India is weighing ideas to mandate imported coal blending at power plants as coal stocks at many facilities have crumbled amid logistics issues in recent months, government sources with direct knowledge of the discussions have told Reuters.
If India initiates a mandatory blending of imported coal, it would be the first time it will have done so since 2024.
The idea is to mandate power plants to blend up to 5% of imported coal with domestically sourced coal, according to the discussions that are still in the early stages.
Most plants in India run on domestic coal, and this has been India’s policy for two years—to raise domestic production and reduce exposure to imports.
However, soaring power demand in recent months and logistics issues with delivering the coal from mines to power plants have depleted coal inventories at many thermal power plants much faster than in previous years.
The share of coal-fired power plants in India running on critically low levels of coal inventory has soared in recent weeks to nearly 40% of all operational coal plants.
As many as 74 coal-fired power plants had fewer than three days’ worth of coal stocks as of the September 19-20 weekend, sharply higher compared to 60 in the previous week.
Despite the low stock levels, India doesn’t face any critical supply issues, as recent domestic transportation issues have depleted the inventory at coal power plants in several states amid rising power demand.
Many coal-fired power plants in India, where coal is still the single largest electricity generator, saw their coal stocks fall below the critically low level of 25% as electricity demand rises amid the strong El Niño, but supply has been disrupted by monsoon rains.
Amid higher power demand and oil and gas disruptions at the Strait of Hormuz, India will see a 4.2% rise in its total coal demand to 1.353 billion tons this year, reversing last year’s temporary slight drop, the International Energy Agency (IEA) said in its Coal Mid-Year Update 2026 published this month.
By Tsvetana Paraskova for Oilprice.com
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