Power plants face coal shortage . . .
India’s coal-fired power plants are running critically low on coal stocks. According to data from India’s Central Electricity Authority, nearly 80 per cent of the country’s 135 coal-fired power plants have less than five days of stock left. States across the country have been warning the central government about this shortage amid fears of massive blackouts. Meanwhile, the Ministry of Coal issued a press release to refute the shortage claims, ease fears about potential power outages, and reassure that there is adequate stock to meet demand. Coal-fired power plants account for nearly 70 per cent of electricity generation in the country.
Falling supply, rising demand . . .
Several factors have been cited for low coal inventory levels, including rising demand for electricity as the economy recovers from a devastating second wave of COVID-19 and disruptions in supply from domestic and imported sources. According to the Ministry of Coal, extended monsoons and heavy rain in the coal belt area have delayed the dispatch of domestic coal in time to the power plants. On the other hand, due to high global prices and freight rates, power plant companies dependent on imported coal have turned to domestic coal. Reduced electricity generation from other sources such as hydropower, gas and nuclear have also led to increased coal-fired power generation.
Economic implications . . .
As the economy bounces back amid a month full of various festivities, demand is expected to soar. For now, the Ministry of Coal has managed to offset the shortage. But experts are cautioning about export curbs on power-intensive industries as domestic coal supplies are diverted to thermal power plants and away from industries like cement, iron and steel. Electricity prices could soar if there is a need to augment domestic supply with high-priced imported coal. All of this could add additional inflationary pressure and dampen robust economic recovery.
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