The gap between the capacity utilisation levels of India's state-owned and private power plants continues to widen, with the plant load factor (PLF) of state-owned thermal plants rising by three percentage points to 77% in April (y-o-y) even as the PLF of private producers slipped nearly seven percentage points to 55.2%. For a sector plagued by Rs 1.74 lakh crore of stressed assets, this is bad news. In plain words, the improving performance of state-owned plants has been accompanied by a fall in the debt-repayment capacity of around 40,000 MW of private plants, which face being relegated to the category of non-performing assets (NPAs). Stressed assets funded by the Power Finance Corporation (PFC) \u2014 the leading state-owned lender for power projects \u2014 tot up to more than Rs 30,000 crore, of which 27% are NPAs, all in the private sector. Significantly, PFC has not received any funding requests for coal-based private projects since 2012. Though the private players blame the \u2018statutory benevolence\u2019 enjoyed by state-owned National Thermal Power Corporation (NTPC) for the low PLFs and poor asset quality, experts say the problem is more complex in origin. Rampant power capacity addition in recent years coupled with less-than-expected growth in demand too has contributed to the situation, they say. The FY13-17 plan period saw private players commissioning 53,660 MW of thermal capacity, which was 23% more than the target. Overall capacity addition of 99,210 MW in the period was 12% ahead of the target. Meanwhile, electricity demand grew at a CAGR of 4.93%. It is not a surprise then that pan-India PLF decreased from 78.9% in FY08 to 60.5% in FY18. Long-term power purchase agreements (PPAs) which ensure power offtake from plants and assured supply of coal are the two factors which determine the financial health of a power producer. Thus, private power producers have regularly held NTPC's legacy of old PPAs responsible for the pass the sector is in \u2014 NTPC signed PPAs with states for more than 40,000 MW capacity in just three months before January, 2011, when competitive bidding for tariffs became mandatory. Incidentally, this figure of 40,000 MW matches the private capacity currently under stress. Coal shortage owing to inadequate transportation infrastructure has also affected private PLFs. And rising global prices have served as a deterrent to coal imports. \u201cHigher global coal prices has seen independent power producers with regulated tariff and cost under-recovery going for a voluntary shutdown. As a result, a fleet of private IPPs are under-utilised,\u201d says Kameswara Rao, leader, PwC India. The Parliamentary Committee on Energy has observed that the power sector had developed in an unbalanced manner, lacking a coordinated approach. \u201cSocial\/ political issues, reneging of parties on contractual obligations and non-fulfillment of enshrined promises make the situation worse,\u201d it felt. In its FY19 outlook on energy infrastructure, India Ratings has said, \u201cabout 51,000 MW of pipeline thermal capacity and soaring renewable capacity compound the stress on waning thermal PLFs\u201d. The rating agency does not expect such plants, without PPAs and exposed to the vagaries of spot market prices, to show a consistent PLF of above 40% in the next few years. Of the 47,855-MW of thermal capacity under construction, only 6,445 MW would be required in the FY17-22 period, the Central Electricity Authority has said. The forecast is based on an estimated demand growth of 6.2% (CAGR), capacity addition for other sources, and the possible phase-out of 22,716 MW capacity. A successful implementation of the plan to attain 1,75,000 MW of renewable capacity by FY22 would keep PLFs of coal plants from rising above 57% in FY22 and 61% in FY27.