Coal supply shortage can trigger power outages in India: Report

An average of four days' worth of stock of the fuel was reported at the end of last month which is the lowest in several years and down from 13 days at the start of August, reported Bloomberg.

According to the report, spot power rates have increased and coal supplies are being diverted away from customers including aluminum smelters and steel mills, who use the fuel intensively in their operations.

India's 70 percent of electricity is produced using coal and meets three fourth of its requirement locally.

However, heavy rains have flooded the mines, especially in Dhanbad, and the main transport routes, causing disruption in supplies leading to a shortage of coal between 60,000 and 80,000 tons per day, said Anil Kumar Jain, India's coal secretary, the report said.

Coal inventories at Indian power plants fell to around 8.1 million tons at the end of September, about 76 percent less than a year earlier, according to government data.

Average spot power prices at the Indian Energy Exchange Ltd. jumped more than 63 percent in September to 4.4 rupees ($0.06) a kilowatt-hour, Bloomberg reported.

Coal India should be able to increase supplies by the second week of October but that will depend on the weather, Jain said.