India's largest power producer NTPC issued a tender in the spot market, which has been uncommon in the past, highlighting the company's concern about the possibility of another shortage of energy supply in the summer.
NTPC plans to issue a tender for about 3 million tonnes this week, according to people familiar with the matter. The country is preparing for possible energy shortages as India's power demand is expected to hit a record again this summer, putting pressure on the country's power grid.
Coal-fired power generation accounts for about 70% of India's electricity mix. According to India's meteorological department, the country faces an increased likelihood of extreme heat in the coming months, sparking concerns that last year's power shortage crisis caused by heatwave will be repeated.
Usually, most of coal used by NTPC comes from contract supply by state miner Coal India. So, the move also indicates that the power company wants to encourage private suppliers to participate in so as to expand supply sources.
The Indian government expects India's peak demand for electricity will rise to 229 GW in April, and as local coal supply will likely not be able to meet this demand, the power company will rely more on higher-cost imported coal and seek to buy domestic coal through competitive bidding.
(Writing by Alex Guo Editing by Harry Huo)
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