Banks tap finmin over worries of power NPAs
Banks raised lending to private power producers in the past few years, responding to the government’s policy focus on bridging the electricity deficit, an imperative for sustainable, rapid growth.
As per the National Tariff Policy, power projects needed to be financed through 70% debt and 30% equity. A power producer may contribute higher equity, but the electricity regulator CERC allows assured return on only up to 30% of equity.
Care Ratings MD & CEO DR Dogra said policy level issues – such as lack of coal and FSAs – have made power sector business a lot more tough to operate in. As per a Credit Suisse August 2012 report, 36 thermal power projects involving a debt of a little over Rs 2 lakh crore of private companies are now facing potential stress. Gas-based capacity of 14,000 MW is likely to come under stress, with an estimated bank debt of Rs 36,500 crore being sunk in these projects.
Companies’ projects facing potential stress include that of Adani (with debt of Rs 24,100 crore), Lanco (Rs 20,100 crore), Reliance Power (Rs 32,600 crore), Tata Power (Rs 14,400 crore), IndiaBulls (Rs 21,200 crore), Essar (Rs 21,900 crore debt), JSW Energy (Rs 6,700 crore), JVPL (Rs 15,500 crore) andKSK (Rs 6,000 crore), the report said.
Bankers, however, acknowledged that none of the