Staggering under the gigantic bundle of bad loans already, banks anticipate bad stressed assets worth $38 billion from the Power sector. According to a report, out of the $178 billion bank loans, $53 billion exposed to the power sector are already debts. Adding to the woes, $38 billion is yet to be written-off as debts.
This report was derived from the concept that coal-based projects consuming 71 gigawatts at private sectors are facing bankruptcy filings and that they will be resolved by June 2019. This might bring 75 percent write-offs.
Based on a combined report by BofA-ML research analysts Amish Shah and Sriharsh Singh, out of the $178 billion loans, transmission companies have a debt of $36 billion, $65 billion debt of distribution companies and $77 billion of the generation companies. The report further revealed that out of the $53 billion debt of power sector, the generation sector itself owes $50 billion. Earlier the bad loans of distribution sector were very high but with the help of government’s Ujwal Discom Assurance Yojana (Uday) scheme and quasi-state guarantees, these loans were restructured.
The analysts deduced from the report that banks have the highest number of stressed assets from mining, steel, roads, telecom and power sectors. These sectors have contributed to bad loans worth more than Rs. 11 trillion as of Dec 2017.