Crisis of Electricity Supply and its Real Cause

This is the second in a series of articles on the class struggle over electricity in India

Large parts of the country are facing severe power shortage as thermal power plants do not have sufficient coal to produce the required power. The monopoly controlled media is creating confusion about who and what is responsible for the power shortage. The Public Sector Coal India Limited (CIL) is being blamed for not producing adequate coal and the Indian Railways is being blamed for not ensuring quick transportation of the coal to the thermal power plants. The Power Minister has blamed the war in Ukraine for the crisis, but the crisis was already there in October 2021, before the war.

The privatisation of electricity generation and coal production is at the root of the crisis.

Privatisation of Electricity Generation

As a result of the program of privatising electricity generation, as of March 2022, 49% of the installed generation capacity for electricity in India is now in the private sector.

Many thermal power plants owned by private monopolies run on imported coal. In the past few years, coal prices have shot up in the international market.

Driven by the desire for maximum profits, the monopoly capitalists owning such imported-coal based thermal electricity generation plants refused to generate electricity and supply it to the government owned electricity distribution companies according to previously agreed upon rates. They deliberately created a power shortage. To justify their sabotage of electricity generation, these monopoly capitalists have carried out a relentless propaganda campaign through the media that they were running at losses and that the government should increase the price paid to them by state electricity boards.

On May 6, the government invoked Section 11 of the Electricity Act, whereby it asked all imported-coal based power projects to generate electricity. Simultaneously, the government order addressed the demand of these monopoly capitalists, that the state ensure guaranteed profits to them for generating electricity. It announced that the new tariffs for electricity produced by thermal power plants operating on imported coal will be worked out by a committee constituted by the ministry of power, the Central Electricity Authority, and the Central Electricity Regulatory Commission.

India has the capacity to produce 17,600 MW of electricity from the imported coal based power projects. However only 10,000 MW are operational. The capitalist owners claim that cost of imported coal has risen so much that they cannot make profits if they have to supply electricity to the distribution companies at the earlier agreed upon rates. With the government fulfilling their demands for a rate increase, power plants of ESSAR Power, Coastal Energen, CLP India and IL&FS Tamil Nadu, in states such as Gujarat, Andhra Pradesh and Tamilnadu, are expected to increase electricity generation in their plants.

Meanwhile, two big imported-coal based companies, Tata Power and Adani Power, which had shut down operations two years ago, refusing to supply electricity to the state distribution companies at the previously agreed upon terms, are now expected to restart electricity generation.

All these plants will supply electricity to power purchase agreement holders at the new rates that will be set by the government.

The monopoly capitalists in the power sector are going to make massive profits at the cost of the consumers.

Privatisation of Coal Mining

In April 2022, the state-owned Coal India Limited met 100 % of its target output of coal. However, the private companies owned by the Adani, Jindal and Birla monopoly capitalist groups produced less than 50% of their target output.

With these monopoly capitalists in the coal mining sector operating their mines at less than half their capacity and monopoly capitalists in the thermal electricity generation sector stopping import of coal, citing high prices, a shortage of coal to operate the thermal power plants was created.

These monopoly capitalist companies wanted to create a shortfall of electricity generation, in order to demand higher tariffs for electricity generated by their companies and in order to push for import of coal from the captive mines they own abroad.

Over the past decade and more, some of the biggest monopoly capitalists who own power generating companies have purchased coal mines abroad. Tata Steel has invested in coal mines in Mozambique and Tata Power has invested in coal mines in Indonesia. Adani has major investments in coal mines in Australia and Indonesia. Jindal Steel and Power and Essar Energy have both invested in coal mines in Mozambique. The GVK group has investments in coal in Australia.  All these monopoly capitalists are making huge profits by selling coal from these mines to India.

Earlier in April, the Union government announced that all thermal power plants in India, including government owned plants, must use at least 10% of imported coal to blend with coal produced by Coal India. This was followed by state governments announcing plans to import coal. Maharashtra announced it would import 10 million tonnes. Gujarat ordered one million tonnes. Tamilnadu announced it would import 1.5 million tonnes and will use 20% of imported coal in its thermal plants. These three states account for one third of electricity demand in the country. The central government has asked the state governments of Karnataka, Uttar Pradesh, Madhya Pradesh, Punjab and Haryana to import a total of 10 million tonnes of coal. Punjab has agreed to import 6.25 lakh tonnes.

The decision to import coal on such a massive scale is being presented as a necessity. The government claims that it has no choice, because adequate supply of coal is not being produced by Coal India.

The truth is that successive governments have been deliberately pursuing a policy of privatising and liquidating Coal India. This is being done to benefit capitalist monopolies in the coal mining and energy sector. However, the heroic struggle of coal workers against privatisation has put a spoke in the plans of the capitalists.

Rising coal imports is expected to lead to a major hike in the international market price of coal, as India is the second largest importer of coal in the world.

The Indian capitalist monopolies who own captive coal mines abroad will make massive profits. The people of India will be made to pay for this, by paying a much higher tariff for electricity. By forcing all thermal power plants, including government owned ones, to buy imported coal, the government is fulfilling the greed of the monopoly capitalists.

Rail Transport

The monopoly controlled media is also blaming the Indian Railways, for allegedly failing to ensure timely transportation of coal to the thermal power plants.

The truth is that the rail workers, toiling day and night, have actually been ensuring that coal is transported in the shortest possible time, from the mines to the power plants.

The railways are using 113,880 wagons — 86% of the total number of open wagons — to transport coal. Daily about 28,470 wagons are being loaded. To ensure speedy transportation, three to five trains are being sent one after the other in quick succession, from 122 locations in the coal producing states of Chattisgarh, Madhya Pradesh, Jharkhand and Odisha. Each coal train has about 84 wagons. In order to ensure speedy movement of coal trains, the railways has cancelled many passenger and express trains.

In 2021-22, the Railways transported 653 million tonnes (MT) of coal, around 20.4 per cent higher than in 2020-21. Of the 653 MT of coal transported by the railways, around 83 per cent, or around 540.4 MT, was to thermal power plants. Despite the false propaganda of the supporters of privatisation, rail workers have been doing an excellent job of transporting coal from the coal mines in the current crisis.


The current power crisis has been created by the greed of capitalist monopolies to rake in maximum profits at the cost of the masses of people. The crisis is a result of the present orientation of the economy, which is to fulfil capitalist greed instead of human need. It is a result of the program of privatisation of electricity generation and coal mining, which is aimed at converting these essential branches of social production into sources of maximum private profits for the Indian and foreign monopoly capitalists.

Read the First part: The struggle of electricity workers is entirely just! Privatisation of electricity is anti-people!

Read the Third part: Historical Evolution of Electricity Supply in independent India, 1947 to 1992

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