Last week was all about the Chinese energy crisis. The issue was broadcasted on each and every news channel. We have seen them. Unfortunately, a similar crisis is brewing in India as well. There have been consistent load shedding and power outages across India. Are we going to face a similar situation to China? Let’s see what the resources are saying.

Coal: Primary Indian Energy resource

Coal is India’s primary source of electricity generation. It is estimated that around 70% of electricity is generated using thermal power plants. India has 135 coal-powered plants out of which 80% of them have less than 8 days of supplies left.

State-run Coal India is responsible for almost 80% of India’s coal output. It is reported that they would ramp up supplies to address the coal shortages across power plants.

What is causing the coal crisis?

There is a combination of factors that is causing the coal crisis in India. If we take a look at the last four years of energy consumption and compare it with the latest, we can see that the usage is increased substantially. With festival season coming closer, energy requirements by households and industries have spiked. In addition to the regained moment of the economic recovery from COVID-19.

But these were all anticipated outcomes, then why are we not prepared?

From 2020, we can consider these two years as a “Black swan” event. Something that happens only once in a lifetime. There were many unpredictable events. First, there was a global shutdown due to COVID, followed by a bias towards the Chinese government. Then the supply chain throughout the world got disrupted due to the following political reasons. We saw major superpowers of the world taking sides.

Then the Suez Canal block opened the eyes of the world to its supply chain problem. Raw materials got stuck somewhere and the demand for ships increased. Subsequently, manufacturers around the world started to hoard raw materials that led to scarcity and demand. Ultimately leading to a hike in prices. The hike in prices was also a result of inflation around the world.

Even though India has one of the largest coal reserves in the world, we are still the top importers of coal. The reason being, the coal we have in India does not have a high burn rate. Hence, we are importing most of the coal. For the aforementioned reasons, coal prices have shot up. Affecting the entire supply chain with inflation and scarcity.

India’s power minister said that the supply crunch could last at least six months. But the Ministry of Coal said that the “country has sufficient coal to meet power plant demands and that fears of disruption in the power supply are “unfounded” and “erroneous”. The coal available at the power plants is a rolling stock that gets replenished by the supplies from the coal companies on a daily basis. Therefore, any fear of coal stocks depleting at the power plant end is erroneous. In fact this year, domestic coal supply has substituted imports by a substantial measure.”

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How Coal is affecting the Textile Industry?

The Textile Industry and most of its supply chain depend on coal and its energy resources. Production costs for these units have gone up more than Rs. 2.50 per meter in the last two months. It is the result of the price hike of coal, yarn, and chemicals. This leads to higher prices for dyeing and printing and the whole supply chain is affected by price fluctuations.

In the last two months, prices have been really unpredictable. Sellers are quoting prices only when confirmation is made.

Will Surat Textile Mills close?

The owners of dyeing and printing mills in Surat proposed to keep their units shut for a month from November 1 due to the rise in prices of colors, chemicals, and the fuel crisis from the coal shortage.

The Federation of Gujarat Weavers Association (FOGWA) Ashok Jariwala said, “We understand the situation of the textile mills. They can keep the mills closed for two days a week and continue their production. There are 7.5 lakh power loom machines in Surat, which house over 4 lakh workers. There are around4 lakh workers working in the 65000 textile trading shops and godowns, and around 3 lakh workers in the textile mills. If any segment in this chain gets shut, the remaining segment will automatically get affected”

This scenario is likely to happen across the textile manufacturing sectors in India. Unless the crisis is solved. It is not only a matter of managing the power but also controlling the price hikes.

What can we expect in the coming days?

We can surely say that India is under an energy crisis. But the chances of going completely out of energy or coal are out of the question. From the statements provided by the government bodies, we can estimate that they have plans to keep it in control and make sure we have enough electricity.

Check out the states hit by power shortage here

What are your thoughts on this coal crisis? What are some ways in which the government can tackle this issue? Comment below.