Government considers mandatory coal blending rule for power plants
The Power Ministry is considering a proposal to mandate blending of imported coal at thermal power plants across India for the first time since 2024, according to three government sources. Under the plan being discussed, thermal power stations would be required to blend up to 5% imported coal with domestically sourced coal, said the sources directly aware of the matter. The move represents a significant reversal in New Delhi's previous drive to boost domestic coal production and curb imports over the past two years.
The consideration comes as coal inventories at power plants have depleted rapidly, falling nearly 49% in the three months to September compared to a decline of 26% in the same period a year ago. This accelerated depletion has been driven by September electricity demand remaining at levels seen during India's summer months, contrary to previous years' seasonal pattern. Additionally, higher global coal demand and rising freight costs are increasing import expenses, with Indonesian prices up about a fifth since May, Russian prices 14% higher, and South African rates up 19%, according to traders. The rapid depletion of coal stocks is prompting the government to consider mandating imports, with the discussion aimed at saving domestic coal reserves for use during next summer.
Most of India's coal-fired power plants rely primarily on domestic coal but can technically blend up to 15% imported coal. Indian coal imports are already at a 15-month high. The government's previous coal-blending directives operated from December 2021 to March 2024. The Union Ministry of Power and Ministry of Coal did not respond to requests for comment.
