is to prevent misuse of this portion of energy.

The government is also looking at getting the renewable energy sector to ramp up production to meet the unexpected rise in demand.

But the situation on coal-based power stations remains serious with about 115 out of 135 plants with just three to four days of coal stocks.