(Bloomberg) -- NTPC Ltd., India's largest power producer, is making a rare move to buy domestic coal in the spot market, underscoring rising concerns about a potential squeeze on summer energy supply.
The state-owned generator plans to issue a tender for 3 million tons in the next week or so, according to people familiar with the plan, who asked not to be named as the information isn't yet public.
NTPC didn't immediately respond to an emailed request for comment.
India is bracing for another summer of grueling heat that's likely to push power demand to a record and pressure the country's grid, which relies on coal for about 70% of electricity generation. Weather officials have already warned there's a higher probability of extreme temperatures in coming months, stoking worries about a repeat of the deadly heat waves last year.
Read more: India Forecasts Heat Waves After Hottest February Since 1901
NTPC, which largely relies on contracted volumes from Coal India Ltd., also wants to boost competition and encourage its major supplier to improve quality by adding alternative sources among private mines that are entering production, the people said.
The country's government expects peak power demand to climb to 229 gigawatts in April, a total that's likely to outpace growth in local coal supplies. That'll force companies to rely on costlier imports and on purchases at domestic auctions.
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