India's power plants face sharply depleting coal cover despite policy push

Coal inventories at India's thermal power plants have steadily declined through the monsoon season (June-September), even as the government pushes to improve coal availability.

Coal stocks at the country's thermal power plants have declined to an average of about 34.5 million metric tons so far in August, enough for only about 11 days of coal burn, down from 49.15 million mt at the start of June, equivalent to more than 18 days of burn, according to data from the Central Electricity Authority.

This is also lower than the 17 days of coal cover that plants held in August last year, highlighting a sharp deterioration in inventories despite continued reliance on domestic coal supplies.

The number of plants classified as having "critical" coal stocks has more than doubled, underscoring a widening gap between policy efforts to improve domestic coal access and the practical ability of individual plants to maintain sufficient inventories. Meanwhile, many power producers continue to adopt a wait-and-see approach to imported coal, deepening the disconnect.

Total coal stocks for 224,308 megawatts of thermal capacity stood at 34.04 million mt as of Aug. 18, 2026, down 34.5% from 51.97 million mt on the same day a year earlier, according to CEA data. The stock represented just 55% of the normative requirement, compared with 88% on Aug. 18, 2025.

The deterioration was accompanied by a rise in the number of plants marked critical to 31 from 15 a year earlier. Twenty-four domestic-coal plants were classified as critical on Aug. 18, compared with seven in the year-earlier report.

Government measures

The central government has introduced a series of measures to improve coal availability, including the revised SHAKTI policy, which aims to broaden eligibility for coal linkages and expand access to domestic coal.

Yet the CEA data indicate that the problem is increasingly one of distribution, logistics, and plant-level availability rather than of aggregate national coal availability.

"Low stocks are the new normal now. Power plants are focusing on maintaining enough coal to meet peak power demand rather than keeping sufficient inventories to support continuous base-load generation. There is still no urgency to buy imported coal because of high delivered prices," an India-based power-sector end user said.

The deterioration is particularly evident across several large state-owned plants. Madhya Pradesh's Sanjay Gandhi Thermal Power Station had only 71,000 mt on Aug. 18, equivalent to 19% of its normative requirement, compared with 397,500 mt, or 105%, a year earlier. Maharashtra's Koradi TPS had 143,400 mt, or 20% of the norm, compared with 536,800 mt, or 77%, a year earlier. Telangana's Yadadri TPS had 119,500 mt, or just 13% of the norm, against 320,900 mt, or 140% of the norm, in August 2025.

The CEA's plant-level remarks also point directly to logistical constraints. Sanjay Gandhi and Shree Singaji in Madhya Pradesh were flagged for coal supply issues involving South Eastern Coalfields/North Eastern Coalfields and the railways. Koradi was flagged for a generating company rake diversion requirement and unloading issues. Andhra Pradesh plants were flagged for ensuring adequate rail programs with Eastern Coalfields and Mahanadi Coalfields. Telangana's Singareni and Yadadri were flagged for supply from Singareni Collieries Company Limited.

"Domestic coal supply has been affected due to monsoons and limited railway rakes and the consumption pattern is not uniform. Moreover, imports were also down due to power plants' high prices, so it's impacting their stocks levels."

Inventory pressure

India's thermal coal imports by power plants fell 22% to 12.28 million mt in the first quarter of FY2026-27 (April-March). Imports by power plants designed to run exclusively on imported coal totaled 10.50 million mt in the April-June period, down 15% from the year-earlier period, while imports by plants using imported coal for blending fell 39% to 1.77 million mt, according to CEA data.

The pressure on inventories has also increased as coal-fired generation has risen. India's coal-fired generation reached a record 114.7 TWh in July, up 13% year over year, according to CEA data. Weak and uneven monsoon rainfall reduced hydropower generation, while coal plants were required to meet evening peak demand after solar generation declined.

The federal coal ministry data, however, pointed to a stronger aggregate coal supply. Coal production rose 7.5% year over year in July 2026 to 69.75 million mt, while dispatches rose 18% to 86.85 million mt. State-owned Coal India said in a statement that its July supply marks the highest-ever coal offtake for the month of July in any financial year.

The commercial coal sector also remains a longer-term source of potential supply rather than an immediate solution. Of 132 commercial coal blocks allocated as of June 2026, only 15 had begun production, according to figures cited by an official of the Minister of State for Coal and Mines and reported by local media.

With imported coal still considered expensive on a delivered basis, plants appear increasingly willing to run with thinner inventories. "Monsoon conditions kept buyers sidelined, with stronger demand expected only from late August/September," according to the latest CERA International Thermal Coal Market Forecast.

India imported 12.9 million mt of coal from Indonesia, its largest supplier, in the monsoon months of June and July, down from 14.3 million mt in the same period the previous year, according to data from S&P Global Commodities at Sea data.