Russia-Eukraine war may give a jolt to our energy sector

The way the Russia-Eukraine conflict is intensifying, at this moment it is very difficult to ascertain the future of the world. Of course the war will have a long-term effect on the global economy and environment, however, I’m more worried that the Indian energy sector has to encounter some immediate challenges.

Although we are yet to feel the hit, the Russia-Eukraine war has already increased energy prices globally. In 2021, India imported 1.8 million tonnes of thermal coal from Russia. Also, we imported 43,400 bpd oil from Russia in 2021, which is about 1% of our overall oil imports. Yet another fact is we account for about 0.2% of Russia’s natural gas exports – in fact, since 2018, GAIL (India) Ltd., has a 20-year deal with Gazprom – a Russian majority state-owned multinational energy corporation.

Isn’t it a bit troublesome? In fact, in an interaction with PTI, recently, ICPPA Secretary General Rajiv Agarwal, has expressed his concern on the effect of the ongoing crisis. He expects that the situation will hamper supplies to both Captive Power Plants (CPPs) and industries from Coal India. The apparent rise in oil price will definitely increase our logistics cost, as a consequence of it, there will be a hike in prices of all commodities.

Although many of our energy-intensive industries have started installing their captive renewable power generation plants, we are still at infancy.  As per the available reports, already during last more or less six months, the coal-based captive power plants are facing a big challenge as far as the supply of coal to them is concerned. The recent situation will further complicate the scenario. Thus, till we find a feasible alternative, our challenges will continue.


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