There has been anxiety over the required supply of electric power in India in the not-so-distant days. This has been mainly due to shortages of coal supply at the power plants. A number of states like Delhi, Punjab and Rajasthan have raised concern about potential blackouts as a result of shortage of the supply of coal. Moreover, Rajasthan, Punjab and Bihar have already reported load shedding as many of their power plants are operating at lower capacity due to disruption in coal supply. According to the data released by the Central Electricity Authority, as of October 13, 135 thermal power plants in India were operating with stocks that were known to be at critical or supercritical levels.
For every thermal power plant, it is man-datory to maintain coal stock for at least 14 days. But in the critical time, coal stock has been reduced to 10 days. The reduction of mandated days has been made with a view to avoid hoarding of coal by a section of power plants. But due to the supply crisis of coal, the overall coal stock has reduced to such a low level that it would last just four days.
Supply disruption of coal in India
India depends excessively on thermal power. At present, about 70% of its power comes from coal-based power plants. The main supply of coal comes from Coal India Limited (CIL) that supplies about 80% of India’s requirements. It is reported that the recent crisis of supply of coal has emerged due to lack of supply of the required coal from CIL. It is not only that domestic coal production has been disrupted in India. The coal supply from other countries, that is, import of coal to India had been slowing down from 2016. The Hindu, on October 17 reports quoting BP Global Energy Statistics that domestic coal production has stagnated since 2018. It peaked at 12.80 exajoules (EJ) worth of coal in India. At the same time, the amount of coal imported from other countries to meet domestic demand, too, dropped significantly. Coal imports have dropped from the peak of 6.46 EJ in 2016 to 4.22 EJ in 2020. So why did the problem not emerge earlier? The answer is that there was low demand for power last year due to the pandemic. But the demand for power in this FY has been rising due to increasing production in various sectors. The government is unable to increase the supply of domestic coal from CIL. Not only that, the government is trying to restrict imports of coal. It is known that the Indian government said last year that it would totally stop coal imports by 2024. But it has been reported that the government may rethink the import of coal.
The immediate problem
Many factors are to be blamed for the ongoing inadequate supply of coal. First, a lot of coal mines have been severely affected by huge rainfall. So mining was impossible for quite some time. Secondly, transportation of coal is also hit by the excessive rains. Both road and rail transport were badly affected. Thirdly, it was also reported that labour availability in the mines was not normalised not only in India but also in other coal exporting countries. So, import of coal has also been disrupted.
Some structural problems
There have been some structural problems as well which may need some time to be solved. The pricing problem is one such issue. The cross-subsidy system is to be mainly blamed. A section has to pay higher to make up the lower price of power paid by another section. Retail consu-mers, agriculture, small traders and small industrial units are some of the sectors that pay lower power tariffs than the average cost of production of power. A section of observers think that these differential power tariffs have been made as a political consideration and are not financially motivated. Power distri-bution companies have been suffering financially. In FY19, for example, distribution companies covered revenues that were 70% of their total cost. As a result, private players are not investing in this sector. But the demand for power has been rising continually. According to a credit rating agency ICRA, the consolidated debt of public sector distribution companies is expected to hit `6 trillion in FY22 (the Hindu, 17 October, 2021).
The present problem of the power sector has been a temporary phenomenon. Vibhuti Garg, Lead, India, Institute of Energy Economics and Financial Analysis pointed out in an article that peak demand of September and October is around 175 gigawatts (GW), less than it was in July when it crossed 200 GW. At that time there was enough coal production and supply. Additionally, there was also wind and solar power available at a bigger amount. So there was no power crisis. In the coming winter season there will be a huge fall in demand for power. At the same time there are some problems which are long term in nature. So, for a vibrant power generation and supply, India needs to have a different power policy.