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Coal India to ramp up supplies to address utilities' fuel shortage

Sudarshan Varadhan and Soumyajit Saha
Updated ·2-min read
FILE PHOTO: Birds fly next to electricity pylons on a smoggy afternoon in the old quarters of Delhi

By Sudarshan Varadhan and Soumyajit Saha

CHENNAI (Reuters) -State-run Coal India said on Wednesday it will ramp up supplies to utilities to address a coal shortage that has left most of the country's power plants close to running out of fuel when electricity demand is increasing.

"Despatches to coal-fired plants from October onwards are aimed at 1.5 million tonnes per day and beyond 1.6 million tonnes in due course," the miner, which accounts for over 80% of India's coal output said in a statement.

India's federal power ministry over a month ago flagged a coal shortage driven by rising electricity demand, and has convened emergency meetings with stakeholders to address challenges, but the coal deficit has widened not shrunk.

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India's power demand, over 70% of which is met by coal, rose 13.2% in the first eight months of 2021, after declining for the first time in over three decades in 2020.

Higher power demand has led to a rally in shares of Indian power producers such as NTPC Ltd, Tata Power and Torrent Power.

As of Sept. 27, a total of 112 of the 135 coal-fired plants had stocks that would last less than a week, compared with over 70 plants the same time last month. Over 70 plants had stocks for less than three days on Sept. 27, the CEA data showed.

Indian utilities are struggling with a coal shortage even though Coal India's supplies to power plants have exceeded pre-COVID levels.

The world's largest coal miner supplied about 243 million tonnes of coal to utilities from April 1 to Sept. 28, 24% higher than the same period last year and up 11% compared with April-September 2019, it said on Wednesday.

Coal India shares, which have risen 27.3% this month, settled 6.4% higher at 185.70 rupees on Wednesday.

The company said higher global prices of coal and freight rates have pushed utilities dependent on imported coal to curtail power production.

"This has resulted in the demand shift to the domestic coal-fired plants," it said in a statement.

(Editing by Barbara Lewis)