News
05/03/26
India mulls mandate to raise imported coal generation
India mulls mandate to raise imported coal generation
Singapore, 5 March (Argus) — India is considering issuing its emergency coal
import directive to imported coal-based power plants to boost generation and to
plan fuel procurement to meet peak summer demand, at a time of elevated seaborne
prices owing to the US-Iran conflict. The country's power ministry is evaluating
a proposal to invoke Section 11 of its Electricity Act, which empowers the
government to direct imported coal-fired utilities to increase generation. No
final decision has been taken but discussions have gathered pace, in view of the
peak demand season and an increase in imported coal prices, two government
officials and a private utility with the knowledge of the matter told Argus . A
similar directive expired on 30 June 2025, after remaining operational for over
three years . International coal prices have increased following the disruptions
to Qatar LNG supplies, after Iranian strikes in retaliation to attacks by the US
and Israel. The disruption to LNG supplies pushed up the price of coal,
especially that of supplies from South Africa and Australia, while also raising
pricing sentiments in the Indonesian market where supply remained tight on
delays in government approval of 2026 production quotas. Prices have increased
as markets such as Taiwan look to boost coal inventories to plan for any
potential shortfall in LNG supplies. Argus last assessed Indonesian GAR 5,000
kcal/kg coal at $69.60/t fob Kalimantan on 27 February, hitting its highest
level since early January 2025. The Indonesian GAR 4,200 kcal/kg market for
Supramaxes was assessed at $54.31/t fob Kalimantan on 27 February, the highest
level since June 2024. The South African and Australian NAR 5,500 kcal/kg prices
eased slightly in the previous week, after hitting the highest level since
December 2024 at $89.69/t fob RBCT and $86.65/t fob Newcastle, respectively, on
20 February. An increase in freight rates, given the conflict in the Middle
East, has raised delivered prices. Power shortages The discussions around
reviving the emergency rules come as India's Central Electricity Authority — the
technical arm of the power ministry — estimated power shortages of 10-12GW when
demand peaks in the summer, according to one of its projection scenarios. The
country is experiencing an early onset of summer conditions with temperatures
set to rise in several parts of the country in the coming days, according to the
India Meteorological Department (IMD). India could experience a
hotter-than-normal summer this year, the department said. This could raise air
conditioning demand, and overall power consumption. A fresh directive is
expected to push imported coal-fired plants to raise generation, officials said.
India has more than 18.7GW of imported coal-fired capacity, accounting for
nearly 9pc of India's coal-based generation capacity and 4pc of overall power
capacity. But much of this capacity operates at low utilisation rates because
the long-term power sale pacts do not fully provide for passthrough of higher
fuel costs. Authorities can allow some passthrough and permit utilities to sell
surplus power on exchanges and offer other operational concessions under Section
11 of India's Electricity Act. The potential issuance of the directive could be
a pre-emptive step rather than a response to any immediate fuel shortages. The
situation in May 2022 was different — India was facing a sharp increase in
summer power demand that exacerbated inventory drawdown at utilities, and
domestic coal supplies could not meet the sharp increase. International coal
prices rose sharply in 2022, following the Russia-Ukraine conflict and the
government needed the directive to push imported-coal utilities to ramp up
generation, an official at a utility said. But India is sitting on a record coal
stockpile this time, following higher domestic output growth and weaker demand.
Combined stocks at power plants, coal producers, in transit and ports and
stockyards, are estimated at well under 200mn t. Most incremental generation
requirements could be met by domestic coal-based plants, which meets the bulk of
India's power needs. Coal-power accounted for about 86pc of overall generation
in January. The government is also pushing imported coal-fired utilities to
explore use of domestic coal, one government officials said, adding that the
overall goal is to have stable power supplies for the summer. India imported
160.15mn t of thermal coal in 2025, down by 3pc, or 5.2mn t, from a year
earlier, according to data from shipbroker Interocean. Out of the total thermal
coal imports in 2025, power utilities might have imported around 50mn t,
according to industry estimates. By Saurabh Chaturvedi Send comments and request
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