Imported coal-based plants procurement hits 4-year high in FY24

Thermal power plants (TPPs), running on foreign coal, imported a record 41.81 million tonnes (mt) in the last financial year, ending March 2024, hitting a four year high following government’s mandate to run units at full capacity till October 15 to meet India’s rising electricity consumption.

Power Ministry data shows that imported-coal based (ICB) procured 41.81 mt of foreign coal, a whopping 104 per cent growth y-o-y from 20.53 mt in FY23. The installed capacity of ICB plants is around 25 gigawatts (GW), of which operational is around 18 GW.

Imports by ICB plants accounted for 64 per cent of the total imports in FY24. In FY23, in-bound shipments accounted for 37 per cent of the cumulative imports.

In-bound shipments by ICB plants in FY24 is the second highest so far. Before this, such plants procured a record 45.5 mt coal from foreign countries such as South Africa and Indonesia in FY20.

Companies such as Tata Power, Adani Power, Essar, Shree Cement and JSW Energy are operating ICB plants.

Earlier this month, the Power Ministry directed imported-coal based (ICB) power plants to continue operating at full capacity till October 15, 2024 in anticipation of rising power demand, which grew at around 8 per cent y-o-y in FY24.

Tariff Relief

The price of imported coal is higher compared to domestic, leading to higher tariffs. However, operating under Section 11 allows for the variable cost to be passed through, providing relief to operators.

According to Fitch Ratings, India’s power demand is likely to rise by 7-8 per cent y-o-y in April-June 2024 due to robust industrial activity, strong GDP growth and the Indian Meteorological Department’s (IMD) forecast of above-normal temperatures during summers.

Government and analysts expect power demand to grow at around 7 per cent y-o-y in FY24 on the back of rising consumption from industries and households. The peak power demand in FY23 hit 240 GW in September 2023 and projections are that it will hit 260 GW this summer.

Keeping thermal power plants well stocked is critical as the Indian Meteorological Department (IMD) expects extreme heat conditions during April to June with central and western India likely to face the worst impact.

As on April 25, the 17 operational ICB plants with 17.97 GW capacity have coal stocks 1.97 MT with a daily requirement of 1.84 lakh tonnes.

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