Coal Crisis in India: Key Facts, Reasons, How to Overcome?

The coal crisis brings a sense of déjà vu as the storyline seems similar to what happens when there is a shortage of sugar or onions. The difference is that the shortage of farm products is normally due to crop failure while the reasons for coal shortage are more human-made.

 

India is on the verge of a power crisis as the stock of coal at country’s thermal power plants has hit at critically low levels. Many power plants are operating with zero reserve stock or with stocks that could last just a few days. Many States have resorted to load-shedding to save power.

 

India’s thermal power plants contribute highest share in power generation. But they are facing a severe coal shortage, with coal stocks having come down to an average of  4-5 days from earlier 15-18 days. Union Power Minister R K Singh has said that while the supply crunch has not yet led to any power cuts in the country, the coal supply situation may remain low up to six months.

 

While Finance Minister Nirmala Sitharaman, has termed the worries about a possible shortage of coal and power supplies “absolutely baseless” and said that India is now a power-surplus country, the latest report by CRISIL Research says, “Coal stocks are unlikely to improve to the previous level of 15-18 days inventory anytime soon.” This has come as a surprise as India is said to have fourth largest coal reserves and is considered a coal surplus country. It may be noted that India’s coal fired thermal power plants account for 208.8 GW or 54 per cent of India’s 388 GW installed power generation capacity. 

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Why Coal is so Important?

In the power mix production and supply, the maximum contribution is of thermal power. Its Generation depends upon Coal Avaailability and its shortage causes electricity outage not only in residential areas but also affects industrial production adversely causing the economy to go out of gear.

 

coal

Source: Indian Express

 

Coal Shortage: Key Facts  

  • More than 68% power production depends upon coal availability and stock in power plants
  • The average level of coal stocks in India’s many thermal power plants have come down to four days as against the government recommendations of 14 days.
  • On October 4, 2021, there were 16 thermal power plants with a power generation capacity of 17,475 MW (mega watts) which had zero day coal stock.
  • 45 thermal power plants with a power generation capacity of 59,790 MW had coal stock for only two days of power generation.
  • The plants with a power generation capacity of 132 Gigawatts (1GW is 1,000 MW) of the 165 GW of capacity daily, had critical coal stock levels.
  • The 98 non pithead plants out of 108 such plants, located much far from coal mines are suffering from very critical level of below 8 days of coal stock.

Source: Indian Express

 

More Demand & Short Supply of Coal

Region wise demand and coal supply imbalance is clearly visible in the image below

 

coal

Source: Indian Express

 

Key Reasons of Coal Shortage

  • Indian economy while recovering from the Covid pandemic is getting a set-back due to coal supply issues. India consumed 124 billion units of power in August 2021 compared to 106 billion units of power in August 2019
  • Coal fired thermal power plants supplied to meet higher demand with a share of thermal power increasing to 66.4% in 2021 from 61.9% in 2019 in India’s power mix.
  • The power minister Mr Singh has attributed the problem to higher demand caused by additional 28.2 million household connections provided by the government as these households are buying lights, fans and television sets leading to an increase in power demand. He said, “We touched 200 Gigawatts during the Covid period, and the demand has been hovering around 170-180 GW. I expect it to go up again to near about 200GW, and stay there” 
  • The trend for higher daily demand is still continuing with total demand for power in the country hitting 174 GW on October 4, 2021 up 15 GW from Oct 4, 2020.
  • Lower than normal stock accumulation by thermal power plants in the April-June period
  • Continuous rainfall in coal bearing areas in August and September which led to lower coal production and fewer despatches of coal from coal mines
  • Lower imports due to high international prices of coal have also led to plants cutting imports.

Source: Indian Express 

 

How the Coal Shortage is Impacting India?

  • If the shortage persists, Indian Economy which is struggling to rebound, may remain on slow moving track
  • Production of Electricity will be severely hit causing more electricity cuts and unrest in the country
  • Small, Mediaum and Large scale industries will cut production further causing a vicious circle of less production, less supply, and more unemployment

 

How to Overcome the Coal Crisis? Way Ahead
Government of India is taking aggressive measures to overcome the crisis. Some of the key measures being taken by the Government and the Way Ahead to improve the situation are

  • An inter-ministerial team, including representatives of the Power and Railway Ministries, Coal India Ltd, the Central Electricity Authority and Power System Operation Corporation, is monitoring the supply of coal to thermal power plants.
  • The government is pressing thermal plants with captive coal mines to boost their coal output so that they can meet more of their own demand
  • Prioritising coal supplies for thermal power plants with low levels of stock.
  • The Power Ministry is trying to increase the supply of coal by expediting the start of production from a number of mines that already have all requisite clearances. According to the Power Minister Mr Singh, “Somewhere, the clearances are available, the bidding for MDOs (Mine Developer and Operator) etc is (going on). Where the clearance and land is available that can be expedited. Where the clearances are pending, I have taken up with the environment ministry.”
  • The government has increased the number of rakes of coal being transported to thermal power plants daily with 263 rakes of coal dispatched from coal mines from 248 rakes.

coal

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