India warns of fuel-supply cuts to utilities if coal imports delayed

May 19, 2022: India's power ministry on Wednesday said it would cut domestic fuel supply to state government-run utilities by 5% if they do not import coal for blending by June 15, as officials struggle to address rising power demand.

A heatwave pushed power use to a record high in April, leading to the worst electricity crisis in more than six years and forcing India to reverse a policy to slash coal imports.

The power ministry said lower imports by states was "the cause of the stress in the availability of coal," and said states' efforts were "not satisfactory." Coal imports for blending fell by a fifth to 8.3 million tonnes during the financial year through March, the ministry said.

"If blending with domestic coal is not started by 15.06.2022 then the domestic allocation of the concerned defaulter thermal power plants will be further reduced by 5%," the power ministry said in a statement.

India had set state and federal government-run utilities a target to import 10% of their coal needs for blending with domestic coal.

The power ministry had asked all utilities to ensure delivery of 50% of the allocated quantity by June 30, another 40% by end-August and the remaining 10% by the end of October.

It said state government-run utilities, most of which are debt-laden, will have to import more coal to fire their power plants due to reduced local supply if they delay placing orders and supplies do not arrive by June 15.

"All the defaulter generating companies would have to import coal for blending purposes to the extent of 15%," the ministry said.

"Not much blending has taken place in the months of April and May," it noted and said plants that have not yet started blending must ensure they use a 15% blend of coal until October and a 10% blend from November until March 2023.

Reuters