Electricity producers have no incentive to keep large stocks of coal because they cannot be sure that they will be paid regularly
Save time by listening to our audio articles as you multitaskThe most immediate reason for the crisis is scorching heat. The past couple of months have been even hotter than usual in South Asia. In north-west and central India average temperatures in March and April were the highest since records began 122 years ago . As a result, air-conditioners in homes and offices have been whirring away at levels not usually seen until mid-May.
But in recent weeks coal plants have not been receiving enough coal to operate at capacity. At the start of this month more than 100 of India’s 173 thermal plants had critically low stocks. At the end of April, officials in Delhi said the capital could run out of coal in a matter of days, threatening electricity supply to hospitals and the metro system. Power plants have been scrambling for fuel from Coal India, a state-owned company, and paying steep prices for coal at auctions.
But there is a deeper, more long-running reason: electricity producers have no incentive to keep large stocks of coal because they cannot be sure that they will be paid regularly. Billing and payment for electricity is patchy, leaving many distribution companies in the red and unable to pay the power plants, which in turn have a hard time paying the miners.
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