Non-performing assets (NPAs) in the power sector, especially in thermal projects, have grown significantly due to projects not delivering adequate returns to cover interest on loans. Power projects are also plagued by issues such as non-availability of regular fuel supply arrangements, lack of Power Purchase Agreements (PPAs), inability of promoters to invest equity and working capital, and regulatory and contractual issues.
The Insolvency and Bankruptcy Code, 2016 has revolutionised the insolvency regime in the country, and the government’s recent amendments to strengthen it are expected to benefit thermal power projects.
This report provides an overview of the power sector, reasons for stress, resolution within the IBC framework and remedial measures.
