Nearly Rs 1.34 lakh crore worth of debt on operational and under-construction power projects is at risk, says ratings agency Crisil.
As per Crisil estimates, around 17,000 MW of operational power projects with a debt of Rs 70,000 crore and additional 24,000 MW under-construction projects with a debt exposure of around Rs 64,000 crore are at high risk.
"These operational projects are those, which are facing the consequences of aggressive bidding for coal supplies or facing huge cost overruns, and those with gas-supply issues," Crisil Senior Director Sudip Sural said.
He said over the period, the credit growth to the sector will moderate to 5 per cent over the next three years as compared to an average of 18 per cent witnessed in the last five years.
"This is primarily because the discoms debt which has been the key components of this exposure, is going to go out of the banking system over a period of time and move to the fold of the state government because of the UDAY scheme," Sural said.
Also, fresh investments in the thermal generation sector will remain muted, while on the other hand the capacity addition in the renewable space will give some fillip to the credit growth, he said.
As far as delinquencies are concerned, Crisil noted, that while the gross NPAs in the sector have increased from 1.3 per cent to 4.4 per cent in financial year 2015-16, the stressed assets as measured by gross NPAs and restructured standard assets continue to remain steady at 14 per cent.
"They have not seen an increase primarily on account of the movement of Rs 75,000 crore out of this category on the account of UDAY scheme. So, essentially on the restructured assets quantum have come down," Sural said.
"But even with the reduction it continued to be at elevated level in the sector," he added.
Crisil further observed that in the discoms space banking sector debt is expected to come down significantly over the next 3 years with UDAY scheme making increasing impact.
"What we will see is that state governments will take over the principal financiers to discom. As per our estimates as of March 2019, of the roughly Rs 4.6 lakh crore exposure to discoms Rs 3.4 lakh crore would be coming in from state governments," he noted.