India to beat China in coal imports soon: study

India will soon surpass China as the world's biggest thermal coal importer as the government seeks supplies for power producers struggling with a fuel shortage, says a Bloomberg report citing a Citigroup study.

Purchases from abroad may exceed 118 million metric tons in 2012, compared with China's 102 million tons, said Daniel Hynes of Citigroup Inc in Sydney.

Electricity companies have mothballed plans to spend a record $36 billion to build new capacity to meet the government's ambitious target of adding 100,000 MW of capacity in the 12th Five-Year Plan beginning April.

Imports may rise after the prime minister ordered state-run Coal India Ltd, the world's largest producer of the fuel, to sign 20-year fuel supply agreements with the nation's power producers to meet 80 per cent of their needs, resorting to imports if necessary.

Coal India will face penalties if it fails to sign binding FSAs, said a notice posted on the PMO's website last week.

Power plants commissioned up to 31 December 2011, along with companies that have entered into long-term agreements with power distribution companies and are likely to begin production by 31 March 2015, will be eligible to sign the fuel security deals. (See: CIL told to sign fuel pacts with power utilities).

India's economy grew at the slowest pace in two years in the July to September quarter as power and factory output slowed. At the same time, China is reducing its import needs by adding twice as much coal-production capacity this year than in 2011, according to the National Energy Administration.

The deficit between the demand and supply of domestic coal in India may rise as high as 150 million tons by 2014 should the country fail to increase locally sourced supplies by 6 per cent this year, according to Hynes.