India on Monday invoked an emergency law to force power plants that run on imported coal to maximise output ahead of an expected record surge in power usage this summer, according to an internal power ministry notice seen by Reuters. Many of India's power plants that use imported coal, including those owned by Adani Power (ADAN.NS) and Tata Power (TTPW.NS) in the western state of Gujarat, have not operated at full capacity recently because they have found it difficult to compete with power generated from cheap domestic coal.

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Reuters reported last month on India's plans to use the law to maximise coal power output. In the notice sent to all imported coal-based power plants, the ministry said it expects them to operate at full capacity and sell power to buyers on exchanges. India's imported coal plants have a total capacity of 17 gigawatts.

The directive comes into effect on March 16, giving plants the time to import coal ahead of the expected surge in consumption. It would remain valid till June 15. The variable tariff for these plants will be fixed by a panel appointed by the government, the notice said, adding that the panel will use the index with lowest cost of imported coal for calculating the variable tariff for every plant.

The ministry expects a peak demand of 229 gigawatts in April and to address that India would need to operate thermal capacity of 193 gigawatts that month, the notice said.
India expects its power plants to burn about 8% more coal in the financial year ending March 2024, with increased economic activity and erratic weather to continue to boost growth in demand for power. The emergency law has been invoked for the second time in as many years. 

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