Coal production lags electricity demand: RK Singh

01 May 2022

Power minister R K Singh insists that there is no coal shortage and states need to import coal to fill the mismatch between the rise in electricity demand and fuel supply snags caused by a spike in global costs.

He told the media that generation companies (gencos) have been asked to purchase rakes to meet the shortfall from railways.

The good news is that our economy has bounced back vigorously, and we are witnessing a 15% growth in electricity demand. Coal production capacity has increased but not so fast as it takes almost three years to begin a mine.

Simultaneously, international costs of coal shot up from about $40 to $140 a tonne. All our imported coal-based plants, with about 17,000-megawatt (MW) capacity, became too costly. Coal available for blending suddenly came down — from about 24 million tonnes(mt) in 2019 to about 8 million tonnes last year. The complete shortage is 16 million tonnes.

The power ministry has asked generation companies (gencos) and the states to go back to blending, at least 10%, although pushing for 15%.

No one could have anticipated the sharp decline in imports. Due to the closure of coal mines in some nations, demand for international coal increased. Gas costs shot up and have left 25,000 MW idle. Producing electricity from gas, which is approximately $40 a unit, will make electricity prices roughly Rs 23 to Rs 24 per unit.

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Also read: Govt eases environmental approvals for coal mine expansions

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