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India ‘Asks Utilities to Order $33bn in Gear to Lift Coal Output’

Modi government has asked power companies to order $33 billion worth of equipment this year to ramp up more coal power for the rest of this decade

A loader put coal in a truck at the Topa mine in Jharkhand, eastern India (Reuters).

Indian officials say the Modi government has asked power companies to order $33 billion worth of equipment this year to ramp up additional coal-fired power for the rest of this decade.

Normally, the government leaves the timing of tendering timing to the companies themselves, but two government officials said the request was made because the nation is struggling to meet significant electricity demand.

The unprecedented move, which would result in record tendering in a year for the equipment by major power firms such as state-run NTPC and SJVN, as well as by private companies Adani Power and Essar Power, will help add 31 gigawatts (GW) in the next 5-6 years, the sources said.

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Expediting equipment orders for new coal-fired plants was discussed at a meeting held by Power Minister Manohar Lal, soon after the formation of Prime Minister Narendra Modi’s federal cabinet early last month, the sources said.

The targets are ambitious given the country has ordered equipment for about 2-3 GW capacity annually in prior years, barring last year’s orders for 10 GW.

Rush to add more coal plants

India is rushing to add fresh coal-fired plants as it is barely able to meet power demand with the existing fleet in non-solar hours.

Post pandemic, the country’s power demand scaled new records on the back of the fastest rate of economic growth among major economies and increased instances of heatwaves.

India saw its biggest power shortfall in 14 years in June, and had to race to avoid night time outages by deferring planned plant maintenance, and invoking an emergency clause to mandate companies to run plants based on imported coal and power.

State-run Bharat Heavy Electricals Ltd (BHEL), which bagged all power equipment contracts in auctions in the last year, is likely to get most of the contracts for the new equipment, the sources said.

Larsen & Toubro, the only other power equipment producer in the market, had not participated in most of last year’s bids, they sai