Bleak revival prospects for 21 GW stressed assets: CRISIL

A large proportion of coal-based power generation capacities in the private sector, stressed due to multiple factors, will remain in duress for a long time despite a raft of alleviation measures from the government, forecasts CRISIL Research.

As of August 2017, about 21 GW of commissioned private sector coal based capacities were under stress for lack of long-term power purchase agreements (PPAs) or because of poor or no offtake. With demand growth expected to remain tepid, the outlook for these capacities is bleak for at least next few years.

In addition, 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). 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.

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