Spectre of Shortage

Context: Coal demand rises as supplies fail to keep up. Though the mismatch is easing, larger challenges in power sector remain.

Factors that caused coal shortages: Sharp demand-supply mismatch

• Supply side issues:
  • Delay in supplies: With rainy season stretching out this year, there has been a considerable delay in coal supplies returning to normal levels.
  • Second wave of the pandemic impact: Due to disruptions, coal stocks were not accumulated to the level required.
  • Sharp increase in price of imported coal: Owing to a rise in global demand.
• Demand side issues:
  • The sharp pick-up in economic activities — large parts of the economy are operating near or exceeding their pre-pandemic levels — has led to an unanticipated surge in electricity demand.