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10% import mandate: Telangana opposes coal import order
A senior official of the Telangana energy department said on condition of anonymity that state special chief secretary (energy), Sunil Sharma, had written to the Centre sometime last week stating that the state government won’t go in for import of coal from foreign suppliers as it was financially and practically not viable for the state.
The Telangana government has strongly resisted the latest order from the Centre on the mandatory import of 10 per cent of its coal requirements for thermal power generation, an official aware of the developments said on Friday.
A senior official of the Telangana energy department said on condition of anonymity that state special chief secretary (energy), Sunil Sharma, had written to the Centre sometime last week stating that the state government won’t go in for import of coal from foreign suppliers as it was financially and practically not viable for the state.
The special chief secretary was referring to a missive from the Union ministry of power on May 18 to all the states that the thermal power stations run by them would have to import 10 per cent of their coal requirements from foreign suppliers, to overcome coal shortage in the country, the above-cited official said.
The Union ministry also warned that if orders for coal imports were not placed with Coal India Limited (CIL) by May 31, 2022, and the imported fuel does not start arriving at power plants by June 15, the defaulter power generating companies (Gencos) will have to increase their imports to the extent of 15 per cent, the official added.
Further, if the blending of imported coal with domestic coal does not start by June 15, then the domestic allocation of the concerned defaulter’s thermal power plants will be further reduced by 5 per cent, the ministry said.
The ministry also warned that if the state power generators and independent power producers do not place their indents with the CIL for imported coal, they would face a 30 per cent cut in the domestic coal supplies.
According to the energy department official quoted above, the five thermal power generating stations in Telangana require about 50,000 tonnes of coal every day. As per the central government’s order, the state has to import 5,000 tonnes of coal, which would be a costly affair, he said.
“Currently, the cost of imported coal is around the US $ 140-150 per tonne. It was more than 200 dollars per tonne three months ago. This is going to be a huge burden on the state,” the official said.
Telangana power generation corporation (TSGenco) chairman and managing director D Prabhakar Rao told HT that all the thermal power plants in the state had a coal supply agreement with Singareni Collieries Company Limited.
“We do not depend on imported coal as we get sufficient coal supply from Singareni. Why should the Centre make it mandatory for us to import coal from foreign suppliers?” he asked.
Moreover, Telangana is a landlocked state, and it doesn’t have a sea coast to import coal.
“For just 10 per cent of coal, we have to import it at Chennai Port and from there, it has to be brought to the thermal power stations in Telangana through railways. The transportation cost is going to be an additional burden. Hence, it is not viable,” Rao said.
A power sector expert, who preferred anonymity, said the decision of the Centre to import 10 per cent of the coal was taken in anticipation of the severe shortage of coal during the coming months, particularly in September and October when there would be heavy rains and the coal production gets severely affected.
“That is why the Centre wants the power plants to have buffer stocks for at least 10 days. However, the imported coal at a high cost would result in a steep rise in variable cost of power, and the burden will ultimately fall on power consumers,” he said.
Interestingly, neighbouring Andhra Pradesh has given consent to the Centre’s order for the mandatory import of 10 per cent of its coal requirements. State energy minister Peddireddy Ramachandra Reddy said in a statement last Sunday that steps had been taken to import 3.1 million metric tonnes of coal from other countries.
“Andhra Pradesh can afford to import because it has ports at Visakhapatnam, Krishnapatnam and Gangavaram. We don’t have such a facility,” the Telangana power official added.
The official said that based on the requests of some landlocked states like Chhattisgarh, Madhya Pradesh and Uttar Pradesh, the Centre is contemplating importing coal directly through Coal India Limited and supplying the same to these states. “Yet, Telangana won’t be able to buy the imported coal because of its high cost,” he added.
