The government has extended the mandate for power plants to import coal until March 2024 in an effort to meet surging electricity demand, said Power Secretary Pankaj Agarwal in an interview with Bloomberg on Saturday. The move comes as the country’s electricity demand has been breaking records. On August 1, the country reached peak demand of almost 240 gigawatts, surpassing the last record set just a day before, according to data from Grid Controller of India Ltd.
Friday’s was 20 per cent more than the maximum peak power demand during September last year, the report said. The driest August in more than a century has been pushing farmers to use irrigation pumps to water their fields. Additionally, the use of cooling appliances like AC and industrial chillers has also been boosting consumption, as per the report.
On January 9, 2023, a government directive asked power generation companies (GENCOs) to import coal for 6 per cent of their total coal requirement. This mandate was initially enforced until September this year. The directive was issued to maintain the power plants’ stocks at a safer level and avoid blackouts during peak hours. Earlier, this import mandate was 4 per cent for GENCOs and Independent Power Producers (IPPs) and 10 per cent for central GENCOs.
Power Secretary Pankaj Agarwal told Bloomberg that plants designed to run on domestic coal have been asked to import 4 per cent of their supplies of the fuel through March to avoid outages, extending an earlier direction to buy from overseas until the end of this month. The decision comes amid surging electricity demand, partly a result of deficient rainfall that’s forcing farmers to run irrigation pumps to water their fields, he said.
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India usually sees its peak electricity demand during the summer months from April to June. This surge in coal demand has led to a rapid reduction in coal stockpiles, said the report. Adding that at the start of June, power stations were left with only 11 days’ worth of inventories, down from 14 days.
To address this situation, the ministry has devised a plan to replenish stockpiles with seaborne coal shipments. This initiative aims to counter the declining trend in coal imports by power stations, which had been occurring due to a rise in domestic coal availability.
Data from the power ministry showed that coal imports by power stations in the four months leading up to July declined by 24 per cent compared to the previous year, said the report.