India Plans to Restart Imported Coal Blending Requirement for Coal-Fired Power Plants, with a Maximum Ratio of 5%

en.Wedoany.com Reported - On September 25, the Indian government is evaluating the reintroduction of a requirement for power plants primarily fueled by domestic coal to blend imported coal, with the ratio under discussion capped at 5%. The relevant plan is still in the internal discussion stage within India's Ministry of Power and has not yet formed a formal policy document. If ultimately implemented, it would mark the first time since India stopped the mandatory imported coal blending arrangement in October 2024 that imported coal procurement requirements are again imposed on domestic coal power plants.

This policy discussion is directly related to the recent decline in coal-fired power plant inventories. From July to September, coal inventories at Indian power plants fell by about 49% cumulatively, compared with a decline of 26% in the same period last year. As of late September, nearly 40% of coal-fired power plants had less than 3 days of inventory. Electricity demand in September remained at summer highs, while some coal-producing areas in eastern India were affected by heavy rainfall, disrupting coal mining and transportation, and railway capacity constraints also affected coal deliveries to power plants.

Most coal-fired power plants in India mainly use domestic coal, and existing boilers generally have some capacity to blend imported coal, with some plants able to blend up to about 15%. The plan under discussion in this round would cap the imported coal use ratio at a maximum of 5%, mainly targeting fuel inventory replenishment for domestic coal power plants. Indian government sources said one consideration is to slow the depletion of domestic coal inventories in the remaining months of this year and preserve more domestic coal resources for the summer peak electricity demand period in 2027.

India's Ministry of Power had previously implemented imported coal blending arrangements consecutively. In January 2023, India required central and state power generation companies and independent power producers to blend 6% imported coal by weight; since then, the implementation deadline has been adjusted multiple times based on inventory changes. In June 2024, the Ministry of Power lowered the imported coal blending ratio to 4% and extended the relevant requirement to October 15 of that year. Subsequently, as domestic coal supply and power plant inventories improved, the policy was not extended further.

The cost of imported coal procurement will become an important commercial condition for the implementation of the new round of policy. Market data around September 25 show that since May, among India's main import sources, Indonesian coal prices have risen by about 20%, Russian coal prices by about 14%, and South African coal prices by about 19%, while international shipping costs have also increased. India's average spot electricity price in September reached about 7.71 rupees/kWh, the highest monthly level since 2022.

India's Ministry of Power previously made clear that the cost of imported coal blending is affected by factors such as international coal prices, coal sources, shipping, and insurance. Official data for 2024 show that the volume of imported coal used for blending at domestic coal power plants in India fell from 23.4 million tons in 2023 to 18.8 million tons in 2024.