September 6, 2018 Read More →

India’s muddled coal policy leaves producers and banks poorer

Nikkei Asian Review:

After years of developing the thermal energy sector to meet the demands of a nation prone to outages, India is now facing a power glut with over 30 such producers teetering on bankruptcy. Yet the government shows no letup in its drive for more coal power and the effect of oversupply is rippling out to other sectors such as banks.

India’s embrace of coal has allowed it to triple power generation over the past 15 years to 344 gigawatts, surpassing Japan to become the world’s third largest electricity market.

“India has gone through a dramatic change,” said Sydney-based Tim Buckley, director at the Institute for Energy Economics and Financial Analysis. “[Until] five years ago, power outages were absolutely commonplace and there was a massive deficit in supply relative to deman.”

That supply needed to feed the country’s phenomenal economic growth, registering 8.2% in the quarter ended June, has outstripped demand.A government report showed that 34 power plants with a total capacity of 40 GW are on the verge of bankruptcy. A report by investment bank Credit Suisse pegs their outstanding debt at 1.75 trillion rupees ($25 billion) that could potentially deal a heavy blow to banks if they default.

India’s muddled coal policy leaves producers and banks poorer

Posted in: IEEFA In the News

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