A power crisis is looming large

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An unprecedented power crisis is looming in the country. While the demand for power has risen sharply with many establishments reopening in the wake of relaxations in Covid-19 restrictions, electricity generation has not been able to keep pace with the rising demand. In the last two months, the power demand has soared 17% compared to that in August-September 2019.

At the root of the problem lies the coal shortage. India’s power plants are heavily dependent on coal supply. According to the Central Electricity Authority (CEA) data for 2019-20, total power generation in India was 13,83,417Gwh. Of this, coal’s share 9,94,197GWh or over 71%.

According to state-owned Coal India Ltd (CIL), which accounts for 80% of India’s coal output, the power plants did not pick up fresh stocks between October last year and February this year and used up all their stocks as the demand soared.

Coal reserves

The Times of India reported that as of October 3, out of 107 thermal power plants in the country, 78  have ‘super critical stock’, i.e., supplies that are likely to last less than five days. Three power plants have less than three days of supply. And 17 power plants have no remaining coal supplies. Not even one power plant in the country has coal supplies that could last for eight or more days.

What this means is that most of the power plants in the country have only 3-4 days, or even fewer days worth of, coal supplies left.

Power minister RK Singh told The Indian Express in an interview that the situation was “touch and go” and that the country should brace itself for the next five to six months.

BBC has reported that global coal prices increased by 40% and plants that rely on imports are now dependent on domestic supply coal, adding further pressure to stretched domestic supplies.

According to government guidelines, power plants should have at least 2 weeks of supplies at any given point in time.

Compounding the problem, heavy rains over the past few days have flooded several coal mines and made transportation of supplies to plants difficult.

Consequences of low supplies

The shortage of coal means not just that many factories across the country have rolled down their shutters temporarily, at a time when the country is trying to claw its way back to normalcy after suffering two back-to-back Covid-19 waves.

Dr Aurodeep Nandi, India Economist and Vice President at Nomura told BBC that India had seen coal shortages in the past, but what’s unprecedented this time was coal has become really expensive.

A hike in electricity charges is a possibility if the crisis is not resolved immediately.

Vivek Jain, Director at India Ratings Research told BBC that the situation ss “precarious”.

Zohra Chatterji, the former Chief of Coal India is quoted as saying in the BBC report: “Electricity powers everything, so the entire manufacturing sector- cement, steel, construction – everything gets impacted once there is a coal shortage.”

It is a “wake-up call for India”, she said, adding that India should more aggressively pursue a renewable energy strategy.