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Robust demand and a renewed…
India’s massive coal fleet is running out of coal, threatening a power crunch in the country that relies on the dirtiest fossil fuel for most of its electricity generation.
Coal is the major power generating fuel in India, accounting for 70 percent of electricity generation.
Coal inventories at many of the over 100 coal-fired power plants are at critically low levels, while India scrambles to get more coal supply amid a global crunch of energy supply and skyrocketing prices of coal and natural gas.
As per India’s Central Electricity Authority (CEA), cited by Reuters, more than 80 percent of India’s 135 coal-powered plants had less than a week left of coal inventories as of September 29, more than 50 percent had stocks for less than three days, and 16 plants had no coal at all.
As of October 1, coal stocks were critically low at 104 out of a total of 135 power plants, or 77 percent of all plants, Reuters columnist John Kemp noted.
Amid surging natural gas prices, utilities all over the world are firing up more coal-fueled power generation units, driving up coal demand and prices.
A coal shortage in a major consumer such as India could force power plants to buy more expensive imports of coal or bid up prices in domestic power auctions. This would raise the costs of India’s manufacturing and the whole economy, which is already feeling the pinch of higher oil prices this year.
Now the coal shortage threatens India’s power supply and could lead to a repeat of the power crisis in China, which resorted last week to restricting power use in at least 20 regions and provinces that contribute more than half to the Chinese economy, adding a bearish risks-off sentiment on global markets, including in the oil market.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.