India: Shy Investment in Power Sector

September 26, 2018


The progress of the country largely depends upon the resources available. With the advent of electric supply in the country, numerous activities dependent on manual labour are being adequately managed and replaced by electricity. The Indian power sector aims to manage this vital energy source towards cost-effective power generation, transmission and distribution for the ever-growing needs.

Troubles being faced

Some of the obstructions before the power sector in the country are stated as below:

  • Unviability of the distribution segment reflected in very high transmission and distribution losses;
  • Inadequate supply of raw materials;
  • Power pilferage;
  • Uneconomic tariffs;
  • Power evacuation issues;
  • Non-performing assets;
  • Banking sector unwilling to support power projects.

Impact on investment

The aforesaid reasons have raised great concern in the minds of the investors who are now shying away from the idea of investment in this troubled sector.[1]

While the Government has been attempting to help the power sector by permitting the stressed thermal assets to retain their coal and power supply and long-term transmission network access rights in order to enable them to save the value of the projects and fetch fair deals to the lenders in respect of the same.[2]

Providing relief to the private power companies, the Supreme Court has stayed the Reserve Bank of India direction on resolution of stressed assets, preventing initiation of Insolvency proceedings against their stressed power assets in furtherance to the numerous cases filed by a number of companies against the said directive.[3]

The Government is in the process of taking up the concerns of the investors in this sector by seeking their inputs in the said regard in order to promote and encourage the funding.

A number of efforts are being made with a view to revive investment in the power sector, thereby promoting its growth and development.




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