India stands as the second-largest importer, and consumer of coal and has the fourth largest coal reserves. It imports coal mainly from Indonesia, Australia, and South Africa. Coal plays an important role in seventy percent of electricity production and seventy-five percent of utilities. Currently, prices and demand for coal have risen and the shortage of power-generating fuel is spreading across India The power plants are left with scarce stock and after the resumption of the economy after Covid 19, the demand has risen. Now the demand is not being met which may result in blackouts across the country.

As reported by CRISIL, S&P rating agency unit, the global coal prices are expected to rise, Australian and Indonesian thermal coal prices continue to rise. The reason for these high prices is the supply constraints and high demand from China and other countries. During August and September, the weekly coal imports in India have significantly dropped which has caused the coal crisis in Inda.

What are the reasons for the coal crisis?

There is a significant gap between global and domestic coal prices, the global coal prices have been rising constantly from last year almost up to forty percent. The domestic coal prices are decided by Coal India Limited but the global price rise has deterred imports.

There are supply constraints, mine safety checks, and high demand from China that also caused a price surge in imports. Heavy rainfall during August and September in the coal mine area has caused lower production and fewer dispatches of coal from the mines. Power supply demand in industries is also the key reason for the coal shortage in India.

The increased consumption of power of nearly 124 units in August 2021 in comparison with 106 billion units in August 2019 is also the reason. Another reason is the less storage of coal stock in the April-June period has also caused the problem.

Impact of coal crisis on States

The situation in the states across India is getting outrageous. In Delhi, the central officials reported that there is less availability of coal in generation plants in the north so power supply between 2 pm to 6 pm is critical, therefore, people are requested to use electricity judiciously.

The message has been given by Tata Power Delhi Distribution Limited (TPDDL). In Karnataka, Chief MinisterBasavaraj Bommai expressed his concern about the scarcity of coal that will lead to a power crisis in the state. He has been assured by the Union Minister of coal and mines that the supply will be fulfilled to meet the demand.

In Tamilnadu, Power supply has been affected due to the shortage of coal as reported by the Tamilnadu Generation and Distribution Corporation (Tangedco). In Andhra Pradesh, apart from power cuts, agriculture is getting affected as there is no electricity run the irrigation pumps.

In Rajasthan, the government has imposed a one-hour power cut every day but in some parts of the states, longer power cuts have been reported. Some other states are also facing a rise in coal demands like Bihar, Jharkhand, and Odisha.