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India backtracks on import-only coal power plant amid fuel glut

India’s biggest electricity producer plans to fuel a proposed power project on the country’s southern coast with domestic coal, switching from its original plan to use overseas supplies equivalent to almost 9% of this year’s forecast imports.The state-owned company NTPC Ltd made the decision after the federal power ministry and the state government of Andhra Pradesh, where the 4,000 megawatt Pudimadaka project is located, asked it to scrap plans, NTPC technical director A.K. Jha said. The project may cost about Rs.24,000 crore ($3.6 billion), based on Bloomberg calculations using an estimate of Rs.6 crore per megawatt.

India’s coal supply situation has reversed since 2014, when the plant was proposed as the company’s first to be powered completely by overseas supplies. State miner Coal India Ltd, the world’s biggest producer of the fuel, has since increased output faster than the country’s consumption. While lower Indian imports spell bad news for seaborne coal prices, adequate domestic supplies have helped the nation’s power producers save costs and avoid the risks of price and currency fluctuations.