Untangling The Coal, Rail And Power Mesh


Untangling The Coal, Rail And Power Mesh

There is an apocryphal story that goes like this: Prime Minister Jawaharlal Nehru on a visit to Bihar enquired why mining activity was down. He was told that there were not enough wagons to evacuate the coal from the mines to the factories. Why not enough wagons? Because there wasn’t enough steel for making the wagons. And steel production was constrained because of power shortage. And why was there power shortage? Because there wasn’t enough coal coming out of the mines! Our present coal production is much higher from those early days, but we still seem to be caught up in the deadlock of circularity.

There are at least two new factors in this deadlock of circularity. One is the stress in bank loans given to the power sector. More than ₹1.8 trillion are in these stressed accounts, which might all land up in bankruptcy proceedings. Hence, no further bank funding is forthcoming either as fresh loans or working capital. This can lead to more bottlenecks in projects as well as operations. The stressed banking assets (bad loans) include an estimated 15 gigawatt (GW) generation capacity that is stranded for want of fuel. Read more

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