Renewable Energy projects, which have cornered the bulk of private funding in the power sector over the last six years, could be facing a fresh wave of non-performing assets (NPAs). There is renewed nervousness among banks that lending to renewable power utilities over the last five years could turn bad.
In a deposition before a Parliamentary panel, a senior government official flagged that “outstanding payments” due to renewable energy developers “is a very big issue and an issue of concern” and that “if the situation will not get improved, many solar and wind projects may turn into NPAs”.
The power sector accounts for almost half the credit to the infrastructure sector, with the telecom sector coming in second. In the power sector, the renewable energy sector witnessed significant FDI inflows of $3.22 billion over the last four years. This came alongside domestic investment leveraged mostly by bank funding.