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Revival prospects of 21 GW stressed coal-based power plants bleak: CRISIL

29 Sep 2017 Evaluate

The rating agency, CRISIL in its latest report has said that revival prospects of stressed coal-based power plants with a total capacity of about 21 GW are bleak for at least next few years. It also pointed out that their assets sale as well as consolidation will be slow despite various schemes being undertaken by the government.

The rating agency, in addition, has stated that a large number of plants adding up to 35 GW capacity are smarting due to issues such as lack of fuel supply agreement or coal linkage, unviable tariffs due to increase in cost of imported coal, project cost overrun due to delay in commissioning, and high receivables due to weak financial condition of procurers (state power distribution companies or discoms). It also pointed out that while the government’s SHAKTI and UDAY schemes are expected to alleviate stress related to fuel supply and delayed payments, finding offtake will be a huge challenge.

The report further said that electricity demand is likely to remain tepid at around 6 percent over next five years due to reducing electricity intensity in GDP, rising efficiency and falling technical losses. Besides, it noted that getting discoms to sign new long-term power purchase agreements (PPAs) that ensure stable offtake is going to be challenging. Adequate quantum of power tied-up under already signed PPAs, expected tepid power demand growth, likely migration of high tariff paying industrial and commercial consumers to open access and availability of low-priced power in short-term market would imply few new PPAs in the near term.

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