Officials and analysts say India could face more power cuts this year as utilities’ coal inventories are at their lowest pre-summer levels in at least nine years and power demand for at least 38 years. is expected to grow at the fastest rate.
Power cuts could hit industrial activity in Asia’s third-largest economy, at a time when economic activity began to recover after months of COVID-related lockdowns.
Electricity shortage as a percentage of demand has increased to 1.4% over the past week, a Reuters analysis of government data showed, more than a 1% decrease in October, when India last experienced a severe coal shortage. and 0.5% reduction in March
The southern state of Andhra Pradesh, for plants operated by automakers such as drug makers including Kia Motors and Pfizer, is facing a power shortfall of 8.7%, data showed, prompting it to resort to widespread power cuts. .
Inventory of coal at power plants had an average stock of nine days at the beginning of this financial year starting April 1. Federal guidelines recommend power plants to have an average stock of at least 24 days.
“The problem is that even after Coal India and the Coal Ministry asked to stock power plants, utilities continued to reduce their inventories,” said Rajeev Agarwal, general secretary of the Indian Captive Power Producers Association.
Facor Alloys Ltd., a manufacturer of ferrochrome used in the manufacture of stainless steel. Ltd. said on Monday that it is reducing production by 50% due to power cuts in Andhra Pradesh.
Officials said industrialized states such as Gujarat and Maharashtra have resorted to load shedding, with government data showing power shortfalls of over 3% in eastern states such as Jharkhand and Bihar and Haryana and Uttarakhand in the north.
“The growth in power generation to meet increased demand is unlikely to be limited by coal availability,” Fitch Ratings said in a note on Thursday.
Coal accounts for about 75 per cent of India’s electricity generation.
Shortage of trains to transport coal to power plants is also adding to the supply crisis. Number of trains run by Indian Railways daily is 415, which is 8.4% less than 453 required by utilities.
The actual number of trains available from April 1-6 was 379 per day, 16% less than required, according to minutes of a meeting between the power and coal ministries reviewed by Reuters last week.
increasing demand for electricity
India’s electricity demand is expected to rise in the summer, with weather officials predicting above-normal temperatures in April in several northern and central regions.
Harry Dhaul, director general of the Independent Power Producers Association of India, said, “The unprecedented change in weather has led to a pick-up in demand after midnight due to increased use of air-conditioning.”
Total electricity generation has seen a 15.2% increase during the year ended March 2023, a federal electricity ministry note reviewed by Reuters showed, with demand growing at the fastest pace in at least 38 years.
According to the note, this is expected to increase coal-fired power generation by 17.6 per cent.
High power demand this year has forced India to cut coal supplies to the non-power sector, which produces over 80% of India’s coal, despite record production and supply by Coal India Ltd. .
Another note from the power ministry showed that Coal India is targeting 565 million tonnes with a 4.6 per cent increase in supply to utilities to address power shortfall this fiscal.
But forecasts of growth in power demand have prompted the power ministry to increase coal imports to utilities to 36 million tonnes, the highest in at least six years.
The move could add to the financial woes of debt-ridden electricity distributors, as global coal prices trade at near-average levels in 2021 due to the Russia-Ukraine crisis.
“Higher international coal prices will limit any significant increase in coal imports,” Fitch Ratings said, adding that domestic supplies could be hit during the annual monsoon season.