The many dangers from coal shortages The Equicom

The key reason for the coal shortage lies not so much in production, which has increased, but in transportation of the fuel

The Equicom

Here’s a new danger to the current account deficit (CAD) — increasing coal imports. Thermal coal imports in the September quarter rose 35 percent over a year ago to 42.7 million tonnes, the fastest pace in three and a half years. After two years of decline, India is now on course to increase its coal imports in the current fiscal.

It’s good news in one sense because it shows increasing demand in industries such as steel, power and cement. On the flip side, it points to inadequate domestic supplies. Indeed, the lack of fuel is crippling some plants in the power sector.

How bad is the shortage?

Consider these numbers: There are 123 coal-fired power plants which have signed fuel-supply contracts. As on October 23, 68 of these plants had less than three days of coal stocks. Look at it another way, about 15 percent of capacity with coal linkages has inventory of less than four days.

Maharashtra and Karnataka are particularly affected. The shortage has prompted the latter’s chief minister HD Kumaraswamy to appeal to Piyush Goyal, Union minister for railways and coal to ensure steady fuel supply to the state’s thermal power generators.

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