Amitabh Kant Committee constituted to address NPAs in power sector

The Union Government has constituted high-level committee headed by NITI Aayog Chief Executive Amitabh Kant to address problem of Non-performing assets (NPAs) or stressed assets in India’s power sector. It comprises secretaries in the ministries of power, coal and department of financial services as it members. The Government is also planning to investigate whether private developers have inflated project costs to show higher debt.

Background

According to second volume of Economic Survey 2016-17 released in August 2017, NPAs in power generation accounted for around 5.9% of the banking sector’s total outstanding advances of Rs. 4.73 trillion. Tackling issues that afflict so-called stranded power assets will provide much-needed relief for Indian banks weighed down by bad loans. Besides, weak financial health of state-owned power distribution companies (discoms) is also hampering process of signing long-term power purchase agreements (PPAs) through competitive bidding.
So far, a total of 34 coal-fuelled power projects, with an estimated debt of Rs. 1.77 trillion were reviewed by government after being identified by department of financial services. Issues faced by these projects include paucity of funds, lack of PPAs and absence of fuel security.

Month: Current Affairs - December, 2017