Coal inventory critical, India stares at power crisis this festive season

India may be staring at an acute power crisis this festive season with half of the countrys thermal power reducing generation as coal inventories hit critically low levels while surge in power demand post the Covidinduced lockdowns is not being supported by record global prices of fuel that has shot up more than three times in just over a couple of monthsOver half of the countrys 135 coalfired plants are sitting on coal stocks of less than three days while in others as well fuel inventories are well below the stipulated 22day stock data from the Central Electricity Authority showed The situation is critical for staterun power generation units where poor financial condition of utilities has prevented them from proper stocking of coalGlobal developments are now having a play in the Indian markets too Sharp uptick in economic activity with the easing of the Covid pandemic has pushed up power demand with major industrial states such as Maharashtra Gujarat and Tamil Nadu seeing demand rising between 14 per cent and 20 per cent in the last three months said a power sector analyst from one of the four big audit firms To meet this demand additional coal is required The production from Coal India is low now as monsoons have just ended when the production is typically low Imports are not an option as global prices have touched historic high levels he addedThe development in the Indian market is a reflection of what is happening globally Like in India increased vaccinations and lowering ring of Covid scare have scaled up industrial activities taking economies from Europe to Asia to a situation where demand has outpaced supply resulting in energy shortages For India the competition in the global coal market is coming from China the worlds largest coal consumer Large scale shortage in China has meant that it is going on a coal hunt worldwide to address the energy crisis at homeThis has pushed up coal prices from all major suppliers with the price of Indonesian coal 5500 Kcal shooting up to over 100 per tonne from just about 5060 per tonne a few months ago while Australian noncoking coal has touched a price of over 200 per tonne What the high global coal prices has done is that it has prevented domestic generation companies from buying coal abroad to meet the local rise in demand In fact several of the countrys imported coalbased power projects have also reduced generation rather than supporting production through expensive buys As per a Crisil study in AprilJuly noncoking coal imports by the power segment were at the same level as in fiscal 2021 and down 37 per cent compared to fiscal 2020The situation of fuel is particularly grim for nonpower sector users leaving players with stocks for 45 days only Dispatches from CIL and SCCL were down 15 pert cent at 64 MT compared to 65 MT dispatched in AprilAugust of fiscal 2020 As the demand rose spot eauction premiums for August 2021 increased to 74 per cent compared to 30 per cent in the first quarter of this fiscal and 25 per cent in fiscal 2021 In the near term the supply crunch is expected to persist with the nonpower sector facing the heat as imports remain the only option to meet the demand but at rising costs Crisil saidCoal inventory at thermal plants will improve only gradually by March mext year For this fiscal it will hover around 10 days compared to the twoyear average of around 18 days it added This would mean that the crisis would continue through the festive season with Coal India scrambling to meet the rising demand for fuel in the absence of support from importsThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever