The Economist has an interesting article about power generation in India. Given the near impossibility of constructing large dams and nuclear power plants, coal is taking up an ever larger pie of our energy sources. However,
Coal India is not digging fast enough. Output has been flat for the past two years.
And the private sector reacts by setting up backups to backups in typical Indian fashion:
Private generating firms are not waiting to find out the answer to this identity crisis. Instead they have assumed that the state will not deliver enough and are prepared to import vast amounts of coal to fire their plants, either by acquiring it from wholesalers or by buying foreign coal mines. Some $7 billion has been spent in the past six years on pits in Australia, Indonesia and Africa. Gautam Adani, a Gujarat-based tycoon, is building a private network of mines abroad that feeds ports and power stations in India.
The high debt loads that this entails might drag down the banks:
The central bank has been forced to reassure financial markets that a wave of defaults in the sector will not hurt the banks, which have about 7% of their loans to the power industry, mainly to generation firms.
It’s a fun read. Go read the whole article.
