Opinion | Thermal power plants left with low fuel stocks, yet coal scarcity is more political than real

Do we have a coal shortage? In absolute terms, no. But did a lot of the thermal plants around the country let their coal stocks go below even five days’ stocks? Yes. They did so, basing their demand projections on near flat Covid-19-induced demand last year. Maybe they were expecting a third wave as bad as the second. Instead, the intense round of vaccinations, nearly 100 crore people worth, has greatly assuaged the situation. There is a reason for the hesitation. Electricity, once produced, is a perishable commodity without expensive and high technology methods of storage. The United States has created over 25 gigawatts of strategic electrical energy storage. But India has next to none, unless you count a few batteries. But we do have a National Grid and Exchange. The trouble is, it buys at market rates and sells its electricity to the highest bidder. This can upset contractual rates and force electricity selling prices upwards. Besides, the thermal generation units let this squeeze happen every year post monsoon. There is a dip in the mining of coal after the rains till all the water can be drained. Still, dry coal stocks at the mines are maintained at about 22 days’ demand. Coal India meets 80 percent, though many thermal units have been importing a lot in past years. Caught out by their own calculations, particularly in Punjab, Rajasthan, Jharkhand, thermal power plants are scrambling to raise stocks to 15 days now to meet a sharp uptick in demand of more than 20 percent. The manufacturing economy has woken up to the emphasis on aatmanirbhar, and opportunities based on at least partial relocations from China. Other sectors of the economy too have perked up enough to produce the highest growth forecasts in the world for this fiscal. Rural electrification has increased consumption. GDP is headed to clock 9.5 percent growth this year followed by another 8.5 percent growth on top of that next year as well. The IMF and World Bank are saying so, and not our government statisticians. Economics being a demand-supply game, there are a few associated problems on the coal imbroglio that cannot be glossed over. The thermal plants owe the coal suppliers Rs 20,000 crore in unpaid bills. Nevertheless, enhanced coal supplies are already at 1.62 million tonnes a day heading up towards 2 million tonnes a day post Dussehra, according to Coal Minister Pralhad Joshi. The Prime Minister’s Office has taken a quick supervisory interest, as it doesn’t want anything like this to damage the return to robust growth. The partially revamped and far more dynamic railways are moving vast tonnages around the country on an emergency basis. The electricity distributing companies (discoms) also owe the generating companies Rs 1,60,000 crore in unpaid bills. Presumably, this is because the governments of the states and at the Centre have not paid. Private consumers have to pay if they don’t want to be cut off. Present firefighting apart, the situation seems pretty precarious. The political buck passing that is usual in such situations has been countered rather well by the Centre in this instance with ready facts and figures. The comparisons in the international media with China are misplaced, because China is highly dependent on imports to make up the deficit in demand. That it is in a financial bind right now is another matter. In the broader context, India has the fifth largest proven coal deposits in the world, after the US, Russia, Australia and China in descending order. Some accounts put India at number 4. These can last us for 111 years at present offtakes, but even accounting for increased requirements, it’s enough for at least a century going forward. And that’s assuming no further discoveries of large deposits. However, with concerns over pollution, scrubbing expenses, environmental concerns, the Paris Accords, coal is regarded worldwide as a bad old Victorian Industrial Revolution leftover. However, it would be a mistake for India to not leverage a strength just to please the climate lobbies. Concern over global warming may be real, but immediate fuel shortages and spikes in pricing are more compelling. This year coal prices have risen from $60 a tonne to $160 internationally. India has been the second largest importer of coal after China, at about $16 billion to their $16.7 billion per annum, running neck to neck with Japan in this. But not this year. After this page break caused by rapacious international coal prices, freight hikes and shipping congestion, India should be headed towards export of coal. This, after meeting all its needs. A revived Coal India is now producing 600 million tonnes per annum but slated to produce a billion tonnes by 2023-24. Other coal blocks have been auctioned. Commercial production of coal as opposed to the United Progressive Alliance era ‘captive’ mining handed out to industrial groups has been introduced. Are there any real alternatives to coal? Alternate energy sources including hydroelectric, solar, biomass, nuclear (both uranium-based with its erratic supply, and the as yet non-player thorium), have not done very much. Then there are wind, wave, gas, petroleum, and who knows, hydrogen in the future. For now, plentiful coal might be the main player for years yet. At present it provides 70 percent of the thermal based electricity, with all the other contenders put together accounting for no more than 30 percent. India has the largest reserves of thorium in the world, but has not been able to develop a workable thorium-based reactor to produce electricity. It may be political to create a fuss over perceived coal shortages just as there was a real one for oxygen during the second wave last year. There may be some blackouts, and load-shedding power cuts have already begun in some states. But it is a crisis of our own making at best, and headed swiftly towards a solution. But having said that, it is another misinformation gambit aimed at a 2022 election scenario that is not going to fly. The writer is a Delhi-based commentator on political and economic affairs. The views expressed are personal.