Jakarta, CNBC Indonesia – India has the potential to face energy supply problems in the coming months due to coal shortages and post-pandemic demand spikes.
This was revealed after China and European countries faced an energy crisis that disrupted global supply chains and made prices soar.
“Usually demand starts to drop in the second half of October… when (the weather) starts to cool off,” India’s Energy Minister RK Singh said.
“Demand will not go away, it will increase … We have added 28.2 million consumers. Most of them are lower middle class and poor, so they buy fans, lights, televisions,” he said.
India’s coal-fired power station had a four-day average stock at the end of September, the lowest in years. More than half of the plants are on standby for blackouts and the government is considering restarting idle power plants.
Coal accounts for nearly 70% of India’s electricity generation and about three-quarters of the fossil fuels mined domestically. State-run giant Coal India, which produces most of the country’s supply, said it was on the ‘threat of war’ to ensure adequate deliveries.
Demand for coal is soaring in Asia’s third-largest economy, following the wave of the Covid-19 virus. India has been hit by heavy rainfall recently which has flooded mines and disrupted transport.
This has led to a sharp increase in prices for coal buyers, including power plants. What’s more, the purchase of coal abroad is expensive because international prices have also skyrocketed.
“Until supply really stabilizes, we are likely to see power outages in some pockets, while customers elsewhere may be asked to pay more for electricity,” Pranav Master, director of infrastructure advisory at credit rating firm Crisil.
“Due to the high price of imported coal, power plants using domestic coal will have to do a lot of heavy lifting. Conditions are expected to be better when the rains subside.”
European countries are also facing an electricity crisis, with low natural gas reserves and soaring energy prices. For example, China has been hit by widespread power outages that have shut or partially shut down factories. It also dealt a blow to global production processes and supply chains.
Singh insisted that the Indian government was working hard to prevent a crisis, saying that so far it was still able to supply the amount of electricity on demand.
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