Published: 06th October 2021
What The FAQ: What is India's coal crisis all about and will it affect us in any way?
Heavy rains at several mines in the country this year and logistical issues have created a shortage of domestic supply of coal
As the country's economy is recovering from the pandemic, it is facing an unprecedented shortage of coal due to a sharp surge in energy demand at the country's coal-fired stations. The coal crisis is happening in various other countries for distinct reasons, factories in China have shut down due to power disruptions linked to the short supply of coal. In fact, in the United Kingdom many fuel pumps are running dry and the country’s military has been called in to prevent any violence.
What is the impact in India?
In India, coal-fired power stations account for nearly 70% of India's electricity generation. Thermal plants are dealing with a severe coal shortage due to a sharp increase in power demand, lower levels of coal production and fewer despatches due to disruptions during the monsoon. There has even been low accumulation of stock in the April-June period.
How bad is it really?
The situation is so bad that as many as 17 thermal power plants, with a generation capacity of 21,325 MW, had zero days of coal stock as of October 3 and a total of 40 plants with a generation capacity of 52,510 MW have stocks of one or two days. On average, the stocks of coal available with thermal power plants are sufficient for only 4 days of operations, compared to the recommended stock level of 14 days.
Why is it happening?
Companies have struck up a deal with Coal India, which accounts for over 80 per cent of India's coal, and its subsidiaries which assures them a certain amount of coal supply in a year. However, heavy rains at several mines in the country this year and logistical issues have created a shortage of domestic supplies. India's Union Power Minister R K Singh told the Indian Express that the situation is way “beyond” the normal post-monsoon supply crunch.
How are heavy rains dealt with every year by the coal industry?
To meet the sudden rise in demand, Coal India supplied about 243 million tonnes of coal to power companies from April 1 to September 28, according to a report in Reuters. In usual years, Coal India asks utilities to stock up before the beginning of the monsoon season as the rains cause havoc in transport and output of raw materials. However, many coal firms could not stock up sufficiently due to domestic supply being on the shorter side. This has led many companies, especially on the coastal line, which run primarily on the imported coal, to curtail production or shut down their operation.