Domestic coal prices down, centre asks Tangedco to cut import by 2 per cent

Following requests from discoms, union power ministry has agreed to supply additional coal
For representational purposes
For representational purposes

CHENNAI: The Union Power Ministry has directed the Tamil Nadu Generation and Distribution Corporation (Tangedco) to reduce coal imports from 6% to 4% for this fiscal year. An official order in this regard is expected soon.

This is expected to reduce the financial burden of the power utility, as according to officials, domestic coal (including the cost to transport) is at least `2,000 lesser per tonne than the imported coal. With Tangedco’s annual coal requirement at 223.4 lakh tonnes, a 2 % reduction in purchase of imported coal would mean the power utility’s purchase will come down by roughly 4.5 lakh tonnes this financial year.

A senior official told TNIE that in January 2023 all discoms were instructed to import 6% of their total coal requirement as the centre was struggling to supply coal due to poor extraction from mines, labour issues, climate change and other factors.

Despite approval from the power ministry to import coal, the discoms, including Tangedco, had faced challenges due to high prices, particularly during the Russia-Ukraine war. “At that time, coal prices were $150 per tonne, and now it is $83,” the official said.

He said following requests from discoms, the power ministry agreed to supply additional coal and advised discoms to reduce coal imports by 2%. “During the previous financial year 2023-24, Tangedco imported 6.25 tonnes of coal from Indonesia,” he added.

Highlighting the additional coal needs for the 800 MW North Chennai Thermal Power Station (NTPS) Stage III and upcoming projects, another official said, “Technically, NTPS must operate with 50% domestic and 50% imported coal. Discussions are under way to manage this.”

Additionally, the Standing Linkage Committee of the Ministry of Coal has recommended a grant of bridge linkage (temporary, short-term coal linkage) from Singareni Collieries company in Telangana to meet the domestic coal requirement for the upcoming 3,300 MW thermal plants - Ennore SEZ plant (2 x 660 MW), ETPS Expansion (1 x 660 MW) and Udangudi stage-I (2 x 660 MW), the official added.

Currently, Tangedco’s coal requirement is 223.4 lakh tonnes per year for its existing thermal plants, which have a combined capacity of 4,320 MW. Domestic coal is procured from Mahanadi Coalfields in Odisha through a fuel supply agreement for 195.63 lakh tonnes and from Singareni Collieries in Telangana through a memorandum of understanding for 25 lakh tonnes, totaling 220.63 lakh tonnes.

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