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IEEFA report: India’s stranded asset risk in thermal power sector underestimated

December 18, 2019

December 18, 2019 (IEEFA India)  Several more thermal power stations in India could potentially be classified as stranded assets, finds a new report released today by the Institute for Energy Economics and Financial Analysis (IEEFA).

IEEFA’s report – Seriously Stressed and Stranded: The Burden of Non-Performing Assets in India’s Thermal Power Sector – finds India’s Parliamentary Standing Committee on Energy’s 2018 list of stranded assets in the thermal power sector could have underestimated the true extent of the problem.

IEEFA reviewed 12 non-performing or stranded assets in India’s thermal coal-fired generation sector. Some were previously identified by the government, and others are unable to operate at a competitive price sufficient to deliver a viable return to investors and are equally deteriorating shareholder’s value as formally identified non-performing assets. Also, there are projects which have been on the drawing board for over a decade and most likely will never be constructed.

Stranded assets in India’s thermal sector are not limited to 34 projects

Tim Buckley, lead author of the report and director of energy finance studies with IEEFA, says stranded assets in the Indian thermal sector are not limited to the 34 projects highlighted by the Standing Committee on NPAs.


“Each of the 12 non-performing assets we reviewed had questionable economics behind their investment proposals, particularly as lower cost renewable alternatives can be built in a third of the time and at 30% or lower cost to Indian electricity consumers.”

According to the Reserve Bank of India circular, dated 12th February 2018, bankers were required to refer all loan accounts defaulting payments over 180 days and holding over Rs2,000 crore (US$280m) in loans to the National Company Law Tribunal. Previously, lenders and asset owners were given 270 days to resolve non-payment of dues under a debt restructuring program.

In April 2019, the Supreme Court of India quashed the Reserve Bank’s 12th February circular on project owners’ appeal, and also ruled to invalidate all actions taken since its inception. This left the Indian financial sector hostage to open-ended promoter delays and gaming of the system, and prevented the speedy resolution of decade-old poor investment decisions.

The banking system remains hamstrung, stymying India’s enormous economic growth potential

“As a result, the banking system remains hamstrung, stymying India’s enormous economic growth potential,” states IEEFA’s report.

The US$40-60 billion of non-performing or stranded Indian thermal power assets, which is placing stress on a troubled banking sector, is undermining the flow of capital critical to sustain strong Indian economic growth and a renewable energy future.


“Significantly, they’re also hampering the bank’s ability to invest in clean new renewable energy projects to meet both India’s electricity demand needs and the country’s ambitious world-leading renewable energy targets.

“While sinking in debt, the banks are unable to extend the necessary flow of capital critical to sustained, strong economic growth in India.”

Discoms and the thermal coal- and gas-fired power plant sectors have upwards of US$100 billion in non-performing assets

IEEFA found power distribution companies – discoms – are also struggling under massive debt to the industry. There is currently upwards of US$100 billion of non-performing or stranded assets shared between discoms and the thermal coal- and gas-fired power plant sectors.

“Although there have been a number of initiatives by government and the Reserve Bank of India to resolve the massive financial distress at many coal- and gas-fired power plants across India, the problems remain unresolved,” says Buckley.


“Instead of building uncompetitive and expensive coal-based thermal power plants, investments should be made in wind and solar-based power systems as well as flexible gas-based peaker plants.”

Renewable energy power purchase agreements are consistently being signed at Rs2.60-3.00/kWh

New 25-year, zero indexation, renewable energy power purchase agreements are consistently being signed at Rs2.60-3.00/kWh, some 20-30% below the first year cost of existing coal-fired power plants in India.

“Operators are finding that coal is less cost-competitive,” says Buckley. “India should cancel many of the worst thermal power plant proposals.”




• PPGCL’s Prayagraj Thermal Power Plant
• Mahagenco’s Koradi Thermal Power Station
• Lanco’s Amarkantak Thermal Power Plant
• GVK’s Gas and Coal-fired Power Plants
• KWPCL’s Korba West Thermal Power Plant
• Tata Power’s Mundra Power Plant
• CTNPL’s Cheyyur Ultra Mega Power Plant
• Adani’s Godda Thermal Power Plant
• RattanIndia’s Nasik Sinnar Thermal Power Plant
• THDC’s Khurja Thermal Power Plant
• SJVN’s Buxar Thermal Power Station
• PCKL’s Gulbarga Thermal Power Station

Read the report: Seriously Stressed and Stranded: The Burden of Non-Performing Assets in India’s Thermal Power Sector

Media Contact: Kate Finlayson ([email protected]) +61 418 254 237

Author Contacts: Tim Buckley ([email protected]), Kashish Shah ([email protected]), Vibhuti Garg ([email protected]) and Simon Nicholas ([email protected])

About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

Tim Buckley

Tim Buckley, Director, Climate Energy Finance (CEF) has 30 years of financial market experience covering the Australian, Asian and global equity markets from both a buy and sell side perspective. Tim was formerly Director Energy Finance Studies, Australia/South Asia, IEEFA, and was a Managing Director, Head of Equity Research at Citigroup for 17 years until 2008.

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Kashish Shah

Kashish Shah was an energy finance analyst with the Institute for Energy Economics & Financial Analysis (IEEFA). He specialises in financing, policy and technology matters of the Indian electricity market.

Kashish has a master’s degree in Economics from the University of Sydney and an Electronics Engineering degree from NMIMS University in Mumbai.

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Vibhuti Garg

Vibhuti Garg is an energy economist and IEEFA Director, South Asia. Vibhuti’s focus is on promoting sustainable development through influencing policy intervention on energy pricing, adoption of new technologies, subsidy reforms, enhancing clean energy access, access to capital and private participation in various areas of the energy sector. 

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Simon Nicholas

Simon Nicholas is IEEFA’s Lead Energy Finance Analyst for Bangladesh, Pakistan and the global steel sector as well as Asian seaborne thermal and coking coal markets.

Simon’s focus is on the energy transition, the long-term outlooks for coal and steel as well as the need for emerging nations to establish financially sustainable power systems to support their development.

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