India’s coal crisis erupts as demand for electricity rises, Reuters hits record global prices


ছবি Reuters file photo: Coal workers travel behind their lorries in Barsana, India, June 13, 2017. Reuters / Cathal McInton / File photo


Written by Sudarshan Vardhan

CHENNAI (Reuters) – Indian utilities are scrambling to secure coal supplies as imports have declined following rising demand for electricity from the industry and a push to power plants due to listed global prices.

More than half of India’s 155 coal-fired power plants have reserves of less than three days, much less than the federal guidelines that recommend at least two weeks of supply, according to government data.

India’s coal shortage crisis

Fuel prices for power generation are rising globally as the demand for electricity increases again with the growth of industry, the supply of coal is tightening and liquefied.

India is competing against buyers like China, the world’s largest coal consumer, which is under pressure to increase imports amid a severe power crisis.

Rising oil, gas, coal and electricity prices are pushing up global inflationary pressures and slowing the economic recovery from the Kovid-1 pandemic epidemic.

“The supply crisis is expected to continue, with the powerless sector facing heat because imports are the only option to meet demand but rising costs.” Prices will continue to rise.

“The list of coal in (Indian) thermal power plants will gradually improve by next March.”

Indian power producers bound by long-term contracts with distribution utilities cannot bear higher input costs unless a clause is written in the contract to pass such costs.

Traders and utilities officials said the purchase of power plants dependent on imported coal has been stopped due to high prices. The websites of state utilities, the major coal importer, showed no new tenders this month for finding new cargo.

Coal prices from major exporters have recently reached all-time highs, with Newcastle prices in Australia rising nearly 50% and Indonesian exports rising 30% in the past three months.

According to Reuters, the Indonesian coal price standard in September was seven times higher than the same quality of fuel sold by Coal India to Indian utilities.

“Traders who bought coal from Coal India at spot auctions are killing. They are selling at a 50-100% premium,” said a senior official in charge of coal sourcing at a major Indian utility operator.

State-run Coal India says higher global coal prices and freight rates this week have pushed imported coal-dependent utilities to reduce power generation, leading to increased reliance on domestic coal-fired power plants.

Despite having the fourth largest reserves, India is the second largest importer of coal in the world. Coal India accounts for about three-quarters of its total consumption, accounting for more than 0% of the country’s total production.

India coal import by supplier

Industrial Power Demand Surge

Power plants in India are also struggling with the growing demand of the industry as economic activity is recovering from the latest wave of Kovid-1 pandemic epidemic.

Electricity consumption in industrialized states, including Maharashtra, Gujarat and Tamil Nadu, increased by 13.9% to 21% in the last three months of September.

The three states account for about one-third of India’s annual electricity consumption. Half of the country’s annual electricity consumption is in industries and offices. In the last two quarters of the fiscal year ending March 2021, the residential and agricultural sectors were the main drivers of electricity consumption after the first wave of coronavirus.

India’s industrial state drives electricity demand

“We have seen a huge increase in industrial demand this year,” Shahmina Hossain, managing director of Gujarat’s power regulator, told Reuters.

Although there have been no major power outages in India, the deficit has nearly quadrupled from the negligible levels recorded last year, Posco data shows.

The shortage has so far been mostly confined to Uttar Pradesh, such as Uttar Pradesh, Bihar and Kashmir, the data showed.

“Domestic spending has increased by about 10% in the last two years due to work from home and air conditioning,” a senior Tamil Nadu government official told Reuters.

“After the industry opened up after the second wave, industries are king,” the official said.

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