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Current Affairs

High coal prices impact on power sector

Date: 06 April 2022 Tags: Energy

Issue

Due to the ongoing Russia-Ukraine conflict, the prices of international and domestic coal are set to witness a sharp rise.

 

Background

Power tariffs have witnessed rise on India Energy Exchange due to increase in input prices for power companies.

 

Details

  • Domestic coal supply has already failed to cater to growing demands. High international coal prices are also affecting Indian power producers.

  • As domestic demand for locally produced coal increase, power cuts started as several thermal power plants ran out of coal stock.

  • The coal import dependency is likely to increase in the short term as demand and supply from domestic producers is not in sync.

 

Rise in international coal prices

  • Russia is one of the largest coal suppliers and the war has led to disruptions from Russia. It is unlikely to be replaced by others anytime soon.

  • The price of Australian coal has hit an all-time high of about $330 per tonne. Australia long with Indonesia is one of the biggest sources for imported coal in India.

  • The spot price of domestic coal is also at all-time high due to increased demand. It is likely to increase further.

 

Way ahead

The prices in global market will increase further unless Coal India is able to ramp up domestic coal production to match demand.