India: Coal imports by power plants slow down in August

Indian thermal power plants struggling to keep pace with elevated demand received a major relief with the improvement in inventory levels as they curtailed imported coal procurement during August.

As per provisional data furnished by the Power Ministry, thermal power plants imported 5.69 million tonnes (mnt) of coal in August 2022, registering a drop of 21% as against 7.22 mnt in July. However, imports saw an exponential growth of 196% y-o-y from 1.92 mnt in August 2021.

Imports have grown at a steep rate this year despite soaring prices in the global market. This was partly due to the government necessitating imports in order to compensate for the shortfall in domestic supplies at a time inventories at power plants had fallen to alarming levels.

Notably, the plants imported a total of 29.27 mnt of coal during April-August this year, which has already surpassed 27 mnt recorded in FY22.

Nevertheless, the need for imports was lessened with the inventory level at plants increasing to 29.62 mnt at the end of August compared to the year-ago levels of 16.93 mnt. This was supported by an uptick in domestic coal supplies, which increased by 18% y-o-y to 301.3 mnt in April-August.

Imported coal-based plants at receiving end

Higher imports were primarily driven by the domestic coal-based (DCB) plants which procured more coal for blending than the imported coal-based (ICB) plants.

During April-August, imports by DCB plants rose 367% y-o-y to 19.21 mnt. On the other hand, ICB plants, which rely solely on imported fuel for their operations, bought 10.07 mnt of coal.

The ICB plants, impacted by operational constraints, have been facing outages at several units. Besides, there was little assistance for them on the pricing front, as prices remained high.

In fact, coal imports by the ICB plants slumped to a six-month low of 1.06 mnt in August.

Going forward, relaxation in import norms provided by the government in tandem with improved domestic coal supplies should further bring down imported coal procurement of the DCB plants.

In contrast, a modest growth in imports is expected from the ICB plants boosted by the return of a few units, as the country strives to ensure optimum power availability in the upcoming festive season.