Evidence from the Field – India’s Power Outage
April 23, 2012: Wall Street Journal headline – “Scandal Spurs Indian Coal Auction”
“India is the world’s third-largest producer of coal, after China and the U.S. But it has become increasingly reliant on imports from countries such as Indonesia because of slumping domestic production. This year, demand is expected to outstrip production by about 100 million tons. State-run Coal India Ltd., which produces about 80% of India’s output and holds a monopoly on domestic sales, has failed to increase production.”
Wonder what that inability of the government-owned mines to increase production portends?
July 31, 2012: New York Times headline – “2nd Day of Power Failures Cripples Wide Swath of India”
So, what to do?
August 22, 2012: Reuters – “Indian coal imports seen rising as global prices fall”
This leads me to the simple conclusion that the governments should not be in the business of owning and operating coal mines (or any other companies for that matter, including auto). For more, Google “Venezuela oil production history”.
All comments and questions are welcomed.
Bob Bilkie, CFA