Thermal power projects facing stress

Thermal power sector projects with investments worth over Rs 2,50,000 crore are facing huge stress, according to a recently published joint study published by ASSOCHAM and Grant Thornton.

The study also noted that the country’s power sector has been one of the highly stressed sectors in recent times, with loans worth approximately Rs 1,00,000 crore having turned bad or been recast.

“As per the recent estimates, around 66,000 MW capacity is facing various degrees of financial stress, including 54,800 MW of coal-based power, 6,830 MW of gasbased power and 4,570 MW of hydropower with lenders having an exposure of around INR 3,00,000 crore to these assets, which is alarming, to say the least,” noted the ASSOCHAM-GRANT Thornton study titled, “Stressed assets in the Indian thermal power sector”.according to the study, non-availability of regular fuel supply arrangements, lack of Power Purchase Agreements (PPAS), the inability of promoters to invest equity and working capital, and regulatory and contractual issues are some of the major challenges faced by thermal power projects.“an effective resolution in a timebound manner is warranted by improving the macro environment governing the power sector. This would involve augmenting coal supplies under the Scheme for Harnessing and Allocating Koyala (coal) Transparently in India (SHAKTI) and medium-term/short-term power procurement by DISCOMS to alleviate plant load factors.