India is facing a severe coal shortage, with coal stock at thermal power plants left with only a handful of days’ worth of fuel.
As per reports released by India’s Central Electricity Authority (CEA) on Tuesday, 63 of the 135 coal-fired power plants in the nation have two days or less of coal supplies, while coal stocks at 17 of them have been run down to zero.
Further, 75 plants are supercritical, running with only five days’ worth of coal or less.
As coal accounts for almost 70% of the country’s electricity generation, it is feared that after China, India which is the third-largest economy of Asia will face a major energy crisis.
But why are we facing a coal shortage?
The current coal crisis in India can be attributed to several reasons namely:
External Reason: Among others, a prominent and inevitable reason for the crisis is the extended monsoon. In September, the heavy rains which hit the coal mining areas adversely impacted the production and delivery. While on a usual basis three-quarters of the nation’s coal demand is met domestically, the heavy monsoon this year flooded mines and key transportation routes resulting in the failure of plants in building their stocks pre-monsoon.
Demand-Supply imbalance: A severe imbalance in demand and supply has been noted despite increased buying from Coal India, which produces most of the coal mined in India. The demand has completely outstripped the supply. The power demand in India has been surging as businesses begin recovery after being struck down by the pandemic. The power consumption has exceeded the pre covid levels in India. In August 2019, the power consumption which stood at 106 billion units has reached 124 billion units in August 2021. Now, while the increased demand indicates economic recovery, the reduced supply of coal puts the nation in a critical situation.
Imports: Due to the outbreak of the pandemic India witnessed a major fall in imports, as the price of commodities doubled. The hiked price On the back of robust global demand, from Europe and China, has forced India to cut down on its coal imports, resulting in the shortage of coal supply in the nation.
The current shortage which is beyond normal has so far resulted in no power outages. However, looking at the situation at hand one cannot be sure for how long it can be maintained.
The power demand in India is likely to increase going forward, as India adds 28.2 million consumers to its power supply and gears up to celebrate its biggest festival ‘Diwali’.
India’s Power Minister RK Singh while speaking to The Indian Express warned that the coal supply may not be “comfortable” for the “next five [to] six” months.
If the situation goes out of hand and India is unable to fix the coal shortage, a nation similar to China will face a power crunch triggered blackouts for households and will be forcing factories to cut production, resulting in the delayed reopening of the Indian economy.
Moving ahead, to constrain the impact of the crisis on the nation, the government of India has asked Coal India to ramp up production.
Furthermore, India will likely amp up its coal imports regardless of financial cost to avoid China like situation.