Coal shortage: Govt scrambles all resources to meet demand; 4 reasons behind looming pan-India power crisis

coal crisis
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Four reasons behind looming pan-India power crisis

With states from Delhi to Andhra Pradesh sending warnings of a developing power crisis due to shortage of coal, the Central government has pressed all resources at its command to ensure power plants have enough feedstock to generate electricity. 

Union Power Minister RK Singh on Sunday reviewed the coal stock position at all thermal power plants, including those units that supply electricity to distribution companies in Delhi. He assured that the national capital will not face any energy crisis as sufficient fuel is being provided to power plants.

Separately, the Ministry of Coal said that “ample coal is available in the country to meet the demand” and “any fear of disruption in power supply is entirely misplaced”.

According to a Power Ministry statement, there are four reasons for the depletion of coal stocks at the power plant end. The reasons are: 

  1. Unprecedented increase in demand of electricity due to revival of economy
  2. Heavy rains in coal mine areas during September thereby adversely affecting the coal production as well as despatch of coal from mines
  3. Increase in prices of imported coal to unprecedented high level leading to substantial reduction in power generation from imported coal based power plants leading to more dependence on domestic coal
  4. Non-building of adequate coal stocks before the onset of monsoon

Besides, there are also legacy issues of heavy dues of coal companies from certain states like Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh, Rajasthan and Madhya Pradesh.

Another factor that has contributed to the present crisis is power plants that used imported coal to generate electricity, have either curtailed generation or completely stopped as a spurt in international energy prices has made it difficult for them to meet the commitments to states at a particular rate.

Fall in coal import 

To meet the domestic shortages, option is definitely available to buy coal from abroad, but the post Covid surge in electricity demand worldwide has created added interest securing fuel sources that had shot up global coal prices. Imported coal price of Indonesian coal has jumped from $60/tonne in March-2021 to $160/tonne (in September/October, 2021) of 5,000 GAR (Gross as received) coal. 

The import of coal has decreased in comparison to 2019-20 due to import substitution and rising prices of imported coal. Australian non-coking coal is touching a price of over $200 per tonne.

China factor

China’s top coal-producing province suspended output at 27 mines because of heavy rain and flooding, adding more pressure to an energy crisis gripping the nation. China is one of the largest producer as well as consumer of coal. Lack of adequate growth in renewables and skyrocketing prices of natural gas is also contributing to brimming global energy crisis. So is China’s decision to secure all available sources of fuel available globally at any cost creating a short of shortage in the world market and prices jumping up sharply.

After Singh’s review of coal stock position, the Power Ministry said that the total despatch of coal from all sources (Coal India Limited, Singareni Collieries Company, Captive Coal Mines and imported coal) on October 9 was 1.92 million tonnes (19.2 lakh tonnes) against the total consumption was 1.87 million tonnes (18.7 lakh tonnes).

“Coal despatch have exceeded the consumption, thereby indicating shift to gradual building up of coal stock,” it said adding the coal stock at power plant is sufficient for more than 4 days’ requirement and as the coal supply is being ramped up by Coal India Ltd (CIL), the coal stock at power plant would gradually improve.

The Coal Ministry in a separate statement said that coal stock at power plants end is about 72 lakh tonnes, sufficient for four days requirement, and that the Coal India Limited (CIL) has more than 400 lakh tonnes of stocks, which is being supplied to power plants.

Coal supply deficit 

The domestic coal-based power generation has grown by nearly 24 per cent in this year (till September 2021) based on a robust supply from the coal companies. The daily average coal requirement at the power plants is about 18.5 lakh tonnes of coal per day whereas the daily coal supply has been around 17.5 lakh tonnes. 

Despite heavy rains in the month of August-September, steep hike in power demand due to economic recovery and increase in prices of imported coal, domestic coal supply have sustained the operation of power plants and all out efforts are being made to ensure full power supply to the DISCOMs as per their requirements.

The Coal Ministry said despite heavy rains in the coal field areas, CIL had supplied more than 255 million tonnes of coal to the power sector in this year which is the highest ever supply. Out of the total coal supply from all sources, present coal supply from CIL to power sector is more than 14 lakh tonnes per day and with the receding rains, this supply has already increased to 15 lakh tonnes and is set to increase to more than 16 lakh tonnes per day by the end of October 2021. The supply from SCCL and captive coal blocks shall contribute to another 3 lakh plus tonnes of coal every day.

“Domestic coal supplies have supported power generation in a major way despite heavy monsoons, low coal imports and a steep hike in power demand due to economic recovery. It is expected that coal supplies are set to be a record high in the current financial year,” it said.

Due to high international prices of coal, supply of power even under agreements by import based power plants has reduced by almost 30% while domestic based power supply has gone up nearly 24% in April-September this year, the statement said adding the imported coal based power plants have generated about 25.6 billion units against a program of 45.7 BU. “It may be noted that the comfortable coal position in the country is reflected by the fact that the CIL has been supplying more than 2.5 lakh tonnes daily to meet the demand of non power industries like aluminium, cement, steel etc. along with supply of coal to thermal plants of the country,” the statement added.

READ MORE: Power crisis to continue through festive season? CIL scrambles to meet rising demand amid economic revival

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