India’s Looming Energy Crisis

Indian laborers work at a coal warehouse in Ahmadabad, India, Tuesday, Oct. 19, 2010. According to news reports, Coal India Ltd’s $3.5 billion initial public share offer, the largest in India’s history, was oversubscribed by 1.57 times hours before closure of the second day of the issue on Tuesday. The government is divesting 10 per cent of its stake in CIL – the world’s largest coal producer coal reserve holder in the world, contributing 82 per cent of total coal production in India.(AP Photo/Ajit Solanki)

India’s impending energy crisis is an urgent and growing concern as fuel inefficiency are greatly bearing down on homes and industries in most parts of the country. The country is struggling to provide round-the-clock power as around 50 power plants have just a few days of coal stock to fuel the power stations in the country. With the shortage of electricity reaching 21,000 megawatts, the energy crisis is expected to worsen this summer.

The situation which has been deteriorating with every passing year, is running out of options as Coal India Limited has faced a shortage of 142 million tonnes. The country cannot get enough fuel, primarily due to political corruption, lack of proper transportation facilities, poor management, incompetent policies and environmental concerns.

Coal India which controls 80 percent of the production of coal in India has been hit by government policies, which requires it to sell coal at 70 percent discount to market prices. India sits on one of the largest reserves of coal in the world, but CIL has been criticized for failing to invest in new mines and technologies. India cannot produce enough coal to meet the growing energy demands. Coal production is growing at an average of 5 percent every year, but demand is escalating between 10 to 15 percent per year.

A few of electricity producers have been importing coal from Indonesia but even that is not a very viable option as Indonesia has doubled the coal prices.

Lack of availability of coal is not just a daunting energy crisis that is unable to provide power to one third of India’s total population, but it is also slowing the country’s economic growth. GDP is expected to climb 7 percent this year from a 10 percent that was enjoyed in 2010.

Moreover, India has not exploited clear energy sources like solar or wind power to meet the growing need of energy. For a fast developing nation like India that is expected to attract foreign investments, power woes could have been easily addressed by the politicians. But political battles and corruption scandals have kept them distracted from the grave energy crisis faced by India today.

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