Severe coal shortage at Indian power plants hits industries

NEW DELHI, Oct 10 (Reuters) - A power plant in India’s capital New Delhi is among 37 across the country that have either exhausted their coal or have less than four days’ supply, a shortage that has forced some states to ration power for industries and homes.

Many states have been hit by a severe power deficit which has dealt a blow to small-scale factories that produce everything from steel to textiles and cannot afford alternatives such as diesel generators.

“The situation is very bad, with power cuts of up to 16 hours a day,” said Vijay Agarwal, a director at Puja Ferro Alloys in Goa state. “The shortage has raised our costs while output is at 60 percent of what it should be.”

The New Delhi plant, run by India’s largest power producer NTPC Ltd, has shut one of its five units due to coal shortage, a company official said.

Sixty of India’s 103 power plants have coal enough for less than a week, mainly due to lower supplies from Coal India , according to the Central Electricity Authority.

The level of coal stocks is the worst in about six years, forcing power companies to import huge consignments and leading to congested ports. In early September, 53 plants had less than a week’s supply on hand.

To deal with the power deficit, the southern state of Telengana has started cutting supplies to industries for two days a week, a move that industry body ASSOCHAM said will badly hurt small and medium sized companies.

“While all the segments of the industry will bear the impact, the small scale units will face death knell,” ASSOCHAM Secretary General D.S. Rawat said in a statement.

Apart from Goa, industries in Maharashtra and Tamil Nadu are suffering from frequent power cuts.


State-owned Coal India, the world’s largest miner of the fuel, accounts for more than 80 percent of the country’s total production but has failed to raise its output fast enough to cater to the increasing needs of the power sector.

Its April-September production fell short of its target of 220.11 million tonnes by more than 9 million tonnes. Coal India’s production shortfalls have already made India the third-largest importer of coal despite sitting on the world’s fifth largest reserves.

But a Coal India official told Reuters on Friday that the company cannot be expected to supply all the coal that power companies need and that they should import a percentage of their requirement.

Forced by populist governments to sell power at regulated rates, many debt-laden state power companies shy away from importing coal, given the higher costs. Importing coal can cost twice as much as buying it from Coal India.

Still, India’s coal imports hit 168.4 million tonnes in the fiscal year through March 31 and are rising as the new government has promised to scale up power output to light up every home. About 400 million of the 1.2 billion Indians still live without electricity.

India’s inbound shipments of thermal coal, used in power generation, are expected to surge 11 percent to 150 million tonnes this fiscal year, according to online market operator mjunction.

Annual coal imports could jump by as much as a third to more than 200 million tonnes for the next few years as a result of a court ruling last month that will halt mining of the resource by most private companies from next year. (Reporting by Krishna N Das; Editing by Anupama Dwivedi)