Demand for imported coal decreased on the back of lower electricity consumption as lock-down restrictions across states curtailed economic activities.
Data provided by the power ministry showed that imports by power plants dropped 14% month-on-month (m-o-m) to 3.68 mn t in May ’21 compared to 4.28 mn t in Apr ’21.
However, power generation continues on an upsurge compared to the year-ago period when the initial Covid wave had brought the country to a standstill. But, the output has been affected by the fresh restrictions imposed during the second wave. Besides, a cooler than usual summer and outages following cyclones added to the generation loss.
Overall, generation from coal-based plants was recorded at 17% higher on the year at 81.04 billion units (BU) in May ’21, but fell 16% m-o-m from 97.1 BU in Apr ’21.
Sector-wise imports
Plants designed to run on imported coal reported a decline in appetite for imports. Notably, coastal plants of Adani and Tata Power, located at Mundra, which are the largest coal importers, both witnessed a steep fall in imports on a monthly basis.
Total coal imports by such plants fell by 21% m-o-m to 2.71 mn t in May ’21 compared to 3.42 mn t in Apr ’21.
On the other hand, an increase in imports was seen from the plants which utilise these coals for blending purposes. However, the rise was majorly attributed to the private sector plants which were more active in coal imports.
Notably, as a result of higher supply of domestic coal, imports by state-run plants had plunged 78% m-o-m to 0.04 mn t in May ’21. In fact, total imports by these plants have decreased by 72% y-o-y to 0.21 mn t in the first two months of FY ’22 (Apr-May ’21).
Outlook
With gradual easing of restrictions, electricity consumption would bounce back in tandem with a revival in economic activity.
Nonetheless, power producers are expected to satiate their their coal requirements from domestic supplies instead of imports provided domestic miner Coal India Limited (CIL) keeps in place several consumer-friendly policies, at a time when global coal prices are soaring.
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