Global seaborne coal prices have been running at high levels recently due to the continued fermentation of the U. S.-Iran conflict. In the face of this situation, the Indian government is preparing an emergency measure to consider issuing special import instructions to power plants that rely on imported coal, and make every effort to cope with the upcoming summer peak power consumption by increasing power generation capacity and rationally planning fuel procurement.
At present, the Ministry of Electricity of India is evaluating a related proposal. The core of the proposal is to activate the relevant provisions of Article 11 of the Electricity Act. According to this clause, the government has the right to issue instructions to import coal-fired power plants to increase power generation. In order to strengthen the power supply capacity.
According to Argus (Argus), citing two government officials and a person familiar with the private power company, with the summer peak approaching and the pressure of rising prices of imported coal, discussions on restarting the emergency directive have entered an accelerated stage, but so far, the government has not yet finalized the plan.
In fact, India had previously introduced a similar emergency directive, which officially expired on June 30, 2025 after more than three years of continuous operation.
The increase in international coal prices is closely related to the interruption of Qatari liquefied natural gas (LNG) supply. Earlier, Iran launched air strikes in response to attacks by the United States and Israel, which directly blocked Qatar's LNG supply, which in turn led to higher international coal prices. This change has not only boosted coal prices in South Africa and Australia, but also had a significant impact on the pricing of the Indonesian coal market, which has been tight due to delays in government approval of coal production quotas in 2026. In addition, in order to prevent potential LNG supply gaps and actively increase coal stocks in regions such as Taiwan, China has further exacerbated the rising trend of global coal prices.
According to Argus's latest market evaluation data, on February 27, the price of 5000 kcal/kg thermal coal (GAR) off-shore (FOB) of Kalimantan Port in Indonesia reached US $69.60/ton, a new record since early January 2025. On the same day, the price of 4200 kcal/kg ultra-flexible bulk carrier (Supramaxes) thermal coal offshore at the port was 54.31 USD/ton, also reaching its peak since June 2024.
At the same time, the price of 5500 kcal/kg thermal coal (NAR) in South Africa and Australia fell slightly last week. Prior to this, on February 20, the FOB price of Richards Bay Coal Terminal (RBCT) in South Africa and the FOB price of Newcastle Port in Australia climbed to US $89.69/ton and US $86.65/ton respectively, both reaching the highest level since December 2024. In addition, due to the conflict in the Middle East, the cost of international freight continues to rise, which further raises the CIF price of coal.
Summer power shortage risk cannot be ignored
according to an official, the Central Electricity Authority of India (as the technical support agency of the Ministry of Electricity) pointed out in one of the forecast scenarios that the power shortage in India is expected to reach 10 to 12 gigawatts (GW) during the summer peak period. This is also an important reason for the Indian government to actively promote the restart of emergency directives.
The Indian Meteorological Department (IMD) stated that the country's summer is coming ahead of schedule this year. Temperatures in many regions will continue to rise in the next few days, and there is a high probability of abnormally hot weather. High temperature weather will directly lead to a surge in demand for air conditioning, which in turn will lead to a significant increase in overall power consumption.
Officials said that if the new emergency directive is implemented, it will effectively promote imported coal-fired power plants to improve power generation efficiency. At present, the total installed capacity of imported coal-fired power generation in India has exceeded 18.7 GW, accounting for about 9% of the total installed capacity of coal-fired power generation in the country and 4% of the total installed capacity of electricity.
However, the operating utilization rate of these imported coal-fired units has been at a low level due to the limitation of the long-term power sales agreement, which failed to fully realize the transmission coverage of rising fuel costs. According to the relevant provisions of Article 11 of the Electricity Law, the authorities may appropriately allow cost transmission, and at the same time allow power companies to sell surplus electricity on the power exchange and provide other related operating preferential policies to improve unit utilization.
It should be noted that the emergency directive issued by India this time is more inclined to a preventive measure than an emergency response to the current fuel shortage.
Officials from a power company compared the current situation with that in May 2022: in the summer of 2022, India's demand for electricity suddenly surged, resulting in rapid consumption of coal stocks in power companies, while domestic coal supply could not keep up with the pace of demand growth; In addition, the conflict between Russia and Ukraine triggered a sharp rise in international coal prices, and the government had to issue an emergency directive to force imported coal-fired power plants to expand power generation.
The current situation is significantly different: thanks to the steady growth of domestic coal production and the relatively weak demand for electricity, India now has the highest level of coal stocks in history. It is estimated that the total coal inventory of power plants, coal producers, in-transit transportation links, ports and storage yards is far less than 0.2 billion tons. For the new demand for power generation, most of India can rely on domestic coal-fired power plants to meet-such power plants are the core strength of the country's power supply, in January this year, coal-fired power generation in India's total power generation accounted for up to about 86%.
A government official also revealed that in addition to planning to restart the emergency import directive, the government is also guiding imported coal-fired power plants to try to use domestic coal. Its core goal is to ensure a stable and orderly power supply during the summer.
According to data Interocean by shipbrokers, India's thermal coal imports in 2025 will be 0.16015 billion tons, a decrease of 3% from the previous year, or about 5.2 million tons. According to industry estimates, among the total thermal coal imports in 2025, the import scale of power companies is about 50 million tons.
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