Power Outages Amidst Scorching Heat Create Menace

Coal plants in India are running out of steam, and there’s no power in 12 states. Amidst scorching summer, power outages have become frequent alongside inflation eating our pockets.
Power Outages Amidst Scorching Heat Create Menace

What’s Happening?

Soaring temperatures are breaking a heavy sweat already, and to top it off, there are power outages in major states – Andhra Pradesh, Gujarat, Punjab, Jharkhand, and Haryana, to name a few. All these states are facing a shortage of coal inventories. With a shortage in coal, the country is running a high demand for power amidst a scorching summer. According to the Central Electricity Authority’s coal stock assessment, 100 of the country’s 173 thermal power plants’ coal-stock situations are critical as of April 18. Coal inventory is the lowest in the last nine years.

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Coal India, which accounts for four out of every five tons of the fuel mined in the country, boosted its output by 27% in the first half of April from a year earlier. Still, escalating demand is not sufficient compared to supply. With the rise in fuel costs, steel mills and cement factories face a shortage of fossil fuels. Let’s not forget there’s already an air of inflation fear looming over us. With inflation and power shortage in view, the economy will hit as industrial output suffers and power costs rise.

Should Investors Be Worried?

Stocks like Coal India, Tata Power, Power Grid, etc., are rallying every other day. Since the demand is high, the power stocks enjoy all the attention. The rally would continue until the power demand goes down and geopolitical tensions don’t ease. India has been buying oil from Russia at a discounted rate. State refiners are safe as long as crude oil is in our reserves.

What Lies Ahead?

Everything seems to be tied to the Ukraine and Russia war. Ever since it began, there has been a rise in inflation, fuel costs, commodity prices and what not. Unless there’s a closure on the war, the power outage problem won’t go away either.

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