Indian thermal power plants got Rs 7.62 lakh crore in loans in 17 years: Report

Tamil Nadu got the most loans at over Rs 84,000 crore; followed by Telangana, Maharashtra and Madhya Pradesh

By Seema Prasad
Published: Friday 16 December 2022
Financiers are increasingly shying away from backing thermal power plants, given the risks involved. Photo: iStock

Thermal power projects were given loans of Rs 7.62 lakh crore from 2005-2022 by 84 domestic and international lenders, according to a new report. The loans to 122 projects were from the public and private sector, found New Delhi-based non-profit Centre for Financial Accountability (CFA). 

The study titled The Coal Tail: Tracking Investments in Coal fired Thermal Power Plants in India highlighted data about large-scale projects above 1,000 megawatts (MW) amounting to 198,659 MW capacity in 16 states and Union territories.

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Financiers are increasingly shying away from backing thermal power plants, given the risks involved. Consequently, thermal capacity addition has reduced over the years. For instance, private institution Federal Bank recently announced it would no longer be financing coal projects, the report said.

On the contrary, the total coal supply, both coking and non-coking, has increased in the last five years to 955 million tonnes from 808 million tonnes, the paper by CFA data analyst Kenneth Gomes found.

Such information is rarely accessible to the public, according to Gomes, due to the lack of transparency and astute use of fiduciary relationships between bank and client.

“This report intends to remove this asymmetry and make such information available publicly to encourage demands for accountability from financial institutions,” he said.

Information about financing is indispensable to any scrutiny of project feasibility not only in terms of efficiency and requirement but also the environmental and social impacts accompanying such projects,” he added.

Most loans not from banks  

Non-banking financial institutions accounted for 65 per cent of the Rs 7,11,741.89 crore (Rs 7.11 lakh crore) in loans sanctioned domestically, the analysis said. Public sector banks gave out 31 per cent of the loans and 4 per cent came from private banks. 

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Non-banking financial institutions such as Power Finance Corporation (PFC) and Rural Electrification Authority (REC) provided Rs 4.65 lakh crore out of the total loan amount (7.6 lakh crore). Of this, Rs 3.60 lakh crore was given to public sector thermal power plants

The analysis highlighted 29 public sector banks lending equal to Rs 2.18 lakh crore (Rs 2,18,125.77 crore). 

The report said:

Out of the total, State Bank of India accounts for 35.21 per cent of the loans, which amounts to Rs 7,68,144.2 million (Rs 76,814.42), was given to 55 thermal power plants across the country, followed by Punjab National Bank to 44 thermal power plants and Bank of India to 27 plants.

State Bank of India extended 56 per cent of its loans to privately-held thermal power plants, Punjab National Bank 78.2 per cent and Bank of India 69.89 per cent, the analysis added.

“In comparison to public sector banks, private sector banks have lent Rs 2,78,046.48 million (Rs 27,804.64 crore) to coal-fired thermal power plants within the country. Out of these, ICICI Bank has lent the highest amount, Rs 73,660 million (Rs 7,366 crore), followed by Axis Bank, Rs 71,190 million (Rs 7,119 crore) and HDFC Rs 61,570 million (Rs 6,157 crore),” the report said.

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International financial institutions lent Rs 5,03,66.89 crore. They include Japan Bank for International Cooperation, China Development Bank, and Standard Chartered, which gave the most amount of loans to various projects.

A state-wise analysis showed that the highest amount of loans had gone to Tamil Nadu, amounting to Rs 84,725.99 crore, followed by Telangana, Maharashtra and Madhya Pradesh.

This is mainly because these are states with the highest number of plants: Chhattisgarh (17), followed by Uttar Pradesh (16), Tamil Nadu (13), Maharashtra and Madhya Pradesh (12). 

Accordingly, Uttar Pradesh has the most commissioned capacity at 23,944 MW, followed by Madhya Pradesh with 21,650 MW, and Chhattisgarh with 21,565 MW.

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