The Wanakbori thermal power plant at Wanakbori village, some 120kms from Ahmedabad in India. The country relies on coal for electricity. Photo: AFP / Sam Pantaky

India is now staring at a squeeze in coal reserves with demand far outstripping supply, which could plunge the country into a major power crisis.

With the economy recovering after Covid-19 lockdowns and other curbs on economic activity, a sharp surge in energy demand has triggered an unprecedented fuel shortage at the country’s coal-fired stations.

These power plants had an average of four days’ worth of stock of fuel at the end of last month, down from 13 days at the start of August.

More than half the plants are on alert for outages. Of the 104 thermal plants monitored daily, 15 with a generation capacity of 14,875MW had zero days of coal stocks on September 30, while another 39 with a capacity of 52,530MW had stocks of less than three days. Another 6,960MW of capacity is facing plant outage due to the unavailability of coal.

Coal inventories at Indian power plants fell to about 8.1 million tons at the end of September, about 76% less than a year earlier, it added.

The country’s power minister RK Singh is concerned over the supply crunch and warned it could last for another six months. “I can’t say I am secure … If you have 40,000-50,000MW (of thermal capacity) with less than three days of stock, you can’t be secure,” Singh told The Indian Express.

Singh said demand normally started to decline in the second half of October, when winter sets it, but admitted it was a “touch and go” situation. However, he said his ministry was working toward averting a crisis.

In India, coal-fired power stations account for nearly 70% of electricity generation. There have been reports that coal supplies have been diverted from key customers including aluminum smelters and steel mills. The country meets about three-quarters of its demand locally, but heavy rains have flooded mines and key transport routes.

The government has amended rules with the aim of allowing a 50% sale of coal from captive mines. The move is likely to benefit more than 100 captive coal and lignite blocks. The availability of additional coal will ease pressure on power plants.

This crisis comes amidst a global energy crunch, with a sharp surge in demand across Europe, China and elsewhere after the opening up of economies. Supply chains are being tested.