Power projects in India may come to a grinding halt unless generation companies are supported with easier access to fuel and restructuring of loans in the wake of coronavirus outbreak and the ensuing lockdown, warned Hemant Kanoria, chairman, Srei Infrastructure Finance Ltd.
“The power sector has been facing an existential issue since the last five years and with COVID-19, it seems to be the proverbial last straw that broke the camel’s back kind of situation,” Kanoria wrote in a letter to the Prime Minister, Narendra Modi.
“The gencos need to be supported with easier access to fuel and restructuring of their loans, or else those projects can come to a halt resulting in job losses and also leading to a rise in the non-performing assets (NPAs) in the banking system,” he added.
In his letter to the PM, Kanoria suggested that the government must implement certain measures to ameliorate the stress in the power sector.
The condition of advance payments for coal at Coal India and freight charged by Indian Railways from power companies should be waived for next 12 months, while the government should also consider relaxing incidence of tax and additional levy on coal and rail transportation.
Kanoria said that coal should be made available to all gencos at lower prices given the lower global energy prices. “Coal should ideally be available round the clock and throughout the year on a ‘pay and take’ basis.
The precondition of having a power purchase agreement for coal supply contracts should be done away with,” he said.