- Domestic coal-based plants hold just 19.8 mnt
- 80 thermal plants now classified critical
India is considering reintroducing mandatory imported coal blending at domestic coal-based thermal power plants, potentially requiring utilities to blend up to 5% imported coal. If implemented, it would mark the first such central intervention since the previous blending directions ended in March 2024.
The proposal comes as the coal stock position at power stations has deteriorated sharply through the monsoon. More importantly, the latest Central Electricity Authority (CEA) data show that the stress is concentrated among plants dependent on domestic coal – precisely the segment that would be targeted by a blending mandate.
Power plant stocks fall to 22.31 mnt
CEA’s Daily Coal Stock Report for 24 September shows total coal inventory across 190 monitored plants at 22.31 mnt, against a normative inventory of 57.86 mnt – only 38% of normative requirement. The fleet had a daily coal requirement of about 3.13 mnt at 85% PLF.
However, the aggregate disguises a much tighter position at domestic coal-based (DCB) plants.
The CEA defines a plant as critical when its stock falls below 25% of normative requirement. The report therefore shows 72 domestic coal-based plants already in the critical category, rising to 80 when imported coal plants and washery reject plants are included.
The geographic spread is also important. State utilities in Rajasthan held only 14% of normative stocks, Haryana 11%, Uttar Pradesh 26%, Maharashtra 22%, Andhra Pradesh 13% and Karnataka 22% in the latest report.
This is therefore not simply a national inventory problem; several large generating systems have considerably less cushion than the headline total suggests.
Receipts continue to trail consumption
The 24 September report provides another indication of why stocks remain under pressure. Across the monitored fleet, coal receipts were about 2.42 mnt during the day against consumption of 2.51 mnt.
For domestic coal-based plants alone, receipts were about 2.24 mnt against consumption of 2.37 mnt. In other words, inventories were still being drawn down rather than rebuilt.
That becomes particularly important as India moves out of the monsoon and towards the period when utilities would normally be expected to rebuild stocks ahead of the next summer.
The deterioration has been rapid. Power-plant stocks stood at 41.4 mnt on 18 July, sufficient for around 13 days at 85% PLF. By August, inventories had fallen to around 29 mnt, the lowest stock cover in 34 months, according to Crisil. The latest CEA number of 22.31 mnt indicates that the drawdown continued through September.
Why is the govt considering imports again?
The immediate problem is not necessarily a shortage of coal in India, but getting sufficient coal to power stations at the required pace.
September electricity demand has remained unusually strong. Power Secretary Pankaj Agarwal said demand during the month increased by around 14%, while more than 440 coal rakes were being moved daily.
At the same time, rainfall has disrupted mining in parts of eastern India, while the weak and uneven monsoon has constrained hydro generation. The report on the proposed blending mandate says power plant stocks fell nearly 49% over the three months to September, almost twice the 26% decline during the comparable period last year.
The combination has effectively created a production-logistics-demand mismatch.
5% mandate could create sizeable import demand
The potential market implication is significant.
Domestic coal-based plants covered by the CEA have a daily coal requirement of around 2.94 mnt at 85% PLF. A theoretical 5% blend across that entire requirement would equate to roughly: 0.147 mnt/day → 4.4 mnt/month → 53-54 mnt annualised.
Actual incremental imports would almost certainly be lower because blending requirements could vary by plant, utilisation, domestic supply position and existing imported coal availability.
Nevertheless, even a temporary 5% mandate applied selectively through the high-demand period could introduce several million tonnes of additional seaborne demand.
That would represent a notable reversal from India’s import trend. Government policy has focused on increasing domestic production and reducing avoidable thermal coal imports; coal imports remain permitted under Open General Licence based on consumers’ commercial requirements.
Imports will not come cheap
The timing is also challenging.
Indonesian coal prices have risen by around 20% since May, Russian prices by 14% and South African prices by 19%, while freight costs have also strengthened.
A mandated return to imports could therefore expose generators – and ultimately distribution companies – to higher fuel costs just as power market prices are already elevated. September spot power prices averaged around INR 7.71/kWh at the time of the report, the highest monthly level since 2022.
BigMint assessment
The latest CEA data explain why imported coal blending has returned to policy discussion.
India does not appear to face a structural shortage of coal resources. Instead, coal at power stations has been depleted much faster than domestic supply and logistics have been able to replenish it. The most striking number is not the 22.31 mnt national inventory but the 19.81 mnt held by domestic coal-based plants – only 36% of their normative requirement, with 72 plants already critical.
A 5% blending mandate would therefore function primarily as an inventory-restoration and risk-management measure, rather than a permanent reversal of India’s coal-import substitution strategy.
The critical question is timing. If domestic production and rail despatches strengthen rapidly after the monsoon, the requirement for mandatory blending could diminish. But if receipts continue to lag consumption into October while electricity demand remains strong, the case for intervention becomes substantially stronger.
For the seaborne thermal coal market, even a temporary mandate would matter. India could move from opportunistic buying towards policy-driven procurement just as international coal and freight prices are strengthening – potentially adding another source of support to Asian thermal-coal prices heading into the fourth quarter.
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