Rs 2.5L-cr in­vest­ments in ther­mal power projects face stress

The Free Press Journal - - BUSINESS -

In­vest­ments worth over Rs 2.50 lakh crore in ther­mal power projects (based on do­mes­tic coal, im­ported coal and gas) are fac­ing stress, and im­me­di­ate re­me­dial mea­sures are needed to en­sure that they are re­vived in a time-bound man­ner, as per a re­port.

The As­socham-Grant Thorn­ton joint study noted that the coun­try's power sec­tor has been one of the highly stressed sec­tors in re­cent times, with loans worth around Rs 1 lakh 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 coal­based power, 6,830 MW of gas-based power and 4,570 MW of hy­dropower with the lenders hav­ing an ex­po­sure of around Rs 3 lakh crore to these as­sets, which is alarm­ing, to say the least," the re­port said.

Non-avail­abil­ity of reg­u­lar fuel sup­ply ar­range­ments, lack of Power Pur­chase Agree­ments (PPAs), 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, it said. The re­port added that there is no uni­ver­sal so­lu­tion for these ail­ing power as­sets and a mixed multi-pronged strat­egy needs to be adopted in­stead of a straight jack­eted ap­proach.

"This has to be done as there are not enough tak­ers for all of these stressed as­sets and any un­thought­ful ac­tion may re­sult in huge credit re­cov­ery losses for the banks/FIs," it added.

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