India warns of fuel-supply cuts to utilities if coal imports delayed

Most state-run utilities are debt-laden and will have to import more coal to fire their power plants due to reduced local supply

India's power ministry on Wednesday said it would cut domestic fuel supply to state government-run utilities by 5% if they do not import coal for blending by June 15, as officials struggle to address rising power demand.

A heatwave pushed power use to a record high in April, leading to the worst electricity crisis in more than six years and forcing India to reverse a policy to slash coal imports.

"If blending with domestic coal is not started by 15.06.2022 then the domestic allocation of the concerned defaulter thermal power plants will be further reduced by 5%," the power ministry said in a statement.

It said state government-run utilities, most of which are debt-laden, will have to import more coal to fire their power plants due to reduced local supply if they delay placing orders and supplies do not arrive by June 15.

India had set state and federal government-run utilities a target to import 10% of their coal needs for blending with domestic coal. The power ministry has asked all utilities to ensure delivery of 50% of the allocated quantity by June 30, another 40% by end-August and the remaining 10% by the end of October.

"If the imported coal for blending purposes does not start arriving at the power plants by June 15, all the defaulter generating companies would have to import coal for blending purpose to the extent of 15%," the ministry said.

"Not much blending has taken place in the months of April and May," it noted, and said plants which have not yet started blending must ensure they use a 15% blend of coal until October and a 10% blend from November until March 2023.