In a first, thermal power major NTPC starts procuring commercial coal

Thermal behemoth issues tender for 3 million tonne coal from privately owned mines

NTPC Limited, NTPC — NTPC passes through all costs incurred in generating power to the final electricity supply rate.

3 min read Last Updated : Apr 14 2025 | 12:21 AM IST

India’s largest power generation company, NTPC Limited, has for the first time started procuring coal from privately owned commercial coal mines in the country. Until now, NTPC had been sourcing domestic coal exclusively from state-run Coal India (CIL) through long-term fuel supply agreements (FSAs).

Senior company executives said NTPC issued tenders over the past six months to procure 3 million tonnes (mt) of coal from privately owned mines, and supply has already begun.

“We are receiving coal from commercial mines. The supply from these mines is directly to our plants. The tender was for NTPC’s non-pithead power plants,” said a company executive. Non-pithead plants are located more than 500 kilometres from coal mines, while pithead power plants are situated nearby.

Executives said that coal from commercial mines is “slightly costlier” than FSA coal from CIL, but still cheaper than imported coal.

In addition to sourcing from CIL, NTPC also imports higher-grade coal — mainly from Indonesia — for blending with domestic coal and to offset any shortfall in supply from CIL. Imported coal accounts for about 8–10 per cent of NTPC’s overall coal demand.

“Soon, we aim to replace imported coal with commercial coal. We are aiming for zero imported coal in the near future,” a senior official said.

NTPC passes through all costs incurred in generating power to the final electricity supply rate. Company executives told Business Standard the overall cost impact would be minimal.

“Coal from these private mines is delivered directly to our plants. This is unlike CIL’s coal, which typically needs to be picked up from rail sidings, often involving road transport. The added cost of commercial coal includes this transportation, which is handled by the miner. Direct delivery is both cost-effective and ecologically efficient,” the executive said.

NTPC’s annual coal requirement stands at around 240–250 mt, with CIL providing the bulk of the supply. In recent years, NTPC’s captive (self-owned) mines have also begun production. Last financial year, they met up to 15 per cent of NTPC’s total coal requirement.

Since 2020, the Centre has been auctioning commercial coal mines to lift domestic coal production and reduce import dependency.

The Ministry of Coal has auctioned 125 coal mines, with a combined production capacity of 273.06 mt per annum. The government opened up the coal mining sector to allow private players to sell coal.

These captive mines have been awarded to private companies and state-owned utilities over the past decade, following a 2014 Supreme Court ruling that cancelled all coal block allocations made over the previous two decades.