CIL to import fuel for utilities use as power shortages loom

The state-run Coal India Limited (CIL), the world's largest miner, will import the fuel for utility use as shortages raise concerns about new blackouts.

It would mark the first time since 2015, Coal India will import the fuel, highlighting efforts by state and federal officials to stockpile to avoid a repeat of April, when India experienced the worst blackouts in more than experienced six years.

CIL would import coal for government-to-government blending (G2G) and supply it to state generator thermal power plants and independent power generators (IPPs), the Department of Energy said in its May 28 letter.

The letter has been sent to all utilities and top officials at the power plant and state energy, including the CIL's coal secretary and the chairman.

India is likely to face a larger coal shortage in the third quarter (Q3) of 2022 due to anticipation of higher demand for electricity, fueling fears of widespread power outages.

The Department of Energy said in the letter that the decision was made after nearly all states indicated that multiple tenders for coal imports by states would lead to a mess and have pushed for centralized sourcing through CIL.

India in recent days pushed for utilities to increase imports to blend with local coal, and warned of cuts in the supply of domestically mined coal if power plants did not create coal reserves through imports.

But the Department of Energy on Saturday asked states to suspend pending tenders.

The ministry said the tenders pending by state producers and IPPs for importing coal for blending could be suspended pending discovery of the costs by Coal India through the G2G route to purchase coal at the lowest possible rates.

Coal inventories at power plants have fallen nearly 13% since April to their lowest level in years before the summer.