MOUNTING TROUBLEs
riskPower projects worth over `3 lakh cr face default

New Delhi: The Association of Power Producers (APP) has said that nearly 50 power projects, being developed in the country by various private players at a staggering cost of about Rs 3.42 lakh crore, could face the risk of default if immediate steps are not taken to address issues like fuel shortages and environmental hurdles. According to APP, a grouping of over 20 private power companies in the country, an estimated 52 power projects having total capacity of 68,563 mega watts are facing the default risks at present. An investment of about Rs 5 crore is required for developing one mega watt (MW) generation capacity, which pegs the total cost of these projects at close to Rs 3.42 lakh crore. The Association, whose members account for over 95 per cent of the private sector power generation capacity, has sent the list of the projects facing default risks to the Power Ministry as well.

India is expected to see a capacity addition of 80,000 MW in the 12th Five-Year Plan, 2012-17 and a significant chunk would be from private players. The Association has said that a slew of factors including fuel scarcity, coal mines tangled in ‘Go/No Go’ areas and higher price of imported coal are hindering these projects. They are stuck after bidding or post signing memorandum of understanding (MoU) with respective states. The top executives of private power companies had met Prime Minister Manmohan Singh in January to apprise him of the sectoral woes. Following the meeting, the Prime Minister set up a Committee of Secretaries (CoS), headed by his Principal Secretary, Pulok Chatterji, to look into the issues. Later the CoS decided that Coal India would sign fuel supply pacts for power projects for a period of 20 years.

“For power plants that have been commissioned up to December 31, 2011, Fuel Supply Agreements (FSAs) will be signed before March 31, 2012,” PMO had said in a statement. FSAs would be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years. If the supply is below 80 per cent, then Coal India would be penalised whereas in case the supply is above 90 per cent, the company would be provided incentive. In case, Coal India is unable to meet the obligations, the company would have to arrange for fuel through imports or other arrangements. PMO had also noted that these arrangements would provide relief to power plants with estimated capacity of more than 50,000 MW. PTI