The Central Electricity Regulatory Commission (CERC) has made amendments in the provision involving use of alternate fuel by thermal power plants to facilitate imported coal procurement for blending purposes.
In a suo-moto order, CERC has allowed the power gencos to blend domestic coal with up to 6% from alternative sources, including imported coal, without taking prior permission from beneficiaries (Discoms).
Earlier, as per Rule 43 (3) of Tariff Regulation, 2019, the use of alternative source of fuel supply was permitted only in cases where prior permission from beneficiaries was not a pre-condition.
Moreover, other sub-conditions in the same provision concerning hike in average price of alternate fuel against base price of primary fuel and ceiling limits for increase in energy charge rate, have been put in abeyance.
CERC has informed that these directives would remain in place till 30 September, 2023.
Need for coal imports resurfaces
The decision by CERC was taken in tandem with recent directive issued by Ministry of Power (MoP) asking power plants to resort to imports by procuring 6% (by weight) of their needs for blending with domestic coal till September 2023.
The relaxations thus provide regulatory support to gencos so they can procure and blend imported coal to have adequate coal inventory at their power plants for smooth operations.
Interestingly, a similar order was issued by MoP back in May last year when coal imports were mandated against a blending ratio of up to 10% to bolster inventories at power stations.
That time, too, CERC had come up with relaxations in import norms to make room for the proposed blend ratio.
Current status
Riding on the government’s push, coal imports by power plants surged last year as demand for imported material was necessitated to mitigate the domestic coal shortage during monsoon.
However, post improvement in supplies, imports are steadily falling and have dropped to a 10-month low of 2.8 million tonnes (mnt) in December 2022.
In consideration of anticipated surge in power demand in the peak summer period where it has been assessed that increase in supply of domestic coal supply would not be commensurate, it is expected that the country is likely to witness a similar jump in imports to satiate the rising demand.
In January 2023, as against the anticipated power requirement and peak demand of 121,402 MU and 202,065 MW, the actual power supplied and peak demand met was 125,151 MU and 210,618 MW respectively.
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