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Coal Shortage Sees India Struggle Under Heatwave

Sandeep Mall’s engineering products plant in the Indian capital, Delhi, has been experiencing severe power outages for more than a month, with outages lasting up to 14 hours each day.

The business, which is located in Faridabad’s major manufacturing region, produces goods for the aerospace, car, mining, and construction sectors.

“When the power goes out, the machines halt, the semi-finished items are rejected, and we have to start over,” Mr Mall explains.

When he starts up diesel-powered generators to keep the factory functioning, this happens. He claims that running it on fuel costs three times as much as paying the local electricity transmission authority.

“This reduces my profitability and erodes my competitiveness. It’s a huge disaster and really aggravating “Mr Mall explains.

“These are the most severe power outages I’ve experienced in over a decade.”

Power disruptions and blackouts have been sweeping India since April, halting enterprises, stopping schools, and provoking protests. According to more than 21,000 people questioned by LocalCircles in 322 districts, two out of every three families are experiencing power disruptions. Every day, one out of every three families reported outages of two hours or longer.

At least nine states are experiencing protracted power disruptions, including Haryana, where Mr Mall’s plant is based. The major reason for the shortfall of electricity is a coal shortage.

India is the world’s second-largest coal user and production. Coal is responsible for three-quarters of the country’s electrical production. India has the world’s third-biggest coal deposits and the world’s largest coal mining corporation, although per capita consumption is still low.

India imports around a quarter of its energy needs, the majority of which is coking coal, which is used in blast furnaces to make steel and is not readily accessible in India. Despite this, there are always shortages.

When stockpiles at more than half of India’s 135 coal-fired power plants fell below 25% of normal levels last October, the country was on the verge of a power crisis. In 108 of its 173 power units, coal reserves are now believed to be critically low. Because of the conflict in Ukraine, global coal and natural gas prices have risen, making imports costly.

“This year’s issue is greater than previous year’s since demand is truly strong. A perfect storm has formed, and there are several causes for it “Rahul Tongia, a senior fellow at the Delhi-based Centre for Social and Economic Progress (CSEP), agrees.

An earlier-than-expected scorching heat wave has driven energy consumption to new highs in northern and central India, where average temperatures in April were the highest in more than 120 years. This occurred on top of an increase in demand once the economy reopened after two years of pandemic lockdowns.

In addition, India’s railways were carrying more passenger traffic on shared tracks with freight, resulting in fewer coal wagons being transported throughout the nation.

“India is not running out of coal in the strictest sense. We are effectively dealing with an old stockpiling problem. We have a mechanism in place to deal with shortages and connections. It’s not built for efficiency or effective risk management “Mr. Tongia remarks

Electricity demand is seasonal, and experts warn that stockpiling costs more money and takes longer. India has long relied on coal imports to supplement its supply. “With oversupply, one cannot readily remedy under stockpiling over months,” Mr Tongia explains.

The administration claims to be doing all possible to assure supply. According to the federal coal ministry, Coal India, the world’s largest coal miner, has raised production by 12%, “strengthening India’s energy security.” In April, it also delivered 49.7 million metric tonnes of coal to power plants, up 15% from the same month the previous year. Over a thousand passenger trains have been canceled in order to carry extra coal to facilities that are running out of fuel.

The federal and state governments benefit greatly from coal. According to Daljit Singh, an energy specialist at CSEP, India’s “dysfunctional” coal-electricity connection isn’t helping things. He claims that coal is procured by India’s power plants “through several routes with a confusing assortment of price regimes.”

The price a plant pays for the same coal at the same location may differ depending on whether the plant is privately owned or government-owned, the date it was commissioned, and the existence of “power purchase agreements” with a large number of electricity distribution companies, many of which are in debt.

“The strategy is skewed in favor of government-owned power facilities,” he argues.

To keep passenger rates low, India’s largest employer overcharges for transporting coal, the most valuable product it transports. “There are various distortions that produce winners and losers in the coal ecosystem, making change much tougher than it would be based merely on the fundamentals,” Mr. Tongia adds.

India has pledged to boost renewable energy capacity to 450 gigawatts by 2030 in order to wean itself from coal. “However, the development of renewables hasn’t been enough to halt coal’s expansion. Mr Tongia believes that India’s focus should be to clean up its coal rather than wishing it away. However, India’s coal contains a lot of ash, perhaps 35 percent or more, making it exceedingly polluting. According to Greenpeace, coal pollution kill over 100,000 Indians each year.

Mr Mall claims that in the 27 years since his modest firm opened in Faridabad, he has never had a single day of uninterrupted power supply. However, he is totally weary due to the constant blackouts.

“This isn’t the way to conduct business. Is this what we get after all the jobs we create and the taxes we pay?”

Bob Carlson
Bob Carlson
Bob Carlson is a business journalist, with over a decade of experience in the trenches of reporting up-to-date business news for publications all over the world. With a wealth of knowledge at his back, Bob strives to bring the most important insights into the business world for TheOptic daily.
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