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Thermal Power Sector struggles with Unresolved Issues

<p><span style="font-size:9.0pt">Distress in Thermal Power sector have not only ensued underutilization of capacities but also have stressed banking sector. The overall stressed thermal power generation assets remain a sizeable 60,000 mw. Of this about 26,000 MW are in trouble due to absence of long-term PPAs (power purchase agreements), about 12,000 MW are stranded due to non-availability of domestic gas supply and 22,000 MW due to unviable tariff in the PPAs and capital cost overrun. </span></p> <p><span style="font-size:9pt">Delay in statutory clearances and approvals like land acquisition, unavailability of fuel linkages, rise in cost of coal, high freight charges have left thermal power plants stranded, some of them are even operating at less than half PLF. Discoms on the other hand are renegotiating to down revise PPAs, which may impact viability of old plants in longer run. Poor quality of coal, water availability and use of outdated technology across thermal plants are also making situation more worse.</span></p> <p><span style="font-size:9pt">RBI&#39;s stringent insolvency proceedings and strict compliance of environmental norms have also put extreme pressure on the sector. Need of hour is to mull over thermal specific issues, switching over promoters through insolvency is not the panacea for the problem. Structural inefficiencies should not be allowed to remain unresolved.</span></p>