New Delhi: NTPC Ltd, India’s biggest electricity producer, is considering building its first power plant to run completely on imported coal to prepare for local shortages and to take advantage of a fall in global prices.

The state-run generator is studying the option to set up a 2,400 megawatt plant in Pudimadaka in Andhra Pradesh, director finance Kulamani Biswal said in an interview.

NTPC is weighing the plan amid delays in starting its first coal mine and Coal India Ltd, the nation’s monopoly coal producer, missing output targets. In addition, a drop in the international prices of thermal coal and rising domestic freight costs have narrowed the difference with imported fuel.

“Considering the challenges of railway logistics, such a plant would be crucial to our expansion strategy," Biswal said. “Coal prices have been falling and we expect them to either fall further or remain at the same levels."

Thermal coal prices at Australia’s Newcastle port have declined more than 15% in the past year, the fourth year of declines since their peak in 2010, because of oversupply in Australia and the US.

Coal India, which accounts for more than 80% of India’s production of the fuel, missed its output and sales targets for the year ended 31 March. The company produced 462.5 million tonnes, falling short of its 482 million-tonne goal. Sales were 471.5 million tonnes, 4% short of the target.

NTPC’s plans to produce coal from its own mines suffered a setback after it terminated a contract with Australia’s Leighton Holdings Ltd to develop and operate the Pakri Barwadih mine in the eastern state of Jharkhand. The 230 billion-rupee ($3.9 billion) contract was scrapped after delays in execution, the utility said in a May 12 statement. Reuters

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