Fuel Shortage Can Hit Power Sector
Friday, 20 January 2012, 16:28 IST
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New Delhi: Low fuel availability and a rise in input prices caused by dependence on imported coal could continue to bog the Indian power sector in 2012, global credit rating agency, Fitch, said. "Launch of new generation projects will slow down in 2012 because of the lower investor interest over fuel availability, softening of merchant power prices, higher fuel costs and higher interest rates," Fitch said in a statement. "Access to capital will be restricted for weaker entities, including State Power Utilities (SPUs) and greenfield projects," it added. Fitch expected domestic fuel availability to be low in 2012 due to rising demand from power projects and land issues faced by the domestic coal supplier - Coal India. "This (domestic fuel supply) should lead to increased reliance on imported coal for fueling the additional power capacity," it said. Despite various issues bogging the sector, Fitch has rated power entities as stable. "They (power firms) are expected to manage risks by way of implied and tangible support from the central and state governments, strong liquidity and favourable tariff mechanisms," it said. The statement comes a day after Manmohan Singh, Prime Minister, assured independent power producers that their problems would be taken care of and directed various ministries to formulate an action plan on the issue.
Source: IANS
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