India's dependency on coal imports expected to increase this fiscal year

Higher demand for thermal power and lower-than-required growth in domestic coal output may push up coal imports to 62 million tonnes this fiscal, says India Ratings.

According to the rating agency, imported coal requirement is likely to increase to 62 million tonnes this fiscal from 56 million tonnes in FY2018 to meet the incremental power generation.

"With the demand for power likely to remain healthy in the rest of FY19 and thermal capacity contributing to the required growth, coal availability becomes a key determinant. Considering the historical growth rate of domestic non-coking coal production and offtake, imported coal requirement will increase, as against FY18 when imported coal usage declined," Ind-Ra said in a statement issued here.

According to Ind-Ra, in a scenario of lower-than-required growth in domestic coal output, short-term power prices would remain firm and are likely to be determined by the marginal cost of energy production undertaken using imported coal.

The agency has also maintained a stable-to-negative outlook on the power sector for the remaining FY19, despite a rise in electricity demand and an increase in short-term prices.

"The stable-to-negative outlook continues to reflect Ind-Ra's expectation of a continued low plant load factor of 60-62 percent of coal-based thermal power plants over the rest of FY19, because of large capacity additions in the past five years and domestic coal availability challenges," it said.

It further said the country's dependence on thermal power generation is likely to remain high in the absence of any substantial improvement in power generation from other sources.

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