What Happened
- The Central government directed all coal-based power plants to operate at full capacity to meet summer peak power demand, amid a severe supply disruption to liquefied natural gas (LNG) caused by the ongoing West Asia war and the closure of the Strait of Hormuz.
- Petronet LNG, India's top gas importer, issued a force majeure notice to customers — including GAIL, Indian Oil Corporation, and Bharat Petroleum Corporation — after supplies from Qatar (Ras Laffan) and Abu Dhabi National Oil Company were halted.
- LNG spot prices in Asia more than doubled to a three-year high of $25.40 per MMBtu after QatarEnergy declared force majeure at its Ras Laffan plant.
- India's coal plants are sitting on approximately 53.41 million tonnes (MT) of coal stock — enough for about 23 days — and pithead stocks at Coal India reached ~125.54 MT as of mid-March 2026.
- The Cabinet Committee on Security declared that adequate coal supplies at all power plants would ensure no electricity shortage, even if peak demand reaches 250–260 GW this summer.
Static Topic Bridges
India's Electricity Generation Mix — Coal Dependence and Transition
Coal remains the backbone of India's electricity system, accounting for approximately 70% of total electricity generation in 2025, even as renewables are rapidly scaling. India's total installed power capacity has crossed 900 GW (including all sources), with coal comprising roughly 200+ GW of thermal capacity. In a crisis, coal acts as the dispatchable baseload option when gas-based plants lose fuel supply.
- Coal's share in installed capacity is being gradually displaced: renewables now constitute about 40% of installed capacity (though with lower capacity utilisation due to intermittency).
- India added 7.2 GW of new coal-fired capacity in FY 2025-26, about 60% above the previous year's addition — reflecting a deliberate hedge against supply disruptions.
- Gas-based power plants (around 25 GW installed capacity) depend heavily on domestic gas supply from ONGC/GAIL and imported LNG; when LNG supplies are disrupted, these plants operate below capacity.
- Solar PV generation's share is expected to reach 10% of generation by 2026, but intermittency means coal cannot be substituted overnight in a supply emergency.
- Government policy: Electricity Act, 2003 — Section 3 mandates the Central Government to formulate a National Electricity Policy; Section 7 mandates the National Electricity Plan every 5 years through the Central Electricity Authority (CEA).
Connection to this news: The West Asia LNG disruption has acted as a stress test exposing India's gas-based plant vulnerability. The directive to run coal plants at full capacity is a direct policy response, leveraging India's coal stockpile buffer.
LNG vs LPG — Key Distinctions for Energy Security Analysis
LNG (Liquefied Natural Gas) and LPG (Liquefied Petroleum Gas) are distinct energy commodities that serve different demand segments and face different supply chains. Confusion between them is common in exam contexts.
- LNG: Natural gas (predominantly methane, ~95%) cooled to −162°C for transport in cryogenic tankers. Used primarily for power generation and industrial heating. India imports LNG mainly from Qatar (under long-term contracts), the US, Australia, and UAE. Petronet LNG (Dahej terminal, Gujarat, and Kochi terminal, Kerala) is India's primary LNG importer.
- LPG: A mixture of propane and butane, liquefied under moderate pressure. Used primarily for domestic cooking (LPG cylinders). Distributed through OMCs — HPCL, BPCL, IOC. Government target: 15% natural gas share in India's primary energy mix by 2030 (currently ~6%).
- India's government gas target is governed by the National Gas Grid policy; GAIL India is the primary pipeline operator.
- Pradhan Mantri Ujjwala Yojana (PMUY) — launched May 2016 by the Ministry of Petroleum and Natural Gas — has provided LPG connections to over 10 crore BPL households; the crisis-era shortage of LPG hits this constituency hardest.
Connection to this news: Both LNG (power sector) and LPG (cooking gas) supplies are disrupted by the Hormuz closure. The government's distinction in response — full coal capacity for power (LNG substitute) and priority allocation of LPG to households over industries — reflects the different policy levers available for each.
Force Majeure in Energy Contracts — Legal and Economic Implications
Force majeure ("superior force") is a contractual clause that excuses a party from performance when extraordinary, unforeseeable events beyond its control prevent fulfillment. In energy contracts, suppliers invoke force majeure when geopolitical disruptions, natural disasters, or infrastructure failure prevent delivery.
- Under Indian contract law, Section 56 of the Indian Contract Act, 1872 governs the doctrine of frustration of contract — the statutory equivalent of force majeure when a contract does not explicitly include such a clause.
- Long-term LNG Sale and Purchase Agreements (SPAs) typically include force majeure clauses; however, the invoking party must demonstrate that the event is genuinely outside its control and that it took reasonable steps to mitigate.
- When a supplier invokes force majeure, the buyer loses the contracted supply but also typically cannot claim damages during the force majeure period — meaning India's OMCs must find alternative supplies at spot prices (which are far higher).
- Qatar holds the world's largest single LNG liquefaction complex at Ras Laffan Industrial City; it supplies about 40% of globally traded LNG.
Connection to this news: Petronet LNG invoking force majeure on Qatar/ADNOC supplies is the formal legal mechanism triggering the LNG supply crisis. It immediately forces India to seek costlier spot LNG or switch energy sources — hence the coal capacity ramp-up.
India's Coal Supply Chain — Coal India and Energy Security Policy
Coal India Limited (CIL) — a Navratna central public sector undertaking (CPSE) under the Ministry of Coal — is the world's largest coal mining company, responsible for over 80% of India's domestic coal production. India also imports thermal coal (largely from Indonesia, Australia, and South Africa) for blending with domestic coal in coastal and some inland power plants.
- CIL's total domestic production crossed 1 billion tonnes for the first time in FY 2024-25 — a landmark for India's energy sovereignty aspirations.
- Imported coal blending mandates: The Ministry of Power periodically issues directives requiring power plants using domestic coal to blend 4–6% imported coal, particularly to meet peak demand.
- Strategic coal stockpile: As of March 2026, pithead stocks reached ~125.54 MT at CIL mines, with power plant stocks at ~53.41 MT (approximately 23 days of supply).
- The Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) govern coal mining allocation and licensing in India.
Connection to this news: CIL's record production and large stockpiles give the government the buffer to mandate full coal plant operation without facing immediate domestic coal shortage — a strategic advantage over the gas supply crisis.
Key Facts & Data
- India's coal share in electricity generation: ~70% (2025)
- LNG spot price in Asia during crisis: $25.40/MMBtu (3-year high, more than doubled)
- Petronet LNG terminals: Dahej (Gujarat) and Kochi (Kerala)
- Power plant coal stock as of March 2026: ~53.41 MT (~23 days consumption)
- CIL pithead stock: ~125.54 MT (March 2026)
- India's peak power demand projected summer 2026: 250–260 GW
- India's gas target in primary energy mix: 15% by 2030 (current: ~6%)
- Pradhan Mantri Ujjwala Yojana: 10+ crore LPG connections to BPL households
- Qatar's Ras Laffan: world's largest LNG liquefaction complex; ~40% of globally traded LNG
- Coal India production milestone: crossed 1 billion tonnes in FY 2024-25