Centre has asked power producers to import up to 10% of their coal needs amid fuel shortages, and has warned States that federal companies will curb their power supplies if they are found selling electricity on power exchanges to cash in on surging prices.

India is the world’s second largest coal producer, with the world’s fourth largest reserves, but a steep surge in power demand that has outstripped pre-pandemic levels means state-run Coal India’s supplies are no longer enough.

Increased economic activity after the second wave of the pandemic has driven up demand for coal leading to a supply shortage, forcing north Indian States like Bihar and Jharkhand to undertake power cuts for up to 14 hours a day. On Tuesday, the Power Ministry asked utilities, reliant on local coal, to import up to 10% of coal needs to blend with the domestic grade to meet increased power demand, a Ministry note reviewed by Reuters said. The move could push up already high global coal prices.

These power plants usually only import small amounts of coal. Over half of India’s 135 coal-fired power plants, which supply about 70% of the country’s electricity, have fuel stocks that will last three days or less.

Central government-controlled power producers such as NTPC Ltd. sign long-term power-purchase agreements with distribution firms for the sale of most of their power output. But 15% of their power is controlled by the Centre, which sells this so-called ‘unallocated’ power to the States.

The Ministry said if any State had a surplus of power, it should inform the federal government which would allocate that electricity to States that needed it.

Some States, instead of supplying electricity to consumers, are imposing rolling power cuts and selling power at higher prices to energy exchanges, the Ministry said in a statement.