India mulls strategic reserves for coal, gas imports

India may consider creating strategic reserves for imported thermal coal and natural gas to tide over "supply shocks", as it looks to raise coal dispatches to utilities to avert a power crisis.

India's power secretary Alok Kumar, the senior most bureaucrat in the power ministry, said high prices of fuel such as imported thermal coal will make it "very challenging" to attain energy security in the absence of a strategy to have reserves.

"So, let us start thinking [and] discussing about keepingstrategic reserves of these fuels - gas, oil, imported coal - maybe so that economies are able to adjust and tide over these supply shocks for about a month or so," he said last week at an online summit organised by industry body the Confederation of Indian Industry. "That will be a small cost vis-a-vis the cost of disruptions and uncertainties which countries face."

The comments come as Indian authorities are looking at ways to boost inventories at utilities. The power ministry asked utilities to import coal for blending with domestic fuel to support generation and power supplies.

As many as eight utilities with a combined capacity of 8GW have already exhausted their stocks, according to data issued by Central Electricity Authority (CEA).A total of 93 plants with a combined capacity of about 113GW had 1-7 days of inventories. Coal-fired plants, with a combined capacity of 202.8GW, account for more than half of India's overall power generation capacity.

India already has strategic petroleum reserves managed by state-controlled Indian Strategic Petroleum Reserves. Strategic reserves for thermal coal and natural gas could provide support to seaborne LNG and coal cargoes. Indian thermal coal receipts fell compared with a year earlier for a second consecutive month in August, despite firm power-sector coal burn that triggered a stockdraw by utilities. India imported 156mn t of thermal coal in 2020, according to customs data.

India's August LNG imports fell by 3pc from a year earlier, according to preliminary oil ministry data. LNG imports of 2.87bn m³ of pipeline gas equivalent fell from 2.97bn m³ a year earlier.

By Saurabh Chaturvedi