India’s thermal power sector is facing mounting fuel supply pressure, with nearly one-third of the country’s coal powered plants reporting critically low stocks.
According to Central Electricity Authority (CEA) data cited by Reuters, 59 plants had less than 25 percent of the required coal inventory available with them, as of September 9, 2026. The number has considerably risen from 45 plants at the end of August.
Manoj Kumar, an analyst at Centre for Research on Energy and Clean Air, highlighted concerns over the declining fuel inventories at power plant, “The increasing number of power plants with lower coal stocks is a concern,”
The situation comes amid increasing electricity demand driven by El Niño weather conditions, while monsoon-related disruptions in coal-producing regions have further strained coal supplies to thermal power plants.
India’s rising electricity consumption is driving higher coal demand for thermal power generation, with electricity demand reaching approximately 169 billion units (BU) in August 2026, according to The Financial Express.
The pressure on coal supplies is also being reflected in industrial activities. India’s sponge iron sector, a key component of steel manufacturing, has been equally troubled with rising coal cost and declining domestic coal availability. Reuters reported that Indian sponge iron prices reached a two-year high in August 2026, as expensive imports and domestic supply constraints affected producers.
For industries involved in mineral processing, mineral extraction and advanced manufacturing, reliable coal availability remains a priority because disruptions in electricity generation can affect production schedules, operating costs and supply chains.
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The El Niño weather pattern has led to prolonged heat and below-normal rainfall, driving up cooling-related electricity demand. Meanwhile, inadequate rainfall has diminished hydropower generation capacity, further increasing reliance on coal-based power generation.
Crisil reported a 9 percent year-on-year decline in hydropower generation in August, while coal-based generation rose 13 percent.
Monsoon-related disruptions across eastern and east-central coal-producing regions have hampered coal mining and transportation operations.
The combined impact of rising coal consumption and disruptions in supply movement has placed additional pressure on India’s thermal coal production and distribution network. These delays are particularly concerning as thermal power plants continue to operate with low fuel inventories.
State-owned Coal India Limited (CIL) has offered additional coal to power plants that have Fuel Supply Agreements (FSAs) with the company and its subsidiaries. The offer enables eligible power plants to lift coal beyond their annual contracted volumes, helping replenish dwindling inventories. CIL has also ensured increase in coal shipments by road.
Coal India Limited (CIL) has assured that adequate coal stocks are available at its mining sites. According to Reuters, the company held approximately 76 million tons of coal at its mines, suggesting that the challenge lies not only in coal availability but also in transporting supplies to power stations in time.
The Centre has announced measures to strengthen domestic coal availability and improve the supply chain.
The coal ministry has also reported that captive and commercial coal production is expected to exceed 228 million tons in FY2026–27, supporting the government’s strategy to increase domestic production.
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