Coal Shortages Threaten India’s Economic Revival

India’s coal-burning power plants, which supply much of the country’s electricity, are running perilously low on stocks, raising fears of power shortages just as the country’s pandemic-hit economy is on a recovery path.   

The coal shortage is being attributed to surging demand as industries rev up production lines and consumers begin shopping ahead of the main festival season.

India is the second Asian country, after China, facing a crunch in coal supplies.   

The average stock of coal in thermal power plants was about four days on October 3, the Power Ministry said earlier this month.  

“If the coal stocks are not ramped up to the level to which plants need to run, there could be challenges going ahead,” Vivek Jain, director at India Ratings Research, said, “But the problem is, you cannot ramp up output at will.”

Despite efforts to increase use of cleaner energy sources such as solar, wind and water, India’s 135 coal-burning plants remain the backbone of the country’s power sector, supplying nearly two-thirds of its electricity.

Power demand rose by almost 18% in the last two months compared to the same period last year.

However, India had cut back on coal imports in recent months due to slowing demand.  Now a massive surge in international coal prices poses a challenge to stepping up imports while domestic production struggles to keep pace with the country’s needs.

 

Heavy monsoon rains in September in the country’s coal-mining areas hit both production and delivery of coal, according to the Power Ministry.

The dwindling coal supplies are a dampener in Asia’s third-largest economy where COVID-19 cases have come down dramatically and most curbs have been lifted, allowing most sectors of the economy to reopen. Public transport is operating in cities, markets are buzzing and holiday destinations have seen domestic tourists return in droves.

That had raised hopes of an economic recovery. The World Bank has said that India’s economy will grow by 8.3% in the current financial year after plummeting by more than 7% last year.

Experts say if demand for power continues to rise, India will have to consider ramping up alternative power sources or increasing imports, say experts.

“India could be looking at a huge rise in its import bill unless it turns to increasing power output in its nuclear power plants or increasing production of natural gas. But if these are not ramped up in time, we could face disruptions,” according to Jain.

Power Minister R.K. Singh told The Indian Express newspaper this week that the impact could be felt for months. “I don’t know whether I will be comfortable in the next five-six, four-five months,” he said, “But it’s going to be touch and go.” 



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