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Power Distribution Woes Trapping 1.2 Trillion Worth Generation Assets

News

At a time when almost a third of India’s 1.3 billion citizens have no access to electricity, power plants worth about Rs.1.2 trillion are struggling to find customers.

Source: live mint

SNP Insight

This scenario may add more financial stress on the generating unit. The investors and developers may hesitate to go with future thermal based power project under this cloud of uncertainty on return on investment. Also without long term power supply contract the developers may find it tough to get debt financing for their project. Also due to shortage in revenue generation will hamper the debt service capacity of these generating units. This will result in creating more non-performing assets for the lenders to these projects (* Banks fear 1.5 Lakh loans to various power projects will turn NPAs).

Source: SNP Infra Research