India’s state power giant looks to coal imports to avoid crunch

India’s largest electricity producer is stepping up a campaign of coal imports as the nation seeks to avoid a new power crunch.

State-run NTPC Ltd. has sought about 10 million tons of overseas coal since it issued its first international tender in two years in October, according to documents posted on its website. The reversal after years of supporting the government’s push to favor local producers underscores concern about a repeat of fuel shortages that triggered outages and power restrictions last year.

The New Delhi-based company is aiming to secure cargoes starting from April, when power consumption in India typically surges on summer cooling demand.

Indian power producers are returning to the seaborne coal market as they rebuild stockpiles after last year’s energy crisis, ignoring relatively high global prices and assurances that domestic miners will lift output. While that’s a setback to the government’s agenda to prioritize local production, it should help avoid any repeat of 2021’s squeeze, when reserves dwindled to just a few days’ worth of supply.

NTPC has already agreed to buy 1 million tons of overseas coal from Adani Enterprises Ltd. and has published tenders, including one for 5.75 million tons issued last week, for the remainder.

The “tenders indicate that they expect a very strong summer demand for power and they want to keep all their supply options open,” said Rupesh Sankhe, vice president at Elara Capital India Pvt. in Mumbai. “They have had coal quality issues with Coal India Ltd. recently and imports may be a way to hedge that risk too.”

NTPC, along with its joint ventures, has generation capacity of about 68 gigawatts, of which 83% is fired by coal, according to its website. That makes the company India’s largest consumer of the fossil fuel, burning 170 million tons a year, or about a fifth of the country’s total.