Generation costs of plants running on imported coal are likely to fall as Coal India has started supplying them more local fuel which is much cheaper.
In November power plants imported almost 6.6 million tonnes of fuel, highest this fiscal. Imports fell 9.8% next month and another 6% in January as local supply rose.
To help achieve the Centre’s aim to stop coal imports by 2023, Coal India is focused on raising supply for import substitution and is in regular talks with power producers.
Imports are expected to fall further in the weeks ahead a local supply increases. Coal India has decided to supply around additional 70-75 tonnes a year to these companies.
A large number of inland plants switch to imported fuel when domestic supply dwindles. Domestic coal, which is 25%-30% cheaper, reduces generation cost, which is passed on to consumers.
“Coal production is on the rise over the last several weeks and stocks at pitheads are at comfortable levels allowing us to supply increased quantities to generators relying on imported coal,” said a senior Coal India executive.
Coal offered through long-term supply contract auctions, spot or forward e-auctions find takers from some particular sources. The plan is to supply import substitute fuel from sources that will not affect supplies under existing schemes.
This year, under its coal import scheme, Coal India supplied 3.4 million tonnes till December while it supplied 4 million tonnes in 2018-19.
In the current financial year power companies imported 58.09 million tonnes till January 2020, about 16 per cent more than a year ago. NTPC, the largest power generator, imported almost 2 million tonnes, five times more than the previous corresponding period.
Power companies were forced to import more as unseasonal rains reduced domestic production.