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Disrupted Coal Supply, High Electricity Demand Could Spell a Power Crisis For India | Explained

Ahead of the festival season, the coal supply crisis seems to be deepening as 64 non-pithead power plants are left with less than four days of the dry fuel stocks. (File photo: PTI)

Ahead of the festival season, the coal supply crisis seems to be deepening as 64 non-pithead power plants are left with less than four days of the dry fuel stocks. (File photo: PTI)

Zohra Chatterji, former chief of Coal India Limited, said that if the crisis persists, then India will struggle to get back on track.

India is facing a severe shortage of coal as the shortage of it could leave thermal power plants without fuel. Supplies across the majority of coal-fired thermal power plants in India have dwindled to just days worth of stock.

It is unlikely how long the situation will last, but it is likely to affect other sectors including manufacturing, business at a time when the country enters into festive season.

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News18 takes a look at the crisis:

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Why is it so Massive?

India relies heavily on thermal power plants for its electricity needs and therefore coal remains as the major fuel behind India’s electricity supply. It is the second largest importer, consumer and producer of coal, and has the world’s fourth largest reserves. It mainly imports from Indonesia, Australia and South Africa. The shortages of coal have stoked fears of potential black-outs in parts of India, where 70% of power is generated from coal. Experts say the crunch could upset renewed efforts to ramp up manufacturing.

As economies open up in the rest of the world, the demand for importing power-generation fuels, such as coal, has risen. Similarly in India, the power consumption in August jumped by nearly 20 percent from the same month in 2019, before the pandemic struck, the power ministry said.

India is facing two challenges- soaring electricity demand as manufacturing and business rebounds after Covid-19 curbs were lifted and a fall in local coal output.

Nobody expected economic growth to revive like this and for energy demand to shoot up so quickly, said Vibhuti Garg, an energy economist at the Institute for Energy Economics and Financial Analysis.

How much coal is left?

As per data from the Central Electricity Authority (CEA), over half of the country’s 135 coal-fired power plants were left with an average of less than four days of coal stocks in September-end, down from the average of 13 days at the start of August.

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The crisis comes as the country enters the festive season in October, when the electricity demands are higher. According to a BBC report, Power consumption in the last two months alone jumped by almost 17%, compared to the same period in 2019.

While the global coal prices increased by 40 percent, India’s imports fell to a two-year low. India is now relying heavily on the domestic supply as the imports remain low.

Anil Kumar Jain, Coal secretary, said that currently, deliveries to power plants are short by between 60,000 and 80,000 tonnes a day.

Further impact

The crisis is likely to cost inflation, industry experts say. They say that the electricity shortage could result in retail inflation, affection prices of oil to food.

Zohra Chatterji, the former Chief of Coal India Limited told BBC that if the crisis persists, then India will struggle to get back on track.

Here’s What the Government says

Union Power Minister RK Singh told The Indian Express that in relation to the current level of coal stocks, the situation is way “beyond” normal. He also said that the shortage might last for the next five to six months.

Singh clarified that the shortage has not yet led to a power crisis. He added that there is no need for rationing and insisted that the production will be able to meet the demand over the next few days, The Quint said in a report.

Meanwhile, Delhi CM Arvind Kejriwal wrote a letter to PM Narendra Modi on Saturday, requesting the intervention of the latter’s office for diversion of adequate coal and gas to power plants supplying electricity to the national capital.

Many non-power consumers of coal, and import-based power plants have curtailed production due to high foreign prices. While large scale outages like those in China seem unlikely in the immediate future, some pockets of the country might face power outages, officials say.

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first published:October 09, 2021, 15:23 IST