The electricity sector in India is suffering a severe crisis in light of the shortage of stocks and weak imports of coal at a time during which the demand for electricity has increased as a result of the economic recovery from the consequences of the Corona pandemic.
To fill this shortfall, Indian utilities are scrambling to secure coal supplies as inventories fall to critical lows after increased demand from industries for electricity.
The crisis was also exacerbated by the slowdown in imports after global prices rose to record levels and put power stations on the edge of the abyss, according to Reuters.
Government data shows that more than half of India’s 135 coal-fired power plants have fuel stocks of less than 3 days, well below government guidelines that recommend a supply of no less than 14 days.
Besides the coal crisis, fuel prices in India have witnessed a record high since last Friday, ranging from natural gas to gasoline and diesel, and ranged from state to state according to the local tax rate.
Gasoline and diesel prices were raised in several parts of the country again – last Saturday – by 25 and 30 baisas per liter, respectively, according to the local Economic Times.
Severe Energy Crisis
Global electricity fuel prices are rising as demand for electricity recovers with industrial growth, and supplies of coal and liquefied natural gas shrink.
India is competing with buyers such as China, the world’s largest coal consumer, which is under pressure to increase imports amid a severe electricity crisis.
Rising oil, gas, coal and electricity prices are fueling pressures and slowing the economic recovery from the coronavirus worldwide.
Merchants and officials at public utilities said that purchases made by power plants powered by imported coal were weak due to the high prices.
India’s average weekly coal imports fell from August to late September – as global coal prices rose more than 40% to an all-time high.
Imports were more than 30% higher than the average for the first 7 months of the year.
Total imports in the last week amounted to less than 1.5 million tons, the lowest in two years.
The websites of major coal-importing government utilities did not show any new tenders for new shipments this month.
Coal prices from major exporters have also risen to recent highs, with Newcastle – Australia’s largest coal export port – up nearly 50% and Indonesian export prices up 30% in the past 3 months.
Indonesian Coal Price Hike
Indonesia’s coal price benchmark for September was more than 7 times higher than that of similar quality fuel sold by state-owned Coal India.
Traders who bought coal from Cool India made big profits, selling in installments ranging from 50 to 100 percent, according to Reuters calculations.
Cole India said rising global coal prices and freight rates have pushed utilities that rely on imported coal to reduce electricity production, leading to an increased reliance on local coal-fired plants.
India is the world’s second largest importer of coal, although it has the fourth largest reserves.
Domestic plants account for about three-quarters of its total consumption, with Cool India accounting for more than 80% of the country’s production.
Recovery Of Economic Activity
Power plants in India are struggling to keep up with rising demand from industries as economic activity picks up after the latest wave of the coronavirus pandemic.
Electricity consumption in industrialized states including Maharashtra, Gujarat and Tamil Nadu rose between 13.9 percent and 21 percent in the three months to September, according to a Reuters analysis.
The three states account for nearly a third of India’s annual electricity consumption, while industries and offices account for half of the country’s annual electricity consumption.
During the last two quarters of the fiscal year ending in March 2021, the residential and agricultural sectors were the main drivers of electricity consumption after the first wave of the Corona virus.