India asks regulator to allow utilities to import up to 30% of coal needs

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A worker sits on a truck being loaded with coal at a railway coal yard on the outskirts of the western Indian city of Ahmedabad November 25, 2013. REUTERS/Amit Dave

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NEW DELHI, May 19 (Reuters) - India has asked its federal power regulator to allow power generators to import up to 30% of the country's coal requirement until March next year, according to a power ministry letter seen by Reuters.

India had asked utilities to import 10% of its total requirement, or about 38 million tonnes, to blend with local coal as demand was outstripping supply, adding that delivery of 19 million tonnes had to be ensured by end-June. read more

However, in a May 18 letter to the secretary of the Central Electricity Regulatory Commission (CERC), a federal power ministry official citing a "public interest" provision in India's electricity law said it was "imperative" power generators be allowed to use more imported coal.

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The demand to allow more imported coal reflects the severity of the domestic shortage, which has caused the country's worst power cuts in more than six years as a heatwave bakes vast swathes of South Asia. read more

"In the public interest, CERC is hereby directed to immediately allow the higher amount of blending of up to 30% with imported coal in compliance with the decision of the Ministry of Power, without beneficiaries' consultation up to 31st March," the letter read.

It was not immediately clear if beneficiaries meant power distribution companies or end-consumers. The power ministry did not immediately respond to a request seeking comment.

The power ministry official said CERC had denied permission to some state government-run utilities to import, as the quantity could potentially violate rules which restrict generators from blending imported coal beyond a certain extent without the consent of beneficiaries.

"There is an urgent need to save domestic coal to build reasonable coal stocks at power plants before the monsoon," the official said in the letter, adding that power plant inventories were depleting at a "worrisome" rate.

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Reporting by Sudarshan Varadhan; Editing by Kirsten Donovan

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