Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / Pvt power producers may default on 1.35 lakh cr loans: Study
BackBack

Pvt power producers may default on ₹1.35 lakh cr loans: Study

Pvt power producers may default on ₹1.35 lakh cr loans: Study

Premium

New Delhi: Grappling with a string of negatives like coal shortages and environment hurdles, private power producers might default on loans up to 1.35 lakh crore, says a report.

Banking sector has an exposure of about 2,92,342 crore to the power sector, said the report prepared by Mercados Energy Markets India on behalf of the Association of Power Producers (APP) that includes Reliance Power, Tata Power, Essar Power and Adani Power.

India’s power sector, expected to add over 50,000 MW capacity in the current Five Year Plan (2007-12), is grappling with a host of problems.

Noting that a spectre of acute coal shortage is looming large on the power sector, the report said there is a severe risk of stranding of assets and the associated contracts.

“Considering the impacted capacity to be 38,748 MW and assuming a capital cost of 5 crore per MW (and a debt equity mix of 70:30), the total aggregate amount of default to the banking sector could be 1,35,618 crore i.e. 46.39% of the current banking exposure to the power sector," the report said.

According to the report, up to 50% of the power sector loans sanctioned are lying unutilised.

“These strains and slippages in funds lent to the infrastructure sector have been caused by project execution milestones being missed due to problems in fuel linkages and clearances.

“This has resulted in tighter norms for power disbursement and banks are getting more cautious on incremental exposure in view of these uncertainties," it added.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 12 Sep 2011, 07:12 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie