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Private Power Plant Struggle to Comply with Strict Emission Guidelines and Banks's Lending Denial Worsens Situation

<p><span style="font-size:9.0pt">Government&#39;s raising concerns on Environment Safety and Energy Security, has mandated all thermal plants to comply with emission norms prepared by CEA. Deterrence in form of plant closure on default has forced developers for upgradation of equipment so as to abide by the set standards. It is estimated by the government that about Rs. 1,80,000-crore financial assistance for installation of emission control equipment from sectoral financiers such as Power Finance Corp (PFC) and Rural Electrification Corp (REC) shall be required.</span></p> <p><span style="font-size:9pt">Banks are reluctant to provide lending to private power plants for upgradation, in purview of prevalent stress in the sector, overexposure to the power sector, ongoing bad debt corrective schemes and past experience with denial of pay-out in case of change in law by discoms.</span></p> <p><span style="font-size:9pt">The companies are already running behind the said targets set by CEA. Delay in compliance of emission norms may lead to shutdown of generation across many plants in India. It is likelihood that developers will struggle to service their debt obligations and meet daily O &amp; M expenses. If this scenario continues, India may experience power crisis in near future.</span></p>