India is on the verge of running out of its coal stock that is mandatory to run several industries. The complication could halt the country’s power supply in a matter of just a few days.
At the end of September, coal-fired power stations had about 4 days’ worth of fuel stock in hand. This is the lowest recorded in decades after it came down from 13 days during August start.
As a result, more than half of the plants have been issued alerts for outages as coal shortage threatens their functioning.
Spot power rates have hiked due to this shortage as coal contributes to 70% of the electricity used daily. Aluminium smelters and steel mills are not being supplied with coal anymore as the situation doesn’t guarantee enough stock for them.
With industrial activity jumping back into the game after the pandemic-9nduced halt, India- much like China- is facing fresh problems due to the reduced local coal output. Though the nation caters to 75% of its need through the mines it owns, heavy rains have left very little fuel after flooding vital transport routes and coal mines.
As such, coal-fired industries have 2 options available- either procure whatever little local coal supply is available by paying large premiums at domestic auctions or walk into the seaborne coal market where the prices have gone to an all-time high.
To get a bit of relief, the Indian government is jotting guidelines if the situation forces it to reopen idle power stations.
Speaking about the coal shortage and repercussions of the same, the Director for infrastructure advisory at credit rating firm Crisil Ltd., Pranav Master, said “Until supplies stabilize completely, we are likely to see power outages in some pockets, while customers elsewhere may be asked to pay more for power… Because of imported coal prices shooting through the roof, plants running on domestic coal have had to do a lot of heavy lifting.” The gruesome tides might rest when the rains drop its energy, he added.
While there is no immediate impact on consumers, revised prices would enter the market post approvals from regulators- expected in a few months from now.
As per the government data, coal stock dropped 76% compared to 2020 in September this year with only 8.1 million tons left in Indian power plants. Likewise, spot power prices soared with Rs 4.4 charged per kilowatt-hour. This is a 63% jump from last year, the Indian Energy Exchange Ltd data showed.
A major user of coal power, aluminium industries, raised complaints of a reduced fuel supply to them as state-run miner Coal India halted it to deliver the coal instead to electricity generators.
Bloomberg reports that the Indian economy is going to grow the fastest in the world with a forecasted expansion of 9.4% from 2021 to March 2022. However, the increase in electricity bills does not seem to let this turn into reality.
