Fuel linkages are a powering concern: Kelkar panel

Although the Vijay Kelkar Committee restricted its recommendations for the regulated power sector, it pointed out the challenges in the power sector have had a far-reaching impact on public-private partnership (PPPs) infrastructure projects and the Indian economy.

The committee's report noted many thermal power projects have been affected due to the lack of availability of fuel, cancellation of mines allotments, unfavourable exchange rate, and change in regulations having fallout on fuel prices.

"For this and other reasons, many projects with fixed-tariff power purchase agreements have been classified as NPAs (non-performing assets). This has resulted in shrinking the availability of bank finance for other sectors," the report noted.

The report also said several projects in the power sector have become unviable due to fuel linkages, over-leveraging, and issues related to state-owned power distribution companies.

"The larger issue of power-sector loans needs to be immediately addressed. Failure to do this would lead to deepening of the crisis and locking up bank loans that hamper the ability to support investments across the board, including those in PPP projects," said the report.

The committee restricted its comment on the ultra-mega power projects as it is being reviewed by the Central Electricity Regulatory Commission. The build-own-operate models of ultra mega power projects is yet to be mainstreamed.