Japanese banks to support India’s coal-based power plants

Japanese banks to support India’s coal-based power plants

Mumbai: Dry bulk shipping, by way of coking and thermal coal imports into power-starved India, will receive a much-needed fillip with the news that Japanese lending institutions and banks have expressed their willingness to fund such imports by coal-based power plants who are keen to increase their output of electricity.

India’s power sector is the biggest consumer of coal, absorbing 78% of local production. Of the country’s installed power generation capacity of 267,637 MW, as much as 165,234 MW (61.7%) is fuelled by coal.

It is therefore heartening to find that, at a time when multilateral funders such as the World Bank have stopped supporting coal-fuelled power projects, Japanese lending institutions and banks are stepping in.

This comes against the backdrop of special arrangements for Japanese firms and banks under the Japan Plus initiative, which was started following Prime Minister Narendra Modi’s visit to Japan last year. The initiative refers to a special panel of officials created by Modi to speed up Japanese investments in India.

With India’s demand for electricity expected to double to 2trn units in the next five years, coal-powered generation, the cheapest form of generation, will remain the mainstay in its energy mix.

State-owned NTPC Ltd, for example, has received 25.8bn yen ($212m) in loans from the Japan Bank for International Cooperation (JBIC) and the Japan International Cooperation Agency (JICA). Of the INR671.7bn ($10.58bn) debt with India’s largest power generation utility, 10.2% is in yen loans. Around 87% of NTPC’s installed capacity of 44,598MW is fuelled by coal.

Shirish Nadkarni

Shirish Nadkarni is a management consultant and freelance international journalist, who has been writing on all spheres of Indian business for the past three decades for a number of reputed overseas publications. An avid sportsman, Nadkarni has represented India in international veterans' badminton since 1997, and was the 55+ age group doubles world champion in 2005.

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