Three of India’s most industrialised States (Tamil Nadu, Maharashtra, Gujarat) plan to import 10.5 million tonnes (mt) of coal in the coming months as officials scramble to stop power cuts, a move that could force international coal prices to new highs.
Maharashtra plans to import 8 mt for “merging purposes”, while Gujarat will place orders for 1 mt and Tamil Nadu government was targets importing 20% of its coal requirements, adding that it had already placed orders to import 1.5 mt. The three States are the among the biggest power pickers in the country, accounting for nearly a third of India’s electricity demand in 2021.
The move could lead to a further increase in international coal prices, which are already trading near record highs due to fears of a supply crisis following the suspension on imports from Russia. The main beneficiaries of India’s buying spree are likely to be Coal miners in South Africa, Australia and Indonesia , though those producers are already increased by the recent hike in demand.
Many Indian States, including Andhra Pradesh, Gujarat, Maharashtra, Haryana, Punjab, Rajasthan and Tamil Nadu are already facing power cut. Officials have also decided to request an emergency note in the country’s electricity law to allow currently inoperative power plants designed to run on imported coal to pass on higher costs to distribution companies.
The move would accelerate operation of plants run by Adani Power, Essar Power, CLP India and IL&FS Tamil Nadu, which have sharply keep on production due to high global prices.