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06-10-2021, 08:41 AM
Posted 13h ago
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Here is a summary of the factors that have led to India's coal shortage.
What are the current stock levels?
As of September 29, 16 of India's 135 coal-fired power plants had zero coal stocks, according to the Central Electricity Authority (CEA).
More than half of the plants had stocks that would last fewer than three days, while over 80 per cent had less than a week's stock left.
Coal accounts for more than 70 per cent of India's electricity output, and utilities account for about 75 per cent of India's coal consumption.
What caused the coal shortage?
India's industrial power demand has surged since the second coronavirus pandemic wave.
On top of that, a widening price gap between lower domestic prices and record global coal prices has led buyers to shun imports.
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Why are prices between domestic and global coal widening?
Domestic coal prices in India are largely decided by Coal India.
An increase in coal prices generally has a knock-on effect on power prices and inflation, making a hike a politically sensitive decision.
......
Why are utilities unable to pass on higher costs?
India's power tariffs, set by the respective states, are among the lowest in the world
This has left many of these companies deeply indebted, with cumulative liabilities running into billions of dollars.
The companies' strained balance sheets have consistently triggered delayed payments to power producers, often affecting cash flows and providing few incentives for further investment in the electricity-generation sector.
Indian power producers locked in long-term agreements with distribution utilities often cannot pass on higher input costs unless clauses are included in their contracts.
https://www.abc.net.au/news/2021-10-05/i.../100516332
......
Here is a summary of the factors that have led to India's coal shortage.
What are the current stock levels?
As of September 29, 16 of India's 135 coal-fired power plants had zero coal stocks, according to the Central Electricity Authority (CEA).
More than half of the plants had stocks that would last fewer than three days, while over 80 per cent had less than a week's stock left.
Coal accounts for more than 70 per cent of India's electricity output, and utilities account for about 75 per cent of India's coal consumption.
What caused the coal shortage?
India's industrial power demand has surged since the second coronavirus pandemic wave.
On top of that, a widening price gap between lower domestic prices and record global coal prices has led buyers to shun imports.
......
Why are prices between domestic and global coal widening?
Domestic coal prices in India are largely decided by Coal India.
An increase in coal prices generally has a knock-on effect on power prices and inflation, making a hike a politically sensitive decision.
......
Why are utilities unable to pass on higher costs?
India's power tariffs, set by the respective states, are among the lowest in the world
This has left many of these companies deeply indebted, with cumulative liabilities running into billions of dollars.
The companies' strained balance sheets have consistently triggered delayed payments to power producers, often affecting cash flows and providing few incentives for further investment in the electricity-generation sector.
Indian power producers locked in long-term agreements with distribution utilities often cannot pass on higher input costs unless clauses are included in their contracts.
https://www.abc.net.au/news/2021-10-05/i.../100516332
