Besides China, now other large Asian economies also fight coal shortage

Besides China, now other large Asian economies also fight coal shortage

Summary:

  • China isn’t alone; India is also on the verge of a power shortage.
  • According to, 80 percent of India’s 135 coal-fired power plants had less than 8 days of supplies left as of Oct. 6, with more than half of those having reserves worth two days or less.
  • According to Kunal Kundu, India economist at Societe Generale, the power crisis will likely have an immediate impact on India’s embryonic economic recovery, which is being led by industrial activity rather than services.

China isn’t the only Asian giant dealing with a power shortage; India is also on the verge of a power outage. The majority of India’s coal-fired power facilities have critically low coal inventories at a time when the environment is deteriorating.

Why is coal depleting?

Coal is responsible for over 70% of India’s electrical generation. According to Kunal Kundu, India economist at Societe Generale, a potential power crisis would have an immediate impact on India’s embryonic economic recovery, which is being led by industrial activity rather than services.
According to government data, 80 percent of India’s 135 coal-fired power plants had less than 8 days of supplies left as of Oct. 6, with more than half of those having supplies worth two days or less.
According to Hetal Gandhi, director of research at rating company CRISIL, a subsidiary of S&P Global, the average coal inventory held by power plants over the last four years was roughly 18 days’ worth of supply.

“By December, you should see stock levels returning to 8 to 10 days,” Gandhi told reporters. “Nevertheless, even by March, they will not be near 21/2 weeks.” For the coming six months, close monitoring will be much needed.”

Coal owned by the government of India, which produces over 80% of the country’s coal, reportedly said last month that it will increase coal supplies to utilities to alleviate a coal shortage in power plants. “The coal accessible at power plants is a rolling stock that is supplied daily by supply from coal firms,” the ministry explained.

“As a result, any concern about coal stocks dwindling at power plants is unfounded.” This year, in reality, the domestic supply of coal has replaced with imports by a considerable measure.”

The Future Prediction

“Given India’s large reliance on thermal power, we might see local coal providers redirecting their supply away from industries like steel, cement, and so on,” Societe Generale’s Kundu told Reuters via email.

“There will be a short-term dent inactivity in either case.” “Electricity prices are likely to rise as higher-priced coals must be imported, thereby fuelling inflationary pressure,” Kundu noted.

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