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India’s Coal Supply Shock Causes Major Power Outages

The Indian states of Punjab, Uttar Pradesh and Andhra Pradesh have been forced into blackouts as of Thursday as power supplies are cut off due to a major increase in demand for summer cooling against a backdrop of low coal supplies. 

India relies on coal for approximately 70% of its electricity generation and often struggles with power outages and even blackouts; however, this summer experts are expecting a more severe crisis in what is shaping up to be the hottest March in a century, Bloomberg reported

In the first half of April, power demand in India hit a 38-year high for the month, according to local media reports. 

India’s ABP news outlet reports that several Indian states are running out of coal reserves due to intensifying heat waves. India’s Central Electricity Department has stated that a minimum of 100 out of 173 power plants are now facing a coal shortage, with stocks now 25% from their normal levels.  

Painting an even more dire picture, Indian electricity authorities have noted that on April 18th, coal stocks were sitting at 22.52 million tonnes, while normally at this time of year they should be nearly 67 million tonnes. In other words, coal stocks are down to one-third their usual levels. 

"Thermal plants across the country are grappling with coal shortage as the power demand in states has increased, and many of them are not able to bridge the gap between demand and supply because of insufficient coal stocks at thermal plants," AIPEF Chairman Shailendra Dubey said in a statement carried by ABP. 

Suffering from what Bloomberg has called a “persistent shortage of coal”, Nomura Holdings Inc has expressed concern that the country could experience “stagflationary shock” due to pressure on industrial output. 

Bloomberg also cited a Mumbai-based partner at Deloitte Touche Tohmatsu as warning that the coal shortage could worsen in India, with the monsoon season looming, which typically has a deleterious effect on coal production and distribution. 

By Charles Kennedy for Oilprice.com

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