India backs down from coal import targets for utilities, notice shows

That move followed two of India's worst recent electricity crises, in October and April, which forced the federal government to reverse a long-standing policy to slash coal imports. According to the Aug 1 notice, the power ministry, having reviewed coal availability at various states, has agreed to let the utilities decide the amount of coal they need to import.

India has eased coal import targets for utilities owned by state governments and private companies, according to an internal notice reviewed by Reuters, setting aside a target for them to import 10% of their coal needs. Instead, state government-run utilities and private power producers should assess the amount of coal they need to import, according to the notice which was sent to government officials and private utilities on Aug 1 and reviewed by Reuters.

In May the power ministry had said it would cut domestic fuel supplies to state government-run utilities if they did not import 10% of their coal needs for blending with domestic coal. That move followed two of India's worst recent electricity crises, in October and April, which forced the federal government to reverse a long-standing policy to slash coal imports.

According to the Aug 1 notice, the power ministry, having reviewed coal availability at various states, has agreed to let the utilities decide the amount of coal they need to import. "It has been decided that now onwards, states/independent power producers and Ministry of Coal may decide the blending percentage after assessing the availability of domestic coal supplies," the power ministry said.

India's annual power demand is seen growing at its fastest rate in at least 38 years while global coal prices are trading at near-record levels. Demand for air-conditioning has surged due to an unrelenting heatwave this year while economic recovery as COVID restrictions ease has pushed power demand to record highs.