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India is the latest country to face an acute power crisis that threatens to hamper its recovery from the epidemic, with authorities warning that power plants are running dangerously on coal.
According to India’s Ministry of Power, the 155 thermal power plants in Asia’s third-largest economy had only four days of coal reserves as of Friday, less than 1 day of supply in early August. Of the plants observed daily, more than half have less than three days of stock.
Power shortages have already begun to hit the economy of neighboring China, where the manufacturing sector suffered its first contraction since the epidemic began last month. Beijing has instructed a state-owned energy company to ensure the supply of fossil fuels to prevent a winter shortage, which has helped push up the prices of other major importers, including India.
“The [Indian] The power sector is facing a kind of perfect storm, ”said Ardeep Nandi, an Indian economist at Nomura Financial Advisory and Securities. “You are in a situation where demand is high, your supply is low from the domestic side and you have not re-imported imports.”
In recent months, India’s power producers have reduced coal imports as international prices have risen in the face of strong global demand from Europe as well as China. Prime Minister Narendra Modi’s government has also promoted India’s policy of economic self-reliance as a guiding principle for recovery from the epidemic.
Yet India’s supply of cheap domestic coal, about 50 per cent of which comes from the huge, inefficient state-owned enterprise Coal India Limited, has failed to keep pace with rising domestic demand.
The power ministry said over the weekend that heavy rains in the coal-mining area in September had damaged both coal production and supply, when the plant itself failed to build up its stock before the monsoon season. It has instructed power companies to build stockpiles, in anticipation that demand levels are likely to remain at “current levels”.
In an economy where coal-fired power plants now generate about 66 percent of the electricity, the deficit now increases the likelihood of impending large-scale power cuts, high consumer electricity prices, or power producers hitting the bottom line. From about 62 percent in 2019.
“Basically, we focused so much laser-focused on recovering demand from the epidemic এটি it’s such a central stage যে that all these supply aspects weren’t up to the agitation until they started biting,” Nandi said.
India’s electricity consumption rose sharply to 124.2bn units in August and September, from 106bn units in the same two months of 2019, as the sharp decline in Kovid-1 cases এবং and strong vaccine rates অনেক encouraged many Indians to resume normal activities.
However, coal from Indonesia, one of India’s major suppliers, rose from 60 600 / ton in March to $ 200 / ton in September, discouraging imports.
Although India has long been keen to reduce its heavy reliance on imported coal, which has been a major contributor to its trade deficit, Nandi said New Delhi urgently needs to help Coal India increase production, power producers need to increase imports, regardless of price.
He said if the government does not increase production or increase imports, the power connection will be cut off.