Coal crisis in India

08 Oct 2021 Coal crisis in India

Posted at 15:43h in Daily current-affairs by khyati khare 0 Comments

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India is facing a severe coal shortage. Background:
India is the second-largest importer, consumer and producer of coal, and has the world’s fifth-largest reserves. It mainly imports from Indonesia, Australia and South Africa.

How bad is the situation?

The situation is “touch and go”, and could be “uncomfortable” for up to six months.
The coal stocks at its thermal power plants can supply just days of fuel.
On October 1, the power ministry said that the 135 thermal power plants in the country had only an average of about 4 days of coal stocks left.
This is worrisome because coal-fired plants make up nearly 70% of India’s power source mix.

Reasons for the shortage:

Heavy September rains in coal mining areas hit production and delivery and plants failed to build up their stocks pre monsoon.
Diamond had outstripped supply, despite increased buying from coal india.
Sharp fall in imports due to high prices.

Impact of the shortage:

If industries face electricity shortages it could delay India’s economic reopening.
Some businesses might downscale production.
India’s population and underdeveloped energy infrastructure will mean the Power Crisis could hit long and hard.

What next?

Recent Reforms in coal sector:

Commercial mining of coal allowed, with 50 blocks to be offered to the private sector.
Entry norms will be liberalised as it has done away with the regulation requiring power plants to use “washed” coal.
Coal blocks to be offered to private companies on revenue sharing basis in place of fixed cost.
Coal gasification/liquefaction to be incentivised through rebate in revenue share.
Coal bed methane (CBM) extraction rights to be auctioned from Coal India’s coal mines.

Challenges Ahead :

Coal is the most important and abundant fossil fuel in India. It accounts for 55% of the country’s energy needs. The country’s industrial heritage was built upon indigenous coal.
Commercial primary energy consumption in India has grown by about 700% in the last four decades.
The current per capita commercial primary energy consumption in India is about 350 kgoe/year which is well below that of developed countries.
Driven by the rising population, expanding economy and a quest for improved quality of life, energy usage in India is expected to rise.
Considering the limited reserve potentiality of petroleum & natural gas, eco-conservation restriction on hydel project and geo-political perception of nuclear power, coal will continue to occupy centre-stage of India’s energy scenario.