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India continues to grapple with 'severe and protracted power crisis' after surge in coal prices
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IANS | 28 Jun, 2022
India is continuing to grapple with a "severe and protracted" power
crisis after a sustained surge in global coal prices in late-2021 was
further aggravated by Russia's invasion of Ukraine in February, S&P
Global Commodity Insights said.
The global price
pressure eroded India's import volumes and reduced its power plant
stockpiles to critically low levels just as an unrelenting heat wave
pushed demand to unprecedented levels. The country generates more than
75% of its power from coal, and is the world's third-largest producer of
electricity at 1,383 TWh/year.
The crisis is "so severe" that
government authorities in India - the world's second-largest coal
producer, importer and consumer after China - are "threatening to cut
domestic coal supply to power plants that are reluctant to import coal
at current elevated prices". The current deficit, the second such coal
shortage since October 2021, was initially triggered by the sharp rise
in global coal prices in mid-2021, S&P Global Commodity Insights
said.
In early 2022, before Russia invaded Ukraine, Indonesia's
most popular coal grade, Kalimantan 4,200 kcal/kg GAR coal, traded at
$65.45/mt FOB. Since then, the disruption in global coal supply has led
to a near 30% surge in the grade's price to $86/mt on June 9, according
to S&P Global Commodity Insights data.
To meet India's rising
power demand as Covid-19 restrictions eased, the government first tried
to boost domestic coal production, which rose to 777 million mt in FY
2021-22 from 716 million mt in FY 2020-21, coal ministry data showed.
India
has long harbored ambitions of reducing coal imports to zero by 2030
and state-owned Coal India has said that it targets hiking its domestic
production to 1 billion mt coal by FY 2023-24.
The government has
also tried divesting coal blocks to private companies in recent years
to incentivize them to increase India's overall coal production.
Domestic
coal-based power production could not keep pace with the surge in
electricity demand and India began to experience widespread power
shortages more severe than anything the country had seen in at least
seven years.
India's federal power ministry is currently
scrambling to get an estimate of the coal shortage outlook for September
and has asked the world's largest producer of coal, Coal India, to
procure coal on behalf of power plants at federal, state and other
levels, S&P Global Commodity Insights said.
With the global
coal supply expected to remain tight in H2 and winter still some months
away, coal shortages and power outages may well remain a pressure point
for India for the rest of the year.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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