India stares at power shortage in summer demand due to coal supply crisis

New Delhi, April 13

Several states in India are likely to see a power shortage in the coming weeks as power plants struggle to find optimum amounts of thermal coal amid rising summer demand, higher import costs and the resultant supply tightness, sources told S&P Global Commodity Insights.

Global thermal coal prices have remained elevated as a fallout of the Russia-Ukraine conflict, which disrupted trade flows and crippled supply amid additional demand from Europe, which has now sanctioned Russian coal.

As a result, imported coal has largely remained out of bounds for price-sensitive markets like India, S&P Global Commodity Insights said.

The shortage level was even higher at 80.08 million units on April 7, which raised concerns among several market participants, who said the crunch was near to mid-October 2021 levels when India faced an acute power crisis as the stockpile at 115 power plants slipped to critical levels.

According to a notice issued by the Maharashtra State Electricity Distribution Company Ltd. on March 31, reviewed by S&P Global, the state has decided to temporarily curtail electricity supply to segments of agricultural power consumers in the state.

Other provinces where high supply shortages were recorded on April 10 include Madhya Pradesh (9.67 MU), the union territories of Jammu and Kashmir and Ladakh (cumulatively 4.65 MU), Punjab (4.5 MU), Haryana (4.39 MU) and Jharkhand (2.29 MU).

S&P Global reported April 1 that India needs to increase thermal coal imports to meet rising power demand during the peak summers, even as import prices remain elevated due to supply tightness created by the Russia-Ukraine conflict.

India's state-run Coal India said March 28 that its pithead stock is expected to rise above 60 million mt by April 1, 39.39% lower than the corresponding period in the previous year. Coal stocks at Indian power plants stood at 25.5 million mt March 28, 12.96% lower on the year.