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India will have surplus domestic coal by the financial year 2025-26 that can be used to run the imported coal-based (ICB) power plants, Union Coal Minister Pralhad Joshi said on Thursday.

Speaking to reporters here, he asserted that the government is aiming at boosting domestic production and reducing fossil fuel imports.

“We might ask the ICBs to consider changing the technology at their plants to run on domestic coal. It will not be compulsory but domestic coal would be available for them at competitive rates and they can benefit from it. Even imported coal for blending would also come down,” he said.

Currently, India has 17 Gw of operational ICBs, located mostly in the coastal states of Gujarat, Andhra Pradesh and Tamil Nadu, among others. These plants run on imported coal which is of better quality than domestic production. There is at least a difference of 2500-4000 kcal in the calorific value between the Indian coal and the coal imported from Indonesia and South Africa. The imported coal with a higher calorific value has lesser ash content and better-burning properties than average Indian coal. The power generation units of ICBs are built in compliance with imported coal specifications.

In 2021, a plan was floated by the government to urge ICBs to run on domestic coal with an eye on reducing forex outgo. However, it went on the back burner as the country faced domestic coal shortage owing to a rise in power demand. The Indian mineral and metals sector imports non-thermal coal or coking coal as the country does not have many coking coal mines.

The minister said by 2030, India will have a coal production capacity of 1.5 billion tonnes (bt). “As there will be surplus coal, the idea is to deploy it in the best possible use cases. The policy decision on coal gasification is a step in that direction. With the production of natural gas and variants from coal, we are aiming for a reduction in fossil fuel imports and not just coal,” the minister said.

The Union Cabinet on Wednesday approved Rs 8,500 crore financial incentives for coal gasification projects in three categories.