India unlikely to face China-like power crunch situation

While China still reels under electricity shortage, a similar crisis now looms on India where 70 per cent of electricity generation is through coal-fired power stations. Shortage of coal on the domestic front, rising prices of imported coal, and an increased demand for electricity due to robust economic growth are the reasons for the current situation.

October is normally a monsoon-impacted mining output trough in India. But this year, beside the post-monsoon supply shortage and the surge in demand due to strengthened economic activity, there is a sharp fall in imports owing to high prices in international markets. Stock build-up in April-June 2021 was also deficient compared to pre-COVID years.

Coal stocks have reached a crisis point as most power plants in the country are left with 0-3 days stockpile, according to media reports.

While China still reels under electricity shortage, a similar crisis now looms on India where 70 per cent of electricity generation is through coal-fired power stations. Shortage of coal on the domestic front, rising prices of imported coal, and an increased demand for electricity due to robust economic growth are the reasons for the current situation.

Meanwhile, Coal India Limited (CIL), the Indian government-owned coal mining and refining corporation and the largest coal producing company in the world, has assured of scaling up production to meet the present demand. But it can do so in a short time only by importing coal, which has risen from around $70/ton in November 2020 to $240/ton now.

Coal India produces more than 600 million tonnes of coal, all of which is domestically consumed. In addition, another 300-400 million tonnes is imported from countries like Australia, South Africa and Indonesia to meet domestic needs. While Coal India has not raised prices since 2018, coal prices in international markets have been rising this year—a factor that led to a drop in imports.

Last week, CIL issued a statement that the present low coal stock at thermal power stations could have been averted if thermal power plants had maintained the 22 days stocks, as mandated by the Central Electricity Authority (CEA). “Coal stocks were at a comfortable level of 28.4 MTs at the beginning of the fiscal and even at the end of July coal stock at power utilities was 24 MTs at par with the previous five year average of the same period. It was in August that stock at power plants fell by over 11 MTs,” the CIL statement said.

To monitor the supply of coal to thermal power generation plants, the Indian government has constituted an inter-ministerial team comprising representatives from the ministries of power and railway, CIL, CEA, and Power System Operation Corporation Limited.

At present, it seems unlikely that India’s power situation will worsen like China. However, there may be temporary outages in few regions in the coming days, according to various reports ascribed to officials from the ministry of power.

Fibre2Fashion News Desk (RKS)