Jan. 30 (Bloomberg) -- NTPC Ltd., India's biggest utility, plans to import 67 percent more coal next fiscal year and switch to lower grades, to curb the impact of record fuel prices as its meets soaring electricity demand.

The generator may have to pay 39 percent more to import the fuel in the year starting April, Chairman T. Sankaralingam said by telephone from New Delhi today. At current prices NTPC will on average pay as much as $75 a metric ton for imports next year compared with $54 in the year to March 31, he said.

Supply constraints and rising Chinese demand pushed prices of coal burnt in power stations to a record $93.35 a ton last week at Australia's Newcastle port, according to the globalCOAL NEWC index. NTPC will seek annual contracts to supply cheaper grades for its 18 coal-fired plants, Sankaralingam said.

``We have been talking to people for lower grade coal because our boilers are all designed for low-grade coal'' from India, he said. Almost all of NTPC's imports are from Indonesia and it plans to increase overseas purchases to 4 million tons next year from 2.4 million tons this fiscal, he said.

NTPC, which reported a 15 percent fall in third-quarter profit to 17.8 billion rupees ($452 million) today, needs to ensure coal supplies to meet its target of almost doubling capacity to 51,000 megawatts in the next four years from the current 28,664 megawatts.

Adding Capacity

The utility plans to spend 130 billion rupees to add power capacity in the year starting April, Sankaralingam said in an interview Dec. 27. India faces a 13 percent power shortage during peak hours and the government has set a target to boost output by 60 percent in the next five years to 210,907 megawatts.

Annual coal contract prices will rise more than earlier forecast because of an increase in demand from India and constraints on global exports, JPMorgan Chase & Co. said today.

``Our import bill will certainly rise and we have to look at all options to contain costs,'' Sankaralingam said.

PT Bumi Resources, Indonesia's largest coal exporter, said yesterday prices of the commodity may rise another 60 percent this year after quadrupling this decade. Indonesia is the world's second-largest exporter of thermal coal.

Prices of coal used by power stations may climb to between $125 a metric ton and $150 a ton this year, Dileep Srivastava, Bumi's head of investor relations, said in Jakarta. The company's sales rose as much as 24 percent to $2.3 billion last year, he said.

Own Mines

NTPC plans to develop six coal mines for which it received mining licenses from the Indian government to help the company ensure coal supplies and control costs, the chairman said.

The generator also plans to invest as much as $1.3 billion on buying stakes in coal mines abroad, Sankaralingam said on Dec. 27.

NTPC shares fell 9.95 rupees, or 4.7 percent, to 201.7 rupees a share at the close of trade in Mumbai today.

To contact the reporter on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.

Last Updated: January 30, 2008 07:54 EST