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Power Outage
India's Energy Woes Are Catching Up to It

An Indian aluminum company is looking to site a massive $3 billion smelting complex abroad, citing the country’s energy shortages as explanation for its impulse to “offshore” the project. Bloomberg reports:

Indonesia, Vietnam, Malaysia, Oman and United Arab Emirates are other potential sites for the 500,000 metric ton smelter and a 1,000-megawatt captive power plant, National Aluminium’s Chairman Ansuman Das, 59, said in an interview. He didn’t give a timeline for the project by the state-run maker of a metal used in everything from beer cans to aircraft and cars.

“We are facing a massive energy challenge in India,” Das said. “That’s the reason we are looking at these countries, which have abundant energy resources.”

India’s energy problems have captured international headlines in recent years when the country experienced blackouts on an unprecedented scale, but this smelting plant represents an entirely different, but equally serious problem for the rapidly developing country.

India has sizable fossil fuel reserves, and is actively investing in solar energy and (perhaps most promisingly) thorium nuclear reactors, but its reliance on energy imports continues to increase. In 1990, the country’s coal production met most of its demand, while in 2012 its import dependency rose to 23 percent, according to the EIA. Similarly, India’s net oil import dependency, already at a sizable 43 percent in 1990, jumped to 71 percent in 2012. Year after year, the country’s energy demands are outstripping its domestic supplies, affecting households and businesses alike.

Frequent blackouts stoke unrest for the hundreds of millions of affected people, but for companies trying to compete in international markets, they pose an existential threat. It’s no wonder, then, that firms like National Aluminium are looking abroad to site production. For India’s reputedly business-friendly new Prime Minister Narendra Modi, solving this power problem must be a top priority.

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