New Delhi: India is in the midst of an acute crisis of supply of coal and it may lead to huge power shortage in the country, according to a report by ‘Bloomberg’. The coal shortage is to such an extent that it may trigger a power crisis across India.
Coal-fired power stations had an average of four days’ worth of stock of the fuel at the end of last month. It is the lowest level in years, and down from 13 days at the start of August. More than half the coal-fired plants are on high alert for outages.
Coal produces approximately 70 per cent of electricity in India. Spot power rates have surged, while supplies of the fuel are being diverted away from key customers including aluminum smelters and steel mills.
Like China, India is contending with two key challenges: soaring electricity demand as industrial activity rebounds after pandemic curbs were lifted and a slump in local coal output. India meets around three-fourth of its demand through local outputs. However, heavy rains have flooded mines and key transport routes.
Operators of coal-fired plants are facing a dilemma – pay large premiums at domestic auctions to secure any available local supply or wade into a seaborne coal market where prices have soared to the highest on record. Already, the nation’s government is drawing up guidelines in case it needs to bring idle power stations back into action.
“Until supplies stabilise completely, we are likely to see power outages in some pockets, while customers elsewhere may be asked to pay more for power,” ‘Bloomberg’ has quoted Pranav Master, director for infrastructure advisory at credit ratings firm Crisil Ltd, as saying. “Because of imported coal prices shooting through the roof, plants running on domestic coal have had to do a lot of heavy-lifting. Things are expected to get better as the rains abate,” he added.
The impact on consumer prices would show up a few months later, when distribution utilities get regulatory approvals to pass on the cost, informed Mishra.