Project funding to coal from commercial banks dropped 126 per cent from 2018 to 2019, according to a recent report. It said that commercial banks provided Rs 950 crore in loans to coal.
Whereas, coal financing further decreased by 82 per cent in 2019. “This marked the second consecutive year-on-year decline in coal funding, following a 90 per cent decrease in 2018,” the report added.
According to the report by the Centre for Financial Accountability (CFA) and Climate Trends, there has also been a significant drop in state-owned financing of coal projects while there has been no government financing for coal in 2019 except for Rs 150 crore from EXIM bank.
“A significant drop in project finance to coal means that financial institutes are beginning to realise the associated financial and reputational risk in investing in coal. Pushing healthy commercial banks into financing unviable coal projects in India and abroad will only lead to more stress in the financial sector,” said Joe Athialy, executive director at CFA.
According to the report, in 2019, two coal projects with a total capacity of 3.06 gigawatt (GW) received Rs 1,100 crore in project finance. While in 2018, five coal-fired projects with a combined capacity of 3.8 GW received Rs 6,081 crore. Whereas in 2017, Rs 60,767 crore was lent to 17 GW of coal projects.
“Of the total lending to coal in 2019, Rs 700 crore went towards refinancing of JSW Energy’s Barmer power plant in Rajasthan. The Barmer project was also refinanced in 2018. The remaining Rs 400 crore went towards financing NTPC’s new coal project in Barh, Bihar,” it said.
According to recent reports, shutting down coal plants that are 20 years or older could save up to Rs 53,000 crore over five years for various discoms.