6 Indian states hit by power blackouts as coal supply still tight

New Delhi: India’s energy crisis is starting to bite with states from Uttar Pradesh to Rajasthan and Kerala hit by blackouts over the weekend.

In Rajasthan in northern India, there were rolling outages of up to two hours in urban areas and four hours in rural areas, said Subodh Agarwal, the state’s additional chief secretary for energy.

Rajasthan has been receiving less than half of its contracted volumes of coal from Coal India Ltd., he said. There were also power shortages in other states including Punjab and Jharkand, according to government data.

The shortage of coal - which makes up around 70% of India’s electricity mix - is forcing generators and some industrial users to buy electricity at the power exchange. Spot prices on the Indian Energy Exchange Ltd. have more than tripled over the past two weeks, reaching 16.42 rupees a kilowatt hour on Monday. That’s the highest in 12 years, according to the company.

There are fears of more widespread blackouts, which could thwart economic growth and cripple social infrastructure, including hospitals and schools. With supplies to power plants being prioritized to avert cuts, other coal consumers, including aluminum smelters and steel mills, are left to choose between reducing output or paying more for the fuel.

Delhi Chief Minister Arvind Kejriwal warned of a potential power crisis in the Indian capital in a tweet on Saturday. At least one power station that supplies the city had run out of coal, while others only had reserves of one to four days as of October 5, Kejriwal said in a letter to Prime Minister Narendra Modi that he posted on Twitter. Delhi’s gas-fired power plants don’t have enough of the fuel to make up the shortfall, he said.

India’s coal ministry downplayed the severity of the situation, however. “Any fear of disruption in power supply is entirely misplaced,” it said in a statement on Sunday, responding to Kejriwal’s tweet.

There is “ample coal available in the country to meet the demand of power plants,” it said.

About two-thirds of India’s coal-fired power plants had stockpiles of a week or less, according to data from the power ministry. If the stockpiles dwindle further, the country is counting on importing more coal and reviving idled plants that run on gas.

Coal India Ltd. said its output had risen to 1.5 million tons a day over the past four days, up from 1.4 million at the end of September. The company needs to supply about 1.6 million tons of coal a day to power generators and is expected to reach that level within a week, Federal Power Secretary Alok Kumar said in an interview with the CNBC TV18 news channel.

“There are issues in some pockets, but the situation is under control,” Kumar said. While power shortages rose in the first week of October, they remain below 1% on a national level, he said.

India’s efforts to import more coal are complicated by surging demand as China is also struggling with its own energy crisis. The jump in seaborne coal prices has led to several Indian coastal plants curbing output, increasing the load on units using domestic supply.

However, Debasish Mishra, a Mumbai-based partner at Deloitte Touche Tohmatsu, said India should be able to manage the power situation, and that there was potential to ramp up hydropower as heavy rains had filled the reservoirs. “We’re unlikely to see widespread blackouts,” he said. “There could be some outages in rural areas, but the government can’t afford to stop supplies to industries.”