28-09-2016

India seeks to stop thermal coal imports by 2017, but private power utilities may not comply

TCP

The Indian government is working on a plan to completely stop thermal coal imports by state-run power utilities by next year, sources said Tuesday.

While central government owned power utilities like NTPC Ltd. have been asked not to import any coal now, power utilities owned by state governments are being pursued to follow suit, a source at Central Electricity Authority said Tuesday.

He added that the existing contracts would have to be fulfilled but no new contracts will be signed. Next year, there will be almost negligible coal imports by government-owned power companies, he said.

NTPC, which is the country’s largest electricity generator imported around 736,000 mt of thermal coal over April-August, down from 5.7 million mt imported in the same period last year, according to CEA data.

NTPC has not placed any new orders this year and was currently getting the coal, which was contracted last year, an NTPC official said.

In view of the surplus coal available with state-run coal producer Coal India Ltd., the government was also holding talks with private power utilities to make them shun imported coal and consume domestic coal instead, said sources.

CIL’s production over April-August was 194.81 million mt as against the targeted 213.61 million mt, up 1.3% year on year, while offtake was 211.38 million mt as against the target of 240.95 million mt.

According to the CEA source, the main concern with private power producers was that of the grade slipping, but recent third party sampling by the Central Institute of Mining and Fuel Research has ensured that end-users get quality coal.

He, however, added that if it was economically viable for private players then they would go for Indian coal, otherwise they would continue to use imported coal.

A south India-based power producer source said that the government could not force them to use domestic coal, though his company had been buying domestic coal since March this year.

Currently, domestic coal was cheaper as imported coal prices have gone up. His company buys 5,500 kcal/kg NAR South African coal, which is now being sold at around $65/mt CIF levels, up from around $50/mt CIF levels around two months ago, he said, adding that he will keep buying domestic coal for at least another six months.

Another south India-based end-user source at a power plant said that for coastal power plants imported coal will always be economical so they will not buy domestic coal.

Source: Platts 

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