Adani’s debt levels, heatwaves in China, floods in Pakistan - Issue #19
News of the Week
Last week was densely packed with events.
In India, Adani made the headlines once more. First when Fitch Group’s debt research unit CreditSights raised alarm bells about the conglomerate’s extraordinary debt levels. Its debt-funded growth plans could spiral “into a massive debt trap” and culminate in distress or default of its companies and the broader Indian economy in a “worst-case scenario”, it said.
Two days later came another report. This one, by Bloomberg, found Adani Green’s debt-equity ratio was an eye-popping 2021%. The ratio is used to measure a firm’s debt levels. A ratio of 2 to 2.5 between debt and equity is considered good. Adani’s is ten times higher.
Such alarm bells have been clanged before. The group’s financial management had also raised alarm bells in 2015 – with the Credit Suisse House of Debt report. Four years later, writing on the group’s quicksilver expansion despite a weak balance sheet, online journalism startup Scroll.in had found, among other things, that the group was raising money by pledging shares in new businesses and using that borrowed money as equity to start more new businesses – apart from propping up loss-making businesses.
For now, though, the juggernaut continues. On the day CreditSights released its report, the conglomerate announced it had acquired a firm that owned 29% of NDTV and was making an open offer to pick up another 26%.
At this time, NDTV is fighting this hostile takeover.
Other news. Nayara Energy is in trouble. Given Rosneft’s stake in it, many global oil traders and banks have stopped dealing with the refiner.
Elsewhere in the country, the signals from the energy sector were mixed. Consider these developments.
In Renewables, India found a new price for battery storage. Sajjan-Jindal-led JSW Energy emerged as the lowest bidder in the pilot large-scale battery storage auction with a winning bid of Rs 10.84 lakh per MW. Acme Solar stood a close second with an offer of Rs 10.85 lakh per Mw. China’s BYD, the world’s biggest EV maker, will soon launch its first model in India. Rooftop Solar slowed -- Installations have fallen 25% during April-June 2022, said Mercom. India is trying to gauge the offshore wind potential at the Gulf of Mannar. Chhattisgarh is setting up a new thermal power plant. A new nuclear push is coming as well. NTPC will set up two 700 MW reactors in Madhya Pradesh.
This is a wider pattern. Asia is turning to nuclear. As Bloomberg reported: “As power bills surge and nations deal with fossil fuel-induced inflation, governments are again looking to nuclear. It requires little uranium to operate, which is currently abundant, and it produces power around the clock, unlike intermittent renewable energy projects such as wind and solar. Also boosting the industry advance in producing smaller and cheaper nuclear technology, including small modular reactors -- or SMRs -- which may become attractive alternatives as tools to tackle climate change.
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In another wider pattern, Gas is in trouble. Bangladesh has dropped plans to build a Gas-based power plant.
Gas is in trouble in India as well. As SPGlobal reported, “Lofty global LNG prices and limited supplies threaten to derail India's regasification capacity plans, with existing regas levels running low and some of the previously planned new volume additions progressing at a slower pace... The country currently operates six terminals -- at Dahej, Hazira, Dabhol, Kochi, Ennore, Mundra -- with a combined nameplate capacity of about 42.7 million mt/year. However, in May, three of these terminals at Kochi, Ennore and Mundra, which collectively hold a capacity of 15 million mt/year, operated at only around 12%-20% of their capacity.”
Elsewhere in the world, the polycrisis ruled. Food shocks, extreme weather and energy shocks made headlines.
The corn crop in the US is expected to be low this year. After clamping down on wheat exports due to the heatwave, India is now thinking of halting rice exports as well.
Pakistan started protesting about high fuel costs the week and ended it with extraordinary flash floods. Rainfall this year, for the country, is running 780% higher than normal. As of yesterday, floodwaters threatened to cover up to a third of the country of 220 million people by the end of the monsoon season. Talking of extreme weather, there is also China. It’s reeling under an unprecedented heatwave – the most severe ever recorded. As New Scientist wrote: “River and reservoir levels have fallen, factories have shut because of electricity shortages and huge areas of crops have been damaged.” Read this too on the power crunch in Sichuan.
As this newsletter said last week, riverbeds in the country were running dry. Just as they were in Europe a couple of weeks ago.
Apocalyptic times. Looking at atypical weather patterns this year, it’s almost as though an invisible rubicon has been crossed.
Climate Video of the Week
Climate Long-Reads
India’s clean energy potential might be limited by extreme weather.
This Financial Times report on Bangladesh, on how energy shortages and rising import bills are threatening to undo the country’s impressive gains over the last two decades.
Book(s) of the Week
This week, I happened to read Richard Attenborough’s
A Life on Our Planet: My Witness Statement and a Vision for the Future
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The book published two years ago starts with Attenborough looking back – his entry into the BBC and the natural history programmes he produced. The brief second part, “What Lies Ahead”, talks about how climate change will progressively roil the world. His world descriptions – in 2030, 2040, 2050... -- are unforgettable. But that is not what stands out for me. In the third part, the book uses the doughnut model to talk about the planetary boundaries we must not breach. We know we must move to clean energy. But we also must, for instance, stabilise the planet’s population – for which women empowerment is central.
Reading the book, it’s hard not to feel that while we are progressing on clean energy, we are regressing on several other fronts.
PS: News came this week of extinction. Dugongs are functionally extinct in China. The species follows the Chinese Paddlefish, the wild Yangtze Sturgeon, and the Yangtze River Dolphin into oblivion. On these, a book. In Witness To Extinction, biologist Sam Turvey describes the ill-fated fight to save the Baiji, as the Yangtze River Dolphin is called.