Union Power Ministry Directs Tangedco to Cut Coal Imports by 2% Amid Falling Domestic Prices
In a significant move aimed at reducing financial strain on Tamil Nadu Generation and Distribution Corporation (Tangedco), the Union Power Ministry has instructed the utility to decrease its coal imports from 6% to 4% for the current fiscal year. This directive, expected to be formalized soon through an official order, comes in response to requests from various discoms struggling with high international coal prices.
According to officials familiar with the matter, domestic coal costs, including transportation, are significantly lower by approximately ₹2,000 per tonne compared to imported coal. With Tangedco’s annual coal requirement standing at 223.4 lakh tonnes, a 2% reduction in imported coal procurement translates to a savings of roughly 4.5 lakh tonnes this fiscal year alone.
An official highlighted that amidst challenges such as labor issues, climate impacts, and low extraction rates from mines, discoms were initially advised to import 6% of their coal requirement in January 2023. However, the surge in international coal prices during events like the Russia-Ukraine conflict, where prices soared to $150 per tonne, prompted a reevaluation.
“Now, with coal prices stabilizing around $83 per tonne, the Ministry has responded to discoms’ pleas by increasing domestic supply and advising a reduction in imports,” the official explained.
During the previous fiscal year (2023-24), Tangedco imported 6.25 million tonnes of coal from Indonesia to meet its energy needs, underscoring the utility’s reliance on imported fuel sources despite efforts to boost domestic production.
Looking ahead, discussions are underway to manage coal supplies for upcoming projects like the 800 MW North Chennai Thermal Power Station Stage III, which ideally requires a balanced mix of domestic and imported coal. Plans include leveraging temporary bridge linkages from Singareni Collieries in Telangana to meet the growing demand posed by expansions like the Ennore SEZ plant and Udangudi Stage-I.
Currently, Tangedco sources 220.63 lakh tonnes of its coal from domestic suppliers, primarily Mahanadi Coalfields in Odisha and Singareni Collieries, under strategic agreements to power its existing thermal plants with a collective capacity of 4,320 MW.
As the utility navigates these adjustments, the Ministry’s directive marks a proactive step towards stabilizing energy costs and ensuring sustainable power generation across Tamil Nadu.
