Recurring power crisis

IN NEWS:

• On June 10, India’s power demand touched a record high of 211 GW even as the coal shortage continued with coal stocks available only for eight days.

WHY A RECURRING POWER CRISIS?

• Rise in demand for power:
  • In the last two months, as temperatures soared and the economy recovered, the power demand breached the 200 GW level on several occasions. But the coal stock position at power plants remained worrisome.
• Dip in domestic production:
  • The domestic production of coal stagnated between FY18 and FY21, but revived in FY22. However, power demand too surged owing to economic recovery and hotter weather conditions and domestic production was unable to keep up with it.

• Spike in coal price in international market:
  • The price of imported coal is nearly 56 times higher than the domestic supply. Hence, the coal imported by power plants declined to 27 MT in FY22 from 66.06 MT in FY17. This also added pressure on the domestic supplies.

• Unpaid dues:
  • Distribution companies (DISCOMs) owe dues to the tune of Rs 1.16 lakh crore to the power generation companies. The delays in payments create a working capital crunch for generating companies which in turn inhibits them from procuring an adequate quantity of coal. 
• Weak finances of DISCOMs:
  • Discoms are bleeding because the revenue they generate is much lower than their costs. For instance: for every unit of energy sold by TANGEDCO in Tamil Nadu, the discom earned Rs. 2.09 less than the cost spent on supplying it.
• Reluctance to import:
  • States are wary of using imported coal as it would raise the cost of power substantially.

GOVERNMENT EFFORTS:

• Power­generating companies were directed to use imported coal for 10% of their requirement, failing which their domestic supplies would be cut. Subsequently, Coal India Limited has issued a tender for importing 2.4 million tonnes of coal in the July-September period.
• In May, 2022, the Indian government removed the import duty on coal, aiming to reduce raw material costs.

CONCLUSION:

The Central Electricity Authority of India (CEA) has predicted a peak power demand of 214 GW in August. However, the onset of the southwest monsoon will hamper mining and transportation of coal from mines to power stations. If coal stocks are not replenished to adequate levels before monsoon, the country might be heading towards yet another power crisis in July-August 2022.