Investments in thermal power improve after long sluggishness

The Turnaround

- Arunima Bharadwaj

A renewed push to thermal power seems to have finally ended sluggishness in the sector. While the pace of construction has accelerated for a clutch of units including ultra-super critical ones, state-run NTPC and leading private players such as Adani Power, Tata Power have scaled up their thermal portfolios.

The turnaround is significant as it comes after a decade-long phase of relative stagnation in the sector. Several thermal plants, particularly gas-fired ones, had got stranded after or in the midst of construction, and many turned insolvent, since the "twin balance sheet problem" (rising NPAs) gripped both the corporate and banking sectors.

Since that crisis, which saw banks saddled with high NPAs and over-leveraged corporations, the RBI did a salvaging act, but the lenders have never really turned upbeat about the sector. The current reversal of the trend stems from the Union power ministry's prodding, but the steep rise in power demand also boosted the investors' confidence. The government has set a target to add nearly 95 GW of thermal power generation capacity by 2032 to meet the rising power demand.