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Thermal power’s problems are deep-rooted. New RBI rules can’t fix them alone.

The RBI’s new circular on stressed assets has got a chorus of approval from embattled thermal power producers. But it’s not a silver bullet. To turn around the sector, which generates 80% of India’s power, two key issues – unviable projects and sinking discoms – have to be addressed.
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26 Jun 2019 6 Mins Read 0 comment
BSES workers cut electricity cables in New Delhi's Karol Bagh on February 27, 2019. The country's power sector is in a financial mess. Getty Images
BSES workers cut electricity cables in New Delhi's Karol Bagh on February 27, 2019. The country's power sector is in a financial mess.
The thermal-power infrastructure, which meets 80% of India’s power demand, needs urgent attention. The producers of coal-based power are caught in the muck, with fuel-availability concerns, poor financial health of distribution companies (discoms), and competition from the renewable-energy sector weighing on their books. While the revised Reserve Bank of India (RBI) circular on stressed assets comes as a
within the timelines to prevent their provisioning costs from escalating. The role of IBC will continue to be important in bad-loan resolutions. It remains to be seen whether lenders will continue with the practice of evergreening their books. To change ground reality, the key issues bothering the power sector have to be addressed. ( Graphics by Abdul Shafiq)
The thermal-power infrastructure, which meets 80% of India’s power demand, needs urgent attention. The producers of coal-based power are caught in the muck, with fuel-availability concerns, poor financial health of distribution companies (discoms), and competition from the renewable-energy sector weighing on their books. While the revised Reserve Bank of India (RBI) circular on stressed assets comes as a within the timelines to prevent their provisioning costs from escalating. The role of IBC will continue to be important in bad-loan resolutions. It remains to be seen whether lenders will continue with the practice of evergreening their books. To change ground reality, the key issues bothering the power sector have to be addressed. ( Graphics by Abdul Shafiq)

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