Coal news and updates

New block owners to face difficulty over bank finances

May 11: The new captive coal block allottees, who have bid aggressively to secure supply of the dry fuel, may find it difficult to get adequate bank finances to meet their expenditure on exploration and extraction of coal, an industry expert said.

“I think the new block allottees are going to face difficulty in getting bank finances. This is so because the banks have huge NPAs in the power and mining sectors and will not be much forthcoming in increasing their exposure further,” said the expert, who has served on various expert committees of banks on corporate debt restructuring.

Noting that the total NPA of the banks to the power sector stands at more than Rs 200,000 crore, he said that the PSU banks had, on several occasions, approached the central government ministries to address these issues, but did not get adequate redressal.

“State Bank of India has huge NPAs in power plants, many of which suffered due to lack of proper fuel arrangement. Earlier, the banks would extend loans up to 80-90% of the project cost for these sectors, but things may not be so going forward. It will be difficult for the allottees to garner project finances,” he added.

Last year, the Association of Power Producers (AAP) had claimed that out of the 136 GW stranded power generation capacity at an investment of Rs 623,000 crore, around Rs 436,000 crore was feared could be converted into NPAs.