Coal imports fell 10% y-o-y in Apr-Jan FY22, as prices surged 67%

Even as the government is frantically trying to make up for the deficit in coal supplies, especially to thermal power plants ahead of the peak season, import of the key commodity has been declining consistently since the last two years owing largely to the record high international prices.

During the first 10 months of the current financial year ending March 2022, the coal import volumes fell 10 per cent on an annual basis. However, the value of the imported commodity rose a whopping 67 per cent during the same time.

In April-January FY22, thermal coal (non-coking coal) imports stood at 125.74 million tonnes (MT) at a cost of ₹97,403 crore. Against this during the same period in FY21, the imports stood at 139.42 MT for ₹58,189 crore, indicating a significant hike in price of imported coal.

High global prices have made it unviable for power plants and other sectors to import the dry fuel, forcing them to depend on domestic supplies, which in turn is creating a supply shortage that analysts say could become serious if more coal is not made available.

Declining coal imports

India’s overall imports of the key commodity fell from 248.54 MT in FY20 to 215.25 MT in FY21. During April-January of FY22, in-bound shipments further declined to 173.32 MT from 180.56 MT a year-ago.

Similarly, imports by the power sector also fell from 69.22 MT in FY20 to 45.47 MT in FY21. During April-January FY22, imports went further south to 22.73 MT against 39.01 MT in same period of previous year.

The average domestic coal supply per day to power plants has increased in last few months. The daily domestic coal supply on a provisional basis from CIL, SCCL and captive coal blocks in December 2021, January 2022 and February 2022 was 2.05 tonnes per day, 2.02 tonnes and 2.14 tonnes, respectively.

Besides, the share of coal supply by CIL, which was around 60.8 per cent of the total consumption of coal in FY20, increased to 63.3 per cent in FY21 and further to 64.3 per cent in FY22 (April-January).

Record international prices

On account of high global prices of the dry fuel, domestic and imported coal-based power plants imported less amounts in FY22 resulting in less generation from ICB plants. As per a March 10 report by ICICI Securities, international coal prices were already at high levels and the ongoing Ukraine crisis has pushed them to unprecedented highs as Russia is a major global supplier.

Current prices of the global benchmark Australian coal (6,000kcal/kg) stand at $170 per tonne, while the South African (6,000kcal/kg) and Indonesian (5,900kcal/kg) prices are pegged at $353 and $443 a tonne, respectively. Newcastle coal futures in Europe crossed $440 per tonne in March 2022.

Supply issues at power plants

Increased demand for power coupled with less generation by ICB power plants and interruption in supply of coal due to heavy rains, resulted in the stocks at power plants getting depleted to a record low of 7.2 MT on October 8, 2021. Government prioritised supply to power plants as several parts of India reported power cuts in October and November . With increased supplies, stocks reached 24.85 MT on March 15 for plants based on domestic coal.

For April-February FY22, the coal supplied to power plants stood at 626.3 MT, while consumption was at 631.5 MT. As on March 16, the coal stock available at power plants was around 26.3 MT which is about 39 per cent of their normative requirement. A week later, on March 24, the stock was about 38 per cent of around 67 million tonnes (MT)of normative stock requirement.

More rakes to power sector

Railways also improved supply of coal rakes from 404 rakes per day in September 2021 to 508 rakes in February 2022. Of this, rake supply to power sector, on account of higher priority, improved from 305 rakes a day in September 2021 to 396 rakes in February 2022. Railways have also made a plan for induction of one lakh wagons, out of which 41 per cent are open wagons, during the horizon of three years to facilitate enhanced supply of rakes to coal sector

Coal stocking norms

In December 2021, the Power Ministry issued new coal stocking norms for coal-fired thermal power plants with provisions for penalty for non-maintenance of prescribed stock. Now, the daily coal requirement for both pithead and non-pithead plants is calculated at 85 per cent of the plant load factor (PLF). Besides, the number of days for which stock needs to be maintained is 12-17 days for pithead plants and 20-26 days for non-pithead plants with month-wise variation based on coal dispatch and consumption pattern during the year.

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