One of the biggest crises in the world today is the rising energy cost due to disruption in fuel supply chain that has emerged as a consequence of the conflict in the Middle East.
Since, India relies on imports for about 85% of its oil and a significant portion of its natural gas, the Middle East crisis has caused input costs for Indian energy-intensive sectors (including power generation, cement, and logistics) to rise between 25% and 100%.
Among all the sectors, (thermal) power generation has maximum dependence on fuels. So, it shares a higher proportion of energy-related operating expenses, making it acutely prone to volatility in global crude and LNG prices.
At this juncture, the natural question is: how is our government trying to overcome the crisis? Well, our government has deployed a multi-layered strategy focused on supply diversification, demand-side adjustments, and grid stabilization to completely protect the domestic power sector from Middle East fuel disruptions. With over 531 GW of installed capacity, the Ministry of Power maintains that India’s electricity system is well-diversified and adequately positioned to handle seasonal peaks despite international market volatility.
The government’s multi-layered strategy is primarily based on a few pillars including: Thermal Grid Stabilization & Fuel Management; Supply Sourcing & Bypassing Maritime Chokepoints; Accelerated Capacity Expansion & Energy Transitions; and Downstream Gas Prioritization.
Since our domestic power sector relies predominantly on domestic coal rather than imported natural gas, I think there is no reason in front why India can’t overcome the crisis arising from Middle East fuel supply chain disruptions. By the grace of almighty god, because of our natural shock absorber, i.e., coal, our electricity generation will remain structurally insulated.
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