The Hindu Business Line : 2019-02-11
NEWS : 18 : 18
CHENNAI NEWS 18 BusinessLine MONDAY FEBRUARY 11 2019 • • Thermal power projects with ₹2.5-lakh-cr investments facing stress, says report IMF warns of global economic storm amid sluggish growth 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 multipronged strategy needs to be adopted instead of a straitjacketed approach.
“This has to be done as there are not enough takers for these stressed assets and any unthoughtful action may result in huge credit recovery losses for the banks/ financial institutions,” it added.
While the Insolvency and Bankruptcy Code (IBC) has already been amended four times since its enactment in 2016, the government is willing to amend it further to make it stronger and effective. “This is considered imperative to provide an effective solution to thermal power projects,” the report noted.
Further, an effective resolution in a time-bound manner is warranted by improving the macro environment governing the power sector, it said.
This will involve augmenting coal supplies under the Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India (SHAKTI) and mediumterm/short-term power procurement by discoms to alleviate the sub-optimal plant load factors (PLFs), it stated.
It will also require improvement in operations, besides National Investment and Infrastructure Fund (NIIF)/NTPC led resolutions, the study added. PRESS TRUST OF INDIA PRESS TRUST OF INDIA New Delhi, February 10 Investments worth over ₹2.50 lakh crore in thermal power projects are under stress, and immediate 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 power sector has been one of the highly stressed sectors in recent times, with loans of approximately ₹1 lakh crore having turned bad or been recast. Dubai, February 10 The International Monetary Fund on Sunday warned governments to gear up for a possible economic storm as growth undershoots expectations.
“The bottom-line — we see an economy that is growing more slowly than we had anticipated,” IMF Managing Director Christine Lagarde told the World Government Summit in Dubai.
Last month, the IMF lowered its global economic growth forecast for this year from 3.7 per cent to 3.5 per cent. Lagarde cited “four clouds” as the main factors undermining global economy. The risks include “trade tensions and tariff escalations, financial tightening, uncertainty related to (the) Brexit outcome and spillover impact and an accelerated slowdown of the Chinese economy”, she said.
Lagarde also pointed to the risks posed by rising borrowing costs within a context of “heavy debt” racked up by governments, firms and households.
“When there are too many clouds, it takes one lightning (bolt) to start the storm,” she said. Challenges “As per 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 the lenders having an exposure of around ₹3 lakh crore to these assets, which is alarming, to say the least,” noted the study titled ‘Stressed assets in the Indian thermal power sector’
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