A High Level Empowered Committee (HLEC), chaired by Cabinet Secretary PK Sinha, to address the issue of stressed thermal power projects in India has made far-reaching recommendations. The big question is, will the recommendations be effected? In view of the expected disruption in the power sector, they ought to be.
As many as 34 thermal power plants in the country with a combined capacity of 40,130 MW are stressed. Assuming an average cost of Rs 6 crore per MW (in many cases it is much higher), this means that Rs 2.4 lakh crore of investments are in jeopardy. Since banks contribute at least 75 percent of a project’s cost, it could mean that at least Rs 1.8 lakh crore of bank funds are under stress.
That explains why banks were included in the panel apart from representatives from the power, finance, railways, oil and petroleum and coal ministries. Read more