India Pushes For Re-Design In Coal Power Plants To Utilise Indigenous Coal

The "Strategy Paper on Coal Import Substitution" report recommended power plants to work on the design of their boilers and plants to accommodate the specifications of Indian thermal coal

India's central coal ministry proposed modifications to the design of coal-based power plants to promote the utilisation of indigenous coal, intended to bolster energy security and decrease reliance on imported coal.

Citing the report from S&P Global Commodity Insights, the proposal, outlined in a report released by an inter-ministerial committee on March 7, stated suggestions to implement higher tariffs on imported coal with high gross calorific value (GCV)

According to ANI, the "Strategy Paper on Coal Import Substitution" report recommended that power plants depending upon imported coal should retrofit their boilers and plants to accommodate the specifications of Indian thermal coal.

It is suggested that any expenses associated with retrofitting be passed on to customers following the installation of flue gas desulphurization (FGD) plants, which lower emissions of sulfur dioxide from flue gases.

The coal ministry estimated that India's dependence on imported coal will decrease to below 15 per cent by the fiscal year 2024-25.

In the fiscal year 2022-23, India imported 238 million metric tonnes (MT) of coal, with imported coal-based power plants procuring 20 million MT. Additionally, domestic coal-based power plants consumed 35 million MT, while the non-regulated sector (NRS), including industries like cement and sponge iron, utilised 125 million MT.

Reports Suggest To Feed Indigenous Coal Over Imports

The report also recommends requiring domestic coal-based plants to give preference to domestic coal over imports. provided there is adequate domestic supply and no logistical constraints.

The research suggests partnering with the Ministry of Coal to collect sector-specific coal requirements and ministries in charge of NRS sectors to streamline coal import substitution initiatives. The purpose of this partnership is to support efficient demand planning and substitution strategies.

Additionally, in contrast to the present flat rate of Rupee 400/mt, the research suggests redesigning the Goods and Services Tax (GST) compensation cess on coal imports by putting forth a revised approach depending on coal value and quantity. Because of variations in gross calorific value, there is a tax incidence variance between domestic and imported coal, which is reflected in this proposed modification.

India's domestic coal production has been increasing consistently, and as of March 6 of this fiscal year, it had surpassed 900 million MT. By the end of the current fiscal year, it is projected to surpass 1 billion MT, further bolstering efforts to minimise imports of coal and encourage energy self-sufficiency.