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Moody's Investors Service on Tuesday said that large coal-importing countries, including India, is expected to ramp up the output of domestic coal to strengthen energy security and lessen dependence on the import of fossil fuels. 

The Centre has recently mandated state-owned Coal India (CIL) to be prepared to import 12 million tonnes (MT) of coal for power utilities for the next 13 months as an emergency measure to avoid a shortage of coal.

"Large coal-importing countries such as China and India will also seek to ramp up domestic coal production to enhance energy security and reduce reliance on coal imports. Chinese coal production surged 15 per cent in March 2022," Moody's Investors Service said.

CIL aims to increase production by around 12 per cent in the current year, Moody's said.

The state-owned firm accounts for more than 80 per cent of the country's coal output.

Moody's Investors Service further added that metallurgical and thermal coal prices will remain high, but below recent peaks.

However, the supply constraints were easing, it said.

Prices for copper, zinc, nickel and aluminium reflect low inventories and supply risk related to Russia. Supply, which was tight even before disruptions from the military conflict, will remain constrained, the agency said.

"Steel and raw material prices have begun to soften as panic buying recedes, supply-chain issues reduce global demand, COVID-related lockdowns reduce consumption in China, and inflationary cost pressures and higher interest rates weigh on sentiment and economic growth," it added.

Govt making all efforts to avoid reoccurrence of power outages

According to industry experts, the government is making all efforts to build up stock of coal to avoid the reoccurrence of power outages, which happened in April on account of shortage of the fossil fuel.

On May 18, the Ministry of Power had warned that if orders for coal imports are not placed by May 31, 2022 and the imported fuel does not start arriving at power plants by June 15, the defaulter gencos will have to increase their imports to the extent of 15 per cent.

Further, if blending with domestic coal is not started by June 15, then the domestic allocation of the concerned defaulter's thermal power plants will be further reduced by 5 per cent, the ministry had said in a letter to state governments and power generation companies (gencos), including independent power producers (IPPs).

In April, Coal Secretary A K Jain had attributed the low coal stocks at power plants to several factors such as heightened power demand due to the boom in the economy post-COVID-19, early arrival of summer, rise in the price of gas and imported coal, and sharp fall in electricity generation by coastal thermal power plants.

In April, several parts of the country witnessed power outrages on account of coal shortages.

He had said a lot of measures are already underway to enhance the total power supply in the country.

Gas-based power generation, which has fallen drastically in the country, has aggravated the crisis, he had said.

With agency inputs

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