After Tinkering with the Renewables Market, Indian Fossil Fuel PSUs make a Major Foray

Major coal-based Indian government sector undertakings like Coal India and NTPC have a bleak future with coal becoming the new villain for humankind. The sentiment against coal has seen governments across the world making aggressive plans to completely exit their coal investments. While the developed countries can afford the transition from coal to renewables, India still has not committed to exit coal, given the massive demand for cheap energy. However, the investments in NTPC and Coal India are unlikely to give much of a return as people eventually see that coal will die a natural death very soon, given its huge contribution to global warming which is creating an existential crisis for mankind.

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Coal India has formed subsidiaries both for manufacturing of solar products as well as clean energy generation while NTPC, which was already present in the space, is now aggressively bidding for new projects in tenders. SJVN which is a hydro-based power producer is also becoming a major player in the RE auctions edging out the private equity-backed Indian RE developers with low prices. However, given the lethargic decision-making and accountability issues, it remains to be seen whether these companies can remain viable in the long term or become dinosaurs like BSNL which could not cope due to technology shifts.

While the Indian government has its heart in the right place as it wants to divest most of the government-owned companies, the slow pace of divestment is not giving much confidence. As the whole world moves towards energy transition, only nimble and flexible management can allow these energy giants who rely mostly on fossil fuels to come out as viable entities. Making piecemeal investments won’t help.