Many power assets bagged on lowest tariff quote, under long-term power purchase agreements, are expected to end up in a queue for debt recast, mainly because of fuel problems facing the sector.
According to estimates, Rs 50,000-crore (Rs 500-billion) loans for power projects totalling over 15,000 Mw of capacity could become troubled loans.
“Contracts for many projects awarded through competitive bidding in 2007 and 2008 are in dispute now,” says Debashish Mishra, senior director, Deloitte Touche Tomatsu.
Now, independent power producers, managed by the private sector, might also jump the tricky power-sector debt restructuring bandwagon -- loans to state-owned power distribution companies (discoms) under a Union government package are already being restructured. Banks’ exposure to discoms was estimated at Rs 1.90 lakh crore (Rs 1.90 trillion) when the package was announced last year.
Tamil Nadu, Uttar Pradesh and Haryana, involving debt of around Rs 26,970 crore (Rs 269.7 billion), have already availed of the package.
Fitch Ratings Senior Director S Nandakumar says around seven per cent of the loans for the companies his firm rates has been downgraded to the ‘C’ or ‘D’ level over the past six months.
“Around 2,000 Mw of power capacity is in the danger of default or loan restructuring,” he said.
The rupee’s depreciation has added to the problems of generation companies, which are having to import coal due
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