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Generous state bank loans to Chinese solar companies, a bone of contention for their Western counterparts, are threatening the financial health of the firms, as they grapple with falling product prices and tumbling demand from their biggest customer, Europe. The huge funds that flow into China's solar sector, in which local governments hold stakes, have boosted production in the first half despite fragile demand, depressing product prices and setting off an anti-dumping probe by the United States. State banks provide easy loans to the sector amid the Chinese government's push to develop clean energy. Provincial governments that have helped build solar companies are also pressuring banks to continue lending, which may add to the woes of the struggling industry. The glut of production and swelling inventories of the panels that turn sunlight into electricity have already driven down prices by about 40 percent so far this year. Analysts expect prices to slide by another 10 percent by early next year. "The longer and larger the Chinese bank lending bubble for solar inflates, the sharper and more unpredictable will the eventual fundamental correction be due to industry consolidation," Credit Suisse analyst Satya Kumar said. "We need much sharper production cuts, which will only happen when the debt bubble bursts," he said, warning that the industry may suffer a prolonged period of depressed product prices unless China tightens lending. Total borrowings at top 13 listed Chinese solar companies had doubled to about $15 billion as of June 30 from a year ago, according to CLSA. Majority of those debts are with Chinese banks and are due within a year. AT BREAKING POINT China's support to its companies has angered U.S. solar firms, which say Chinese producers can undercut American prices as they receive massive cash grants and other subsidies. However, mounting unsold products, spiraling debts, shrinking profits and a worsening market could lead to a major shakeout of the legions of weaker Chinese companies, analysts and bankers say. "Over the next six months, there won't be profits to be made," said CLSA's solar analyst Charles Yonts. He expects some companies to start defaulting on loans and put themselves up for sale. "Balance sheets across the solar sector are already stretched to breaking." China's LDK Solar Co Ltd last week sharply lowered its revenue outlook due to price falls, joining First Solar Inc, Trina Solar Ltd, Yingli Green Energy Holding Co Ltd and Renesola Ltd, among others, in cutting targets for the year. Among the U.S.-listed Chinese firms such as LDK Solar, Suntech Power Holdings and Canadian Solar, LDK has the highest credit risk, according to CLSA. Wells Fargo solar analyst Sam Dubinsky dropped coverage of LDK last week, saying he was "not convinced shares are a viable investment," due to increasing liquidity risks in light of its balance sheet geared to short-term borrowings. LDK did not respond to an email from Reuters seeking comment about its credit position. Canadian Solar, China Sunergy, LDK and Suntech had net gearing ratios -- a measure of financial leverage -- of more than 100 percent, making them vulnerable to any further slide in product prices, analysts said. The median net gearing of companies in the sector is 46 percent. SELECTIVE LENDING Despite requests for more lending from local governments, Chinese banks in Jiangsu, one of the country's largest solar panel production bases, are tightening lending for local solar companies, according to banking sources. "We are worried about this industry every day," a senior loan banker who has knowledge of loan arrangements with Chinese solar companies told Basis Point, a Thomson Reuters publication. "The industry is going through a painful reshuffle. Some companies will face tremendous problems and even go bankrupt," said the banker, who declined to be identified as he was not authorized to speak to the media. Cash-strapped companies may be forced to raise capital on poor terms or cut investments if banks tighten funding. Shanghai-based solar panel maker JinkoSolar Holding has raised short-term bank-accepted notes in the second quarter by eight folds from a year ago to pay its suppliers, highlighting the liquidity challenges faced by the industry, according to Susquehanna Financial. JinkoSolar's Chief Financial Officer Longgen Zhang said issuing bank-accepted notes is a common industry practice. "It helps keep a healthy cash flow," the CFO said, adding that the company keeps a strong balance sheet. Banks are also becoming more selective in extending loans amid growing fears that the industry may face further difficulties. "Banks are becoming uncomfortable with many companies' debt levels and as a result, are likely to become unsupportive to uncompetitive producers," said Colm O'Connor, fund manager at KBC Eco Fund Alternative Energy. But relatively big firms such as GCL-Poly Energy Holdings and Trina Solar should be able to survive the downturn as they enjoy the support from their state shareholders or local governments -- who need to keep the plants afloat to boost employment. "The companies are large employers. Local governments will strongly encourage banks not to close out lines of credit and roll over short term debts," said an analyst who requested anonymity due to the sensitive nature of the issue. LDK, which is backed by the Jiangxi provincial government, plans to triple its polysilicon capacity to 55,000 metric tons by 2013, just as it braces for lower revenue. In September, China Development Bank, one of China's three policy-oriented banks, approved a $713 million loan deal with GCL Poly, which is 20 percent owned by sovereign wealth fund China Investment Corp.

India's Income Tax Appellate Tribunal struck down an order for collection of Rs 158 from Grid Corporation of Orissa  for the amount paid to Orissa Power for power transmission charges during 2008-09.

Suzlon Energy received a fourth consecutive order from GAIL consisting of 11 units of its S88-2.1 megawatt wind turbines, totalling to 23.1 megawatts.

Honeywell will work on Hoang Long Joint Operating Company's H-04 wellhead platform in the Te Giac Trang Field.

STX Heavy Industries Co Ltd, an unlisted unit of South Korea's STX Group, said on Sunday it has obtained a $2 billion deal to construct and operate a large-scale industrial complex in Saudi Arabia. The complex comprises iron ore production and power generation plants, it said. Under the deal signed on Saturday in Riyadh, the Korean party will be responsible for the planning, engineering, procurement, construction, operation and management of the plants to be built in the Wadi Sawawin district of Saudi Arabia's northwestern city of Tabuk, STX said in a statement. The Saudi project also involves pelletising and desalination plants that are required to complete the proposed industrial complex, according to STX. STX said it will produce 5 million tonnes of iron ore annually from the Wadi Sawawin mine owned by National Mining Co, a venture firm that Saudi Arabia's Al Sharif Group and U.K.-based mine developer London Mining Plc established. The iron ore mine is estimated to have more than 125 million tonnes of commercial reserves, STX added. An STX spokesman declined to give further details about the project, including capabilities of the other plants.

Vietnam aims to promote industrial energy efficiency through steam and compressed air system optimization and adoption of energy management standards - ISO 50,001.

Adani Power Limited has will commence commercial operations at unit-2 of the Mundra thermal power plant by end of December.

NHPC Limited`s 45 MW Nimoo Bazgo hydroelectric project t has already suffered incessant delays owing to constrained supplies of the crucial electo-magnetic parts.

Khazanah Nasional, the sovereign wealth fund of the Malaysian government, plans to invest in India, including the latter's energy sector.

China Sunergy is shifting capital spending to its ‘Quasar’ selective emitter monocrystalline-based cell technology.

GCL-Poly will install 1GW of solar capacity in Shanxi province and is eyeing Datong City for its project location.

The state government of Jammu and Kashmir in India is seeking bids from power companies to develop a 400MW Karthai hydro electric power project.

Several leaders from GE will participate in the conference program on smart grid and electric vehicle technologies.