India: Power and coal crisis may cause ‘blackouts’

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The power crisis in India has led to ongoing warnings of possible power outages due to a lack of coal. But how has India reached such a point? The country has the fourth largest coal reserves in the world and relies heavily on thermal power plants to meet its energy needs. In addition, the country is also the second largest importer of coal in the world and imports fuels from various countries.

But a sharp rise in electricity demand, low coal reserves after heavy rains in Gujarat, Punjab, Rajasthan, Delhi and Tamil Nadu and a 40% fall in coal imports are some of the factors fueling this coal crisis in India. In addition, rising coal prices, which rose from 60 in (March-2021) to $ 160 / ton in September and October 2021, are also making matters worse.

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In an effort to boost the country’s coal production, the government in May 2020 decided to auction off coal mines along with bauxite. The rationale was to boost production to reduce dependence on imports. The Federation of Indian Mineral Industries has warned India’s Ministry of Coal that the carbon shortage has created “an extremely precarious situation for coal consumers, especially in the aluminum and steel industry” and said the situation could lead to the closure.

“No one believed that industrial demand would rise so quickly, so power plants did not bother to replenish coal reserves. But now stocks are running low day by day, “said Nitin Bansal, deputy director of India Ratings and Research.