The Viewpoint – Competing for Idle Capacity How Coal Supply issues are Derailing Thermal Power Projects in India

The Viewpoint – Competing for Idle Capacity How Coal Supply issues are Derailing  Thermal Power Projects in India

Fuel shortage being faced by power project developers in India is adding significantly to the woes of the power sector, given it is already grappling with challenges of land acquisition and environmental clearances. Both domestic and global power companies are reassessing their expansion plans in India, and considering investments in other jurisdictions due to the increased risk profile of investing in an Indian power sector beleaguered by fuel shortages. With domestic coal and gas production failing to keep up with capacity addition targets, it is unlikely that fuel supply constraints faced by power producers will ease off in the near future. Further, the ability of power producers (especially under the competitive bidding route) to mitigate the effects of fuel supply shortage and increased cost of fuel is also limited by the contractual framework under the Competitive Bidding Guidelines issued by the Ministry of Power (MoP).

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