June 25, 2018

MW woes: India needs a national discom

Shankkar Aiyar, Visiting Senior Fellow at IDFC Institute, writes on why it is imperative for India to fix issues in the power sector, in this New Indian Express article. Excerpts:


"It is a curious phenomenon. Problematic issues in the political economy seem to be governed by a peculiar circle of governance. Every few years a problem ostensibly resolved returns to haunt the political economy and the issues enveloping the issue are veritably the same.On January 18, 2012, Dr Manmohan Singh, the then prime minister, met with industry bigwigs of the power sector. Over `2 lakh crore of public monies were locked in stranded projects hit by poor fuel linkage, clearances and payment dues from debt-laden state electricity boards. The projects were on RBI’s list of stressed assets as early as in December 2011. A committee was tasked with chalking out 30-day, 60-day and 90-day plans to resolve issues. A series of meetings and standoffs followed, and over 850 days later, most of the issues were pending when UPA demitted office in May 2014.


On February 12, 2018, an RBI notification mandating banks to classify even a one-day delay in debt servicing as default launched the sequel of an old script. Banks and the promoters of power projects argued for forbearance by the regulator. On March 7, 2018, the Parliamentary Standing Committee on Energy unravelled the state of affairs and said, “Thousands of MWs are under severe financial stress and are on the brink of becoming NPA.


This is due to fuel shortage, sub-optimal loading, untied capacities, absence of FSA and lack of PPA, etc.” In 2018, banks’ exposure to stressed projects stood at `4.82 lakh crore—34 projects with 40,130 MW generating capacity and outstanding loans of `1.74 lakh crore were NPAs. On June 1, 2018, the Allahabad High Court heard a petition filed by the Independent Power Producers Association of India and directed the finance ministry to hold meetings with stakeholders to resolve the issue."


Read the full article here.

Topic : State Capacity / In : OP-EDS
x Close Window

Please verify your email address to access this content