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energy | IST

Coal shortage hits India; CRISIL expects prices to remain elevated until festive season ends

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CRISIL has come out with an interesting note that states power demand has picked up post COVID 2.0. Hetal Gandhi, Director at CRISIL Research discussed with CNBC-TV18 this and the impact of the coal shortage in India.

Research and rating agency CRISIL, in a note, has said that power demand has picked up post the second wave of COVID-19. Hetal Gandhi, director at CRISIL Research, discussed with CNBC-TV18 the demand for power and the impact of coal shortage in India.
“Coal dispatches are seeing a very good increase even YTD, almost 27 percent increase. The issue is that recovery in demand was better than what was anticipated, there were untimely shutdowns on the nuclear side of it and there were also issues in terms of hydropower plant utilisations given that rainfall was not very consistent – there was a disparity in terms of rainfall. All of that resulted in the heavy-lifting done by coal,” she explained.
According to her, there are plans to ramp up capacity further. “In the second half of the year, generally, coal-based power plant usage is higher. So, despite everything that we are talking about, we would see some kind of pressure that may continue,” she said.
Gandhi added that the inventory level of a seven-day mark may improve but may not cross the 10-day mark or go back to the previous normal. She expects this situation to continue until December a further gradual improvement until March.
Gandhi also pointed to the uncertainty in the global markets in terms of what is going to be the demand during the festive season. “Given the kinds of uncertainties, which are playing around, we believe that prices have shot up. Ideally, they should have started coming down but we don’t see that happening and we believe that prices may continue to remain elevated until the festive season ends, which is in December,” she said.
Renewable energy plants provided some support, however, it is not the season for solar plants to provide a lot of support and therefore, the pressure on coal plants continued to go up, she noted.
She believes that further imports of non-coking coal on the power side have been a little damp given high prices and supply chain disruptions, which have happened on the international coal side of it as well. “So, the combination of this has put in the pressure on the domestic mining,” she said.
For the full interview, watch the accompanying video.