Coal shortage threatens already ailing Indian economy:
Coal has never been in the news as it is now for multiple factors. First it was workers strike, then the commodity itself went into shortage and because of this power generation has become very difficult for power companies. Now add heavy rains in coal producing areas and disruption of coal supplies due to continuing blockade in Telangana region, the circle is complete. To top it all, the Indian government cleared the draft Mining Bill, where companies would have to share 26 per cent profits with locals.
All these have affected both coal mining companies as well as power companies. Coal India Limited, one of the largest companies listed in the Indian stock exchange took the first hit.Stock price of coal India suffered 3-4% in last two days and according to Maulik Patel, Research Analyst with www.makemystocks.com, it was double whammy impact on stock price. Coal India suffered not only production loss on account of employee strike but on the other hand Coal Ministry decided to sell 10% of its stock through e-auction.“I believe that auction price of coal will be discount to the market price. This move of coal ministry has put pressure on Coal India’s balance sheet to about 350-400 cr. The stock is under pressure and likely to test 315 to 320 range. Investors can buy at this rate with two to three months perspective. Stock price can have another go at 350 levels”, Patel said.
NTPC, India’s largest producer of power normally produces 34000 megawatts of electricity. But it is now reduced by around 4000 megawatt because of coal shortage.Considering the precarious power situation country is facing, there is a tussle now on the supply side of coal with Power ministry asking the mining companies to give power sector the priority it deserves before it goes for e-auction, where the dry fuel is sold at market price.
The compounded annual growth rate of coal supply in India has been just 4 per cent in the last five years while the demand rose 7.5 per cent during the same period.What has come to the rescue of power consumption is the lower Index of Industrial Production figure. At 4.1 per cent, it is at its second-lowest level in the last 17 months. As the world faces a grim economic situation, India is staring at a worse situation where inflation and low growth is hampering the Shining India once it used to be.
No comments:
Post a Comment