Coal shortage deepens in India amid plunging plant inventories

India’s massive fleet of coal plants are running dangerously low on stockpiles, which may force the nation to buy expensive shipments of the fuel or else risk blackouts.
 

Stockpiles have fallen to the lowest since November 2017, data from the Central Electricity Authority showed. The South Asian nation isn’t alone in facing a fuel crisis. Buyers from the U.K to China are grappling with energy shortages as a rebound in demand outpaces supply.  

As inventories dry up, plants may be forced to buy expensive imported coal or pay hefty premiums at domestic auctions, said Debasish Mishra, a Mumbai-based partner at Deloitte Touche Tohmatsu. That may raise costs across an economy that’s already battling high petroleum fuel prices. 

“A sharp rise in post-pandemic electricity demand is straining fuel supply chains across the globe,” said Mishra. “India has done well to expand its power generation capacity, but has failed to give similar attention to coal supply infrastructure.”

Electricity demand from India’s state distribution utilities rose more than 10% in July and 18% in August as economic activity rebounded after a second wave of the pandemic receded and more citizens were vaccinated.  

About 124 gigawatts of plants, more than 60% of the nation’s coal generation capacity, had less than a week of inventories as on Sept. 24, according to data from the power ministry. Power stations imported 1.9 million tons of coal in August, 42% lower from a year earlier, government data show.