The Narendra Modi government took charge last month for a second term – but it is confronted with the same crisis in the power sector that it did five years ago. Perhaps, the only positive sign is that coal, which is a major component in driving power generation, does not face the problems it did in 2014. Still, some unresolved issues remain.
What ails the power sector
The government will first need to address two critical issues: the massive contribution of 34 power generating companies (two of them public) to Indian banks’ stressed assets — together, they own loans worth Rs 1.74 lakh crore, which could soon turn into bad debts. The production capacity of these thermal power plants with stressed assets is around 40,000 MWs.
The second issue is the shortage of coal supply and the absence of a Fuel Supply Agreement. The number of power plants in need of adequate coal stood at 30 as of October 2018, according to a report by the Central Electricity Authority. Read more