NTPC plans to import coal to avoid power shortage

The New Delhi-based company is aiming to procure cargoes starting from April when power consumption in India consistently soars on summer cooling demand.

India’s largest electricity producer has sought about 10 million tonnes of overseas coal since it issued its first international tender in two years in October, according to documents posted on its official website. State-run NTPC Ltd. is launching a campaign of coal imports as the nation seeks to avoid a new power crisis.

The New Delhi-based company is aiming to procure cargoes starting from April when power consumption in India consistently soars on summer cooling demand.

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Indian powers producers are switching back to the seaborne coal market as they rebuild stockpiles after last year’s energy crisis, avoiding relatively high global prices and assurances that domestic miners will lift output. While that’s a fiasco to the government’s agenda to prioritize local production, it should help overcome the 2021’s squeeze, when reserves dwindled to just a few days’ worths of supply.

Indian largest electricity giant-NTPC has already approved to buy 1 million tonnes of overseas coal from Adani Enterprises Ltd. and has published tenders, including one for 5.75 million tons issued last week, for the remainder.

“The tenders indicate that they expect a very strong summer demand for power and they want to keep all their supply options open,” said Rupesh Sankhe, Vice President at Elara Capital India Pvt. in Mumbai. “They have had coal quality issues with Coal India Ltd. recently and imports may be a way to hedge that risk too.”

NTPC, along with its joint ventures, has a generation capacity of about 68 GWs, of which 83% is fired by coal, according to its website. That makes the company India’s largest consumer of non-renewable resources, burning 170 million tons a year, or about a fifth of the country’s overall.