India’s Coal Shortage Drags On

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This story of India’s coal shortage refuses to die down.

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For some years now, many parts of the country have been facing power cuts. Why? Because of a shortage of coal, which becomes even more acute in the monsoon season (which is just about ending in most parts of India).

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Northern provinces, including the country’s capital, New Delhi, and those in the central part are susceptible to coal-linked power interruptions, forcing industries to halt temporarily and wreaking havoc on the lives of ordinary people.

India’s single-largest supplier of coal for thermal plants, the state-run Coal India, finds itself at the receiving end because of supply issues, which it, in turn, says is due to unavailability of rail wagons. The firm accounts for about 80% of coal production.

Not only are power plants complaining of the coal shortage — other industries are now protesting loudly, too.

The Aluminium Association of India (AAI), for example, dashed off a letter to the federal government asking it to halt prioritizing coal supply to power plants.

A report in the Indian newspaper The Hindu said excluding other important industries from the coal supply chain was having a detrimental and cascading effect. The reaction comes after the government asked coal companies to send off supply to thermal plants first.

As expected, in these troubled days of import-export between the U.S. and the rest of the world, India’s coal imports shot up by 35% to 21.1 million tons (MT) in September this year, compared to 15.61 million tons in same period last fiscal, according to the Economic Times. Imports were largely of non-coking coal.

Government officials had hoped that this monsoon season it would be a different story compared to some of the previous years. The federal government had assured all that this time there was enough dry coal supply for power plants. At the end of the rainy season, the government’s claim was shown to be untrue.

Incidentally, Coal India registered 15.2% growth in coal production during the first quarter ended June 2018, amounting to 136.87 MT.

One can even claim that an indirect victim of the ongoing U.S.-China trade tariff war is India’s aluminum sector.

Because of the tussle, both countries are sending their aluminum scrap to India. In the AAI’s letter, it pointed out that aluminum smelting needs uninterrupted electricity. An outage of over 2 hours directly affected the functioning of the smelters for a temporary period, affecting bottom lines and yielding lower output.

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Coal India had sent 84% of its coal to power plants up till Oct. 12, sending 1.34 MT of coal per day to power plants in October.

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