India's largest power producer, NTPC Limited, said the company is stepping up coal imports to avoid power crunch caused by a lack of coal.
NTPC has imported a total 10 million tonnes of seaborne coal since the company's first tender for coal imports in two years in October last year, according to a document released by the company. Although the Indian government has been encouraging local mines to increase production and achieve self-sufficiency for years, the supply crisis, which happened in the second half of last year, has raised more concerns about the fuel.
NTPC said the goal is to ensure the security of coal supply from April this year, when India's electricity demand will usually increase with the rising temperature.
While global coal prices are still at high levels, Indian power producers are returning to the seaborne coal market to replenish stocks to avoid another inventory crunch that they faced in the second half of last year.
It was understood that the comany issued a tender for 5.75 million tonnes of seaborne coal last week and has now reached an agreement with Adani to purchase 1 million tonnes of seaborne coal.
"Looking at the demand from the current tender, India's power demand is expected to be very strong this summer," Rupesh Sankhe, vice president of Elara Capital in Mumbai, said. "Recent quality issue with coal supplied by Coal India is also one of reasons to increase imports. This will somewhat mitigate the risk of coal shortages."
NTPC and its joint ventures are said to have a combined generating capacity of 68 GW, 83% of which is coal-fired. It is also the largest consumer of coal in India, with an annual coal consumption of 170 million tonnes, accounting for about one-fifth of India's total coal consumption.
(Writing by Alex Guo Editing by Tammy Yang)
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