India's state power plants resume coal imports amid domestic shortages

NEW DELHI, May 17 (Reuters) - State-run thermal power plants in India’s coastal states have again begun buying overseas coal due to domestic coal shortages, government and utility officials said, in a setback for the country’s long-term plans to eliminate imports.

After no significant imports in 2017, government utilities in the states of Tamil Nadu and Andhra Pradesh have ordered several cargoes of coal since the beginning of this year, two officials said.

Andhra Pradesh, a state on India’s east coast, has imported 200,000 tonnes of coal so far this year and could import as much as 1 million tonnes in 2018, said Ajay Jain, a senior official in the state energy department.

“Coal has been a real problem. If we had depended only on coal, it would have been a disaster,” Jain said.

Tamil Nadu Generation and Distribution Corp, a government utility in the southwestern India state, has imported about 1.4 million tonnes of coal this year, after going a year without imports starting at the end of 2016, according to Vikram Kapoor, the chairman of the utility.

An increase in coal imports by state-owned power utilities undermines a pledge by Indian Prime Minister Narendra Modi’s government to cut thermal coal imports to zero by March 2018.

But state-owned Coal India Ltd, the world’s second-biggest coal miner by production, is grappling with a shortage of trains to carry the fuel from its mines to the country’s power plants.

Both Andhra Pradesh and Tamil Nadu are waiting for the wind energy season to start in June, when they expect dependence on coal to ease, Jain and Kapoor both said.

Domestic logistic bottlenecks, regulatory changes and surging power demand will likely increase 2018 thermal coal imports after two years of declines, Reuters reported in February.

Imports rose over 15 percent in the first quarter of 2018.

State-run utilities could add up to 5 million tonnes to India’s coal imports in 2018 because of the Coal India shortages, a senior executive from Adani Enterprises, India’s biggest coal trader told Reuters in February.

India imported 144.5 million tonnes of coal in 2017, according to data provided by American Fuels & Natural Resources, a Dubai-based coal trader.

Imports would be a boost for international miners such as Indonesia’s Adaro Energy, Australia’s Whitehaven Coal or global commodity merchant Glencore.

Maharashtra, a western coastal state, has floated a tender for procuring 1 million tonnes of coal to augment its existing stock and meet growing power demand, a senior official at Maharashtra State Power Generation Co, the state utility, said on Tuesday.

Gujarat, Maharashtra’s northwestern neighbour, plans to ramp up imports by 400,000 tonnes this year, according to a senior state government official.

Karnataka, another southern state, has resisted imports so far. But that might change, according to Kumar Naik, the managing director of state utility Karnataka Power Corp.

Two of Karnataka’s three major thermal power plants had almost run out of coal stockpiles, according to government data on May 14.

$1 = 68.0800 Indian rupees Reporting by Sudarshan Varadhan; Editing by Sanjeev Miglani and Christian Schmollinger