Power, coal crisis due to govt. mismanagement’ (UPSC Current Affairs)

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Why in the News?

• Thermal power plants, which are largely fuelled by coal, meet 70% of India's electricity requirement.
• Coal supplies at more than 100 thermal power plants in India have slipped below 25% of the necessary level, according to the latest statistics (critical mark).
• The stock of more than 50 thermal plants has dipped below 10%, prompting states to seek more coal supplies from India's sole coal supplier, Coal India Ltd. (CIL).

Over-reliance on coal

• According to statistics from the Central Electricity Authority (CEA), India's power output via thermal plants using domestic coal was at 182.39 GW on April 19, 2022, with an average coal stock of 34%.
• Meanwhile, power plants employing imported coal-generated 16.73 GW, with an average coal stock of 34%. Nine thermal power stations with a combined capacity of 3.56 GW are now offline.
• 85 of the 173 thermal power plants that use domestic coal have less than 25% stock, while 11 of the units that use imported coal have reached critical levels.

Why is India experiencing a coal shortage?

• The primary cause of coal scarcity is rising electricity demand.
  • Demand climbed to 124.2 BU per month in 2021, up from 106.6 BU in 2019. The demand is expected to rise to 132 BU by 2022.
• Another reason is — supply constraint in October 2021, when India faced a significant coal crisis owing to shipping delays, with stockpiles falling to only four days.
• Heavy rains in coal-mining areas like Gujarat, Punjab, Rajasthan, Delhi, and Tamil Nadu, have resulted in lower coal production.

What impact will the coal shortfall have on the power supply and cost?

• According to Fitch, India's daily electricity shortfall climbed from 0.3 per cent to 1% in April 2022.
• As a result, the price of power sold on Indian markets increased by 85 percent from an average of Rs 3/kWh to Rs 8.23/kWh in March.
• States like Andhra Pradesh, Gujarat, Maharashtra, Jharkhand, Bihar, Haryana, and Uttarakhand have used load shedding and scheduled outages to meet the peak demand.

How does the government intend to address the coal shortage?

• The Centre has permitted states to utilise up to 25% of their captive coal reserves to fulfill rising domestic demand.
• It also allows power plants to mix imported coal up to 10% of the time to reduce CIL's load.
• The Centre enacted mining reforms in 2020, ending CIL's monopoly on India's coal production. The statute permitted commercial coal mining to begin immediately, with 50 blocks available.
• It also permitted everyone, not just captive consumers (i.e companies which use coal for running their businesses), to bid for coal mines.
• The law also guaranteed a Rs 50,000 crore investment to diversify CIL's activities and a revenue-sharing rebate for early coal output.
• States, particularly mineral-rich states like Jharkhand and Bihar, have expressed strong opposition to the law, claiming that it will have a negative impact on a significant tribal population and forests. The Supreme Court is now hearing the case.