India is expected to face a greater coal shortage in the quarter ended September amid expectations of increased electricity demand, an internal energy ministry presentation seen by Reuters said, raising the risk of widespread power outages. got bigger.
The energy-hungry country expects local coal supply to be 42.5 million tons lower than demand in the September quarter, 15 percent higher than previously forecast, due to higher electricity demand growth and lower production from some mines.
The grim forecast shows the magnitude of India’s fuel shortage, at a time when annual power demand is growing fastest in at least 38 years and global coal prices are trading at near-record levels due to a Russia-Ukraine supply shortage. -crisis.
India has in recent days ramped up pressure on utilities to increase imports, and warned of cuts to domestically extracted coal supplies if power plants fail to build up coal reserves through imports.
However, one of the slides in the presentation showed that most states had not yet awarded contracts to import coal and that if no coal were imported, Indian utilities would run out of coal by July.
Only one state had awarded a contract to import coal at the end of April, according to a Reuters-reviewed import status report from the Department of Energy.
India expects domestic coal reserves of 154.7 million tons, 42.5 million tons less than its forecast needs of 197.3 million tons in the September quarter, the presentation showed. Previously, a deficit of 37 million tons was assumed.
The presentation took place Friday in a virtual meeting attended by coal and energy ministers, in the presence of top officials from the central and state governments, said two government officials familiar with the matter.
The federal ministries of coal and energy did not immediately respond to a request for comment. Details about the presentation have not been previously reported.
Power plant coal inventories have fallen about 13 percent since April, translating into eight days of coal demand, the lowest level at this time of year in at least nine years. Higher coal demand could also stifle efforts to build up power plant inventories.
India now expects utility coal demand to be 784.6 million tons for the year ending March 2023, the presentation showed, 3.3% higher than previously projected.
The projected annual coal shortage is now 49.3 million tons, nearly three times the 17.7 million tons previously projected, the presentation showed.
India matched its forecasts for coal demand after higher-than-expected electricity demand growth in April, when electricity consumption hit an all-time high due to rising temperatures.
Many states on Friday called for state-owned Coal India to import coal in bulk and distribute it among states, officials said.
States cited high world prices and supply challenges to seek aggregate imports, the officials said, adding that the coal secretary had told states that demand would be considered.
Higher imports could put further pressure on the state’s power distribution companies, which are already burdened with debt and owe billions of dollars to producers for absorbing higher input costs in the past to keep tariffs stable.
Coal India did not immediately respond to a request for comment. The world’s largest miner has failed to import coal in recent years.
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