Is India running out of coal? Economist Report

India is on the verge of a nationwide power outage. More than two-thirds of its electricity comes from 135 coal-fired power plants, and stocks in most of them are dangerously low. They often hold stock equal to 30 days of supply, but last week a site's average reserve dropped to one-tenth of that. Some had to close due to lack of fuel. The country's 28 state governments are responsible for maintaining the energy supply, and many of them are protesting. Rajasthan is planning one-hour and four-hour power cuts in 12 districts, including several near Delhi, the national capital, whose chief minister is pleading for help from Prime Minister Narendra Modi. Maharashtra, home to the industrial capital of Mumbai, is a day and a half from bottoming out; his energy department said it needs 730 billion rupees ($ 9.7 billion) immediately, otherwise the state "will go in the dark." In particular, these posts are run by opposition parties. Mr. Modi's national government has called for calm. His coal minister said "there is absolutely no threat of a power outage." In fact, most of the country's newspapers have kept the ongoing crisis from their front pages, even as the power plants' coal reserves are dwindling. But if the lights go out in Asia's third largest economy, it will be hard not to notice. Why is India fighting for coal? – writes The Economist .

India sits atop the fifth largest proven coal reserve in the world, enough to satisfy its annual appetite for more than a century. Demand is typically higher in October, and several factors have contributed to stifling coal access from thermal power plants this year. The Indian economy is coming back to life after two terrible rounds with the pandemic: in the year following the first, caused by the draconian blockade of April and May 2020, the economy shrank by 7.3%. The nightmare advent of the Delta variant in April and May 2021 dealt a near-death blow. Now, as covid-19 subsides, pent-up demand is increasing. Consumption jumped by more than 16% from August 2019 to August 2021. Coal India, the national quasi-monopoly, failed to predict this (and has skimped on investment in recent years anyway).

Bad weather created problems at the same time, as particularly late and heavy rains in India's coal belt flooded the mines and hampered transport. Just this week, rains in the Chinese province of Shanxi aggravated that country's coal crisis. Which points to a third culprit: prices on the international coal market are at an all-time high. While most of India's coal supply is domestic, plants on the coast require imported material, which power companies can barely afford these days.

North India suffered what is classified as the worst blackout in the world in the summer of 2012. The country's energy supply, like many other things, has changed dramatically since then. Back then the economy was booming and energy production was struggling to keep up. In the following years huge sums were invested in both coal plants and renewable energy sources (even if a substantially greener energy mix is ​​still a long way off). During Modi's tenure, India had a surplus of generative capacity. The main struggle lately has been to find ways to connect more Indians to more energy, for the sake of meshing industry to employ and sustain a population that will soon be the largest in the world. The biggest obstacle has been an antiquated financing system, which distorts prices by placing bankrupt state-owned distribution companies between plants and end users. The distributors, unable to demand sufficient payment from consumers, fail and leave the generators themselves strapped for cash and beg governments for bailouts. This is a perennial plague on India's productivity. Over the next five to six months, the urgent need is to keep the economic recovery on track. Liberals like to say that India grows at night, "while the government sleeps," but it cannot grow during a blackout.

(Extract from the foreign press review by Epr Comunicazione)