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Indian govt projects sharp drop in thermal coal imports but analyst disagree

Source: Pixabay, May 31, 2019

India’s Power Ministry has estimated coal demand from domestic thermal power plants at 651-million tons in 2019/20.

State-miner Coal India Limited (CIL) has assured thermal power producers supply of 530-million tons during the financial year, while the balance of 121-million tons will need to be imported.

However, a section of the industry maintains that the coal import volume projection for the current year is “unrealistic”, considering that it represents an almost 50% reduction on the coal shipped in during the last financial year, which was recorded at 234-million tons.

The industry analysts say that even though coal supplies to thermal power plants by CIL, at 530-million tons, is about 8% higher than volumes supplied during 2018/19, import shipments are unlikely to rise by as much as 50%, factoring in rising demand for electricity and new thermal capacity expected to come on stream during the year.

In fact, the inward shipment of thermal coal so far at start of current financial year is showing little sign of reversing the rising curve, the analysts say. It was pointed out that during April, the first month of current financial year, Indian coal imports were estimated at 21-million tons, up 13.4% over the corresponding month of the previous year, indicating that such strong import volumes were unlikely to be reversed over the course of year.

However, despite the challenges, the Power Ministry is attempting to change coal blending practices of domestic thermal power companies to reduce import dependency.

In an advisory to all thermal power companies, the Power Ministry, in collaboration with CIL, have sought that power plants lower import volumes of high-grade import thermal coal as the domestic miner is willing to increase supplies of high gross calorific value (GCV) domestic coal to be blended with lower grade domestic coal as feedstock for thermal power plant boilers.

As a start, CIL has offered power plants in the southern Indian state of Tamil Nadu and big importers an additional 4.5-million tons of high GCV thermal coal to substitute imported coal for blending.

At the behest of the Power Ministry, CIL has also agreed to increase high GCV thermal coal volumes to be offered through e-auction to enable domestic power producers to reduce import shipments and use domestic coal for their blending needs.

News Source: Hellenic Shipping News Worldwide