Prices surge as India faces acute Coal shortage
Singrauli– Government data shows that surprisingly over half of India’s 135 coal-fired power plants have fuel stocks of less than three days only. Although, coal accounts for over 70 percent of the country’s electricity output, and utilities account for about 75 percent of India’s coal consumption. The acute shortage in coal is noted as electricity demand rebounds with industrial growth. It has tightened supplies of coal and liquefied natural gas and this in return has resulted in a global price surge.
It should be noted that India is competing against buyers such as China, who is the world’s largest coal consumer. With this demand, they are under pressure to ramp up imports amid a severe power crunch. Rising oil, gas, coal, and power prices are feeding inflationary pressures worldwide and slowing the economic recovery from the COVID-19 pandemic.
Moreover, after the second wave of coronavirus, the industrial power demand in India has surged like never before. Adding more problems in the heap, even there is a widening price gap between lower domestic prices and record global coal prices has led buyers to shun imports.
State-run Coal India, which produces over 80 per cent of India’s coal, mentioned last week that the increase in global coal prices and freight costs had led to a curtailment in power production by plants using imported coal, adding to the pressure on utilities using domestically mined coal to ramp up output.
Moreover, power producer Indian companies such as NTPC Ltd, Tata Power and Torrent Power, and Coal India have been rising strongly in recent weeks, spurred by rising power demand. Luckily, the traders who had bought coal at the domestic spot auctions sold the fuel at steep premiums now.