Govt weighs mandatory blending of imported coal at power plants, sources say
The Indian government is considering a mandate for thermal power plants to blend up to 5% imported coal with domestic supplies to address a severe fuel supply crunch. This move marks a reversal of previous policies aimed at reducing import dependency as electricity demand remains unexpectedly high.
Why it matters
Energy security is critical for India's industrial growth, and this policy shift highlights the volatility of global coal prices and domestic supply chain pressures.
India is considering telling power plants to blend imported coal with domestic supplies for the first time since 2024, three government sources said, to ease a supply crunch that has pushed monthly spot power prices to their highest since 2022.
Higher global coal demand and rising freight costs are set to make imports costlier, as Indonesian prices are up about a fifth since May while Russian prices are 14% higher and South African rates are up 19%, traders say.
Under the plan being discussed by officials of the Power Ministry, thermal power plants would have to blend up to 5% imported coal with domestic coal, said the sources, who are directly aware of the matter.
The plan represents a sharp reversal in New Delhi’s drive to boost domestic coal production and curb imports, which helped prune overseas supplies over the past two years.
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