Indian Power Ministry Asks States To Increase Coal Imports For Three Years; Reports
According to a report published by the news agency Reuters, the Indian government has pushed its states to increase coal imports for the next three years to build up stockpiles and meet demand. According to sources, this move is expected to help global coal prices, which are already high due to the conflict in Ukraine.
The decision to increase imports highlights the gravity of India’s fuel problem, as coal supplies are at their lowest pre-summer levels in at least nine years, and energy demand is expected to rise at the highest rate in nearly four decades.
India, the world’s second-largest coal importer, may drive up worldwide demand until 2025, according to Power Minister R K Singh, who has extended a federal effort to raise imports that had previously been viewed as a temporary measure.
“The states were asked to continue importing because the private sector will take until at least early 2025 to produce significant output,” said a power ministry official who recently attended Singh’s meeting with state officials.
Furthermore, according to the source, the state-run rail network has a chronic shortage of trains to transport domestic coal.
Two state officials who attended the meeting and two officials from the electricity ministry declined to be identified since the topic is private.
According to another ministry official who was briefed on the meeting but did not attend, states were instructed to sign long-term import deals to assure supply and cut prices and buy rail carriages to solve logistics concerns.
Higher coal imports may benefit miners such as Indonesia’s Adaro Energy, Australia’s Whitehaven Coal Ltd, and India’s largest coal trader, Adani Enterprises, whose contentious Carmichael project in Australia began producing coal this year.
However, rising global coal prices will put pressure on the debt-ridden utilities of Indian states, perhaps exacerbating their financial woes.
Global prices have risen due to concerns of a supply shortage following the European Commission’s decision to restrict coal imports from Russia following its invasion of Ukraine, which Moscow described as a “special military operation.”
In December, India, which has a long-standing objective of reducing coal imports, stated that no imports should be made unless necessary.
In March, the administration announced that it had “achieved a significant reduction in imports despite the rise in electricity consumption,” attributed to key reforms.
“Only last year they told us to cut down imports,” said one of the state officials at Tuesday’s meeting. “Now they want us to import as much as we can and say there are supply constraints. This is a very confusing, mixed-signal.”
Because New Delhi has a monopoly on domestic coal production and distribution, the minister’s words to state officials amount to an order.
Although the energy-hungry country has made international pledges to reduce its fuel usage gradually, it has stated that coal-fired power stations will not be phased out in the foreseeable future since they supply inexpensive electricity.
Despite record production by state-owned Coal India, India faces a coal shortage. It produces 80% of India’s coal as its largest coal miner.
Even while utility stockpiles are declining, Indian Railways has failed to increase supply.