Don’t need to import coal, Telangana tells Centre on 10% blending rule

The KCR government in Telangana has said that the Union power ministry directive to import 10% of its coal requirement for thermal power stations was not financially viable for the state.

Telangana’s K Chandrasekhar Rao government has decided against implementing the Union power ministry directive to import 10% of its coal requirement for thermal power stations, saying it was not financially viable for the state, people aware of the matter said.

The K Chandrasekhar Rao government in Telangana wrote a letter to the central government last week conveying its decision against the Centre’s 10% coal import rule. (ANI)

A senior official in Telangana’s energy department said the state government’s decision has been conveyed to the central government in a letter last week. Special chief secretary (energy) Sunil Sharma wrote to the Centre making it clear that Telangana will not go in for import of coal from foreign suppliers as it was financially and practically not viable for the state, the official said.

“The cost of imported coal at present is anywhere about US $ 140-150 ( ₹10,800) per tonne. In fact, 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.

In comparison, the official added, Telangana’s thermal power generating company/companies pay about ₹4,000 per tonne for coal sourced from the state-owned Singareni Collieries Company Limited.

The state’s five thermal power generating stations require about 50,000 tonnes of coal every day. The Centre’s 10% rule will mean that the state should import 5,000 tonnes of coal. This will be a costly affair and raise the cost of generating power, he added.

On May 18, the Union power ministry told states to place orders for coal import with Coal India Limited (CIL) by May 31, 2022 and underlined that if imported coal doesn’t start arriving at power plants by June 15, the defaulting power generating companies (Gencos) will have to increase their imports to the extent of 15%.

It added that domestic coal allocation will also be reduced by 5% if the blending of imported coal with domestic coal does not start by June 15. The ministry also threatened to cut domestic coal supplies by 30% for companies that don’t place indents with the CIL.

Telangana power generation corporation (TSGenco) chairman and managing director D Prabhakar Rao told HT that the five thermal power plants in Telangana already have a coal supply agreement with Singareni Collieries Company Limited.

“We do not depend on imported coal at all, 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.

Rao said the effective price of coal will be much higher because Telangana doesn’t have access to the sea and will need to bring the imported coal from Chennai Port in railway takes. “The transportation cost is going to be an additional burden. Hence, it is not viable,” Rao said.

On Thursday, CIL floated its maiden tender to import coal – a first for the world’s largest coal miner which produces 80% of India’s coal.

Experts said the Centre’s decision was taken in anticipation of the coal shortage that was expected to worsen over the next few months in view of the monsoons.

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.

Data from the Central Electricity Authority (CEA) showed that on Wednesday, 80 of 150 power plants in the country running on domestic coal had critically low coal levels. Of the 15 plants designed on imported coal, eight were marked “critical”. Another eight plants were not in operation due to the ongoing coal shortage. To be sure, the situation in June so far has been better than the crisis faced in March-April, when up to 90 of the 150 plants running on domestic coal had critically low stocks.

Neighbouring Andhra Pradesh on Sunday declared that the state will import 31 lakh tonnes of coal.

“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.