Short of coal, desperate India ready to import LNG at thrice the price

Scorching heat and the resultant rise in demand for electricity have compelled the Government of India to import liquefied natural gas (LNG) at higher price.

The fresh imports of LNG will be used to pump up power generation at a time when coal is in short supply. The LNG supply too has been stretched mainly because of the ongoing Russia-Ukraine war.

As reported by Bloomberg, Torrent Power Ltd. and GAIL India Ltd. bought LNG last week at thrice the normal rate to aid power plants increase generation.

That India’s power generating units are buying LNG at such high price is evidence of the fact that domestic coal shortage is for real and is compelling them to look for alternative fuels, even if that means spending more. India’s huge demand for electricity would eventually affect LNG prices globally.

Also read: Three key reasons behind India’s acute coal crisis

Traditionally, LNG has never been the main component of India’s thermal power generation facilities. In 2020, only 4% gas was used to produce electricity in India against 71% for coal, BloombergNEF report stated.

Coal meets about 70% of energy requirements of India, which is the world’s third largest energy consuming country. India’s energy requirement in 2022-23 is estimated to be 1,650.94 billion units.

About 150 power plants in the country are facing coal shortage, which has exacerbated the electricity supply situation.

As on April 30, the coal stock position at the Central Election Authority (CEA) supervised 173 power plants stood at 21.93 million tonnes (MT), which is less than the regulatory requirement of 66.32 MT as on April 21.