Fitch: NTCP, Damodar to gain from India coal crunch

Fitch Ratings said that India's power generation companies could be adversely affected by coal shortages, which are likely to persist over the short-to-medium term.

The comment comes after a recent government decision to prioritize coal supplies to generators, which sell electricity through power purchase agreements over merchant generators or those that run on 30% imported coal, Fitch said.

Therefore, state-run power producers, including NTPC Ltd., which has BBB- ratings and a stable view, and Damodar Valley Corp., which has AA(ind) ratings and a negative outlook, are likely to benefit from this decision, the agency said.

Coal demand has increased significantly with the commissioning of new coal-fired generation capacity, Fitch said. Given India's chronic power deficit, this trend is likely to continue.

A lower-than-expected increase in domestic coal production, particularly due to delays in the development of captive coal blocks allocated to the power generators, has added to the demand-supply gap, the agency added.

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