by ajoy k. das
India is gripped by an acute shortage of coal that could last for six months with stocks of dry fuel with thermal plants down to zero with two to three days consumption equivalent raising specter of a power crisis ahead.
With coal demand far outstripping supplies and restricted import options with China facing an energy crisis too and scouting to increase imports, the Indian government has been forced to announce contingency policy tweaks to increase domestic supplies in long and medium terms.
“Coal supplies are way beyond normal even post-monsoon crunch,” Federal Power Minister R.K. Singh said. “The fuel gap is touch and go. I can’t say I feel secure. If you have 50,000 megawatts (MW) of thermal power capacity having coal stocks of less than three days, you can’t be secure.”
According to government data, of the 104 thermal plants monitored daily, 15 with a generation capacity of 14,875 MW had zero days of coal stocks on September 30, while another 39 with a capacity of 52,530 MW had stocks of less than three days. Another 6,960 MW of capacity is facing a plant outage due to the unavailability of coal.
The Coal Ministry estimates that state-miner Coal India Ltd. (CIL), accounting for 80% of domestic supplies, was supplying an estimated 1.7 million metric tons per day (mt/d) while actual deliveries to thermal power plants, accounting for 70% of electricity generation, was facing shortfall of around 80,000 mt/d.
This has triggered fears of an electricity crisis emerging with a gap between electricity supply and peak demand widening to 4 gigawatts (GW) on October 4.
Coal supplies have clearly been unable to keep pace of post-COVID revival in demand for electricity.
“Demand has gone up tremendously,” Singh said. “In August, the demand was 124 billion units. Compared to pre-COVID period, the demand has increased in one month by 18 billion units.”
As a short measure to increase coal supplies, the federal government has amended a rule enabling captive coal mines with steel, cement companies to sell 50% production from these mines in the open market, which could be accessed for purchase by power companies. There are about 100 captive coal and lignite mines for captive consumption of industries like steel and cement with estimated mineable reserves of 500 million mt.
Indian coal imports during April-September is estimated at 48.40 million mt, up 40% over the corresponding period of the previous year.
Last month, the government issued a directive to thermal power plants to aggressively conclude import contracts. But industry analysts said pushing advisories to reduce coal imports over the past few years and even setting target date of 2025 to make it zero, large consumers have been blindsided by the current fall in supplies and inability to enter the global market at a time when even China is facing acute energy crisis and looking to increase imports from Kazakhstan, South Africa and Mozambique.
Being a late entrant into global coal trade and with no long-term supply contracts in place, Indian importers will be faced with higher prices, for example Indonesian coal, prices of which has escalated 123% since January.