Sudarshan Varadhan

NEW DELHI (Reuters). India’s power Minister has asked states to boost coal imports in the next three year, sources have told Reuters. This is a reference to continued support of already high global prices.

R K Singh, Power Minister puts forth a lengthy timeline for a significant policy change suggested by the federal government this month. The request was made to utilities owned by states governments to increase coal imports.

Although it went against the country’s long-held goal of buying less coal from foreign countries, this move is widely considered a temporary solution to power shortages caused by rising temperatures and increased industrial activity.

Singh said Tuesday that India is the second largest coal importer in the world and could contribute significantly to global demand through 2025.

According to a representative of the power ministry, “The States were requested to keep importing” because it would take at most 2025 before the private sector can produce substantial output. Additionally, there will be a shortage of domestic trains for moving coal about,” he said.

A second official from the power ministry, who was not present at the meeting, said that states were requested to enter long-term agreements to secure supply and lower prices and purchase rail wagons in order to solve logistics problems.

Minister to State Government Officials: These remarks are in fact a direction because New Delhi controls the domestic production and distribution.

India’s severe fuel crisis was highlighted by India’s decision to import more coal. Indian utilities’ coal inventories have fallen to their lowest levels for at least nine year, while electricity demand has been growing at an alarming rate for at least 38 of the past 38 years.

In December, as part its policy of significantly reducing coal imports the government stated that “no import other then very necessary should occur”. According to the government, March saw a significant decrease in coal imports despite a surge in demand for power. The reduction was attributed to major reforms.

India imported 160.84 Million tonnes of coal in April 2021 and December 2021. This is 13.8% less than a year ago.

Because they are required to pay high coal prices, this move could increase state government debt.

At the meeting, two people from state governments attended as well as another person from the federal government.

According to one official of the state government, “Only last summer they instructed us to lower imports.” They want us to continue to import as much as possible, citing supply limitations. This mixed message is very confusing.”