Standard Post with Image

Banks reluctant in lending to private power companies for parts upgrade

<p>Banks have refused fresh lending to private power plants for upgradation of equipment to abide by mandatory emission norms, threatening the closure of 60 GW of operational and near operation assets, starting December this year. Private power firms have sought the Centre&rsquo;s intervention to get 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), following refusal by banks. The companies are already behind schedule for placing equipment orders to meet the phased deadlines beginning this year-end. Power plants that fail to comply with emission norms as per timelines agreed in the Supreme Court will face closure.</p> <p>Closure of these well-running plants due to non-compliance, on account of financial constraints, would dry up the power plants&rsquo; cash flow and consequently would lead to default in their debt obligations. This scenario, in all likelihood, would lead to a new wave of NPAs in the power sector.</p>