The country also has a 20% Energy Efficiency Improvement Plan for 2006-2010 which it is almost sure to miss.China energy reduction plans have gone haywire due its fast growing economy’s dependence on fossil fuels.China has recently talked of increasing the percentage of Renewables to 15% by 2020 from the single digit figure now but the progress of Energy Efficiency has been not upto the mark.China’s Energy Efficiency in fact decreased in the first half of 2010 instead of increasing.This decrease is due to the breakneck industrialization occurring in Chinese provinces determined to outdo each other in the Growth Game.Diktats by the Central Party Leadership have failed to rein in the provinces.
Shale Gas Extraction has seen doubts being raised against its Environmental Safety Record.This new form of Fossil Fuel Extraction has seen a Gold Rush from Global Oil and Gas Majors looking to tap into this major new Energy Form.In the initial helter and skelter,environmental norms have been bypassed.Recently a NGO blamed regulators and companies of illegally diverting millions of tons of water in Pennsylvania.India’s Biggest Private Company Relaince Industries has invested a huge amount in acquiring Shale Gas Assets in order to assimilate this Technology. The Indian government is writing a new Shale Gas Policy as India is said to have geographical formations with potential Shale Gas Deposits.
Coal India Limited (CIL) would be a safe stock to invest in if it priced in the indicated manner that is a $33 Billion Market Capitalization.This stock won’t be a multi bagger but would offer decent price appreciation with almost no downside risks.At trailing P/E of 15x and 3 year average trailing P/E of 20x,the company is not expensive given its competitive strengths.Its dividend yield would be around 1.5% with growth of around ~10-12%.However if you exclude $8.5 Billion in Cash,then the stock seems cheap at around trailing P/E of 11x.It has a P/B of 6x and P/S of around 3x.With its ASP being at a 65% Discount to the International Price,the Company has a huge moat around its business model and I would recommend it as a Buy.
Reliance Industries is known to have one of the smartest management teams in the country.The Reliance Group led by Mukesh Ambani is well connected with proven record in executing huge projects in the Oil and Gas Arena.However outside of their core competence,the Group has suffered.Its Retail Entry has not been much of a success despite big bucks being poured in the last 3-4 years.It entry into marketing of oil based fuels has also meandered without going anywhere.Now the Reliance Group has announced an entry into the Hotels Sector by acquiring a 14% stake in East India Hotels at a significant premium over the market price from the promoter Group.This ~$220 million investment is totally unrelated to Reliance’s activities and make no strategic sense.
Norway has been hailed as the toughest cutter of Greenhouse Gas Emissions amongst the devloped countries promising to cut Carbon Emissions by 30-40% by 2020 from the 1990 Levels.Compared to this USA has promised a measily 17% cut from 2005 levels and the EU only 20% by 2020 from 1990 levels.Norway’s cost of cutting emissions […]
Reliance’s Strategy in Shale Gas makes a lot of sense.The Technology is but new and unproven on a long time scale.There have been concerns about the environment impact of Shale Gas Extraction.Also low Gas Prices due to the GFC has made the industry growth slowdown.This is a good time to buy Shale Gas Assets relatively cheaply as Economic Recovery will again see Fossil Fuel Prices heading up.