Coal Inventories Held By Indian Power Plants Remain Tight: Nomura

Nomura, in its report on Tuesday, highlighted that coal inventories held by Indian power plants remain tight with nine days' worth of stock as of mid-April and could result in power outages.

It noted in its report that if coal supplies do not improve, it could become another "stagflationary shock."

The report titled, '‘India: A Power crunch in the making', says that coal stocks at power plants have dwindled as power demand has shot up without a coincident rise in coal supply.

Nomura said nearly 100 out of 173 power plants have critical coal stocks, less than 25 per cent of normative levels.

It noted that electricity demand has shot up due to the reopening of the economy and the onset of the summer season with record high temperatures. The supply, it said, has been disrupted due to the reduced availability of railway rakes to transport coal and lower coal imports.

"If coal supply does not catch up—either via higher domestic production or higher coal imports—this will result in more power outages in summer and a diversion of coal away from non-power sectors like aluminium, cement, steel, weighing on industrial output and increasing electricity costs," it added.