Over 30 distressed power projects on block, big companies uninterested

NEW DELHI: Entrepreneurs, who rushed in to build power stations five years ago, are knocking at the doors of large business houses. On offer are power projects at various stages of construction with a combined capacity of 35,000-50,000 megawatts.
A top executive in a large power company said at least 30 project developers are in the market to sell.
Problems of fuel supply, mining approvals, rupee depreciation, land acquisition and rising interest burden have stressed the sector, said Essar Power executive director KVB Reddy. "These have made many projects unviable and hence many of them may be on the block. Only the serious players with a strong financial backing are likely to remain in the fray," Reddy said. Analysts agree. "There were many groups for whom power sector was not a core business.
Most of these projects are still under development and today's stressful economic scenario is forcing them to exit," said Debasish Mishra, a senior director with Deloitte Touche Tohmatsu India.
But it is difficult to strike a good deal because the bigger players themselves are facing a rough environment and are reluctant to add stranded projects to their portfolio.
"Currently we are focused on finishing our projects on hand and delivering value to our stakeholders and are not looking at any acquisition opportunities in the space," Reddy said. A top executive of another company, which has been approached by sellers, also ruled out acquisitions for the time being. "We are getting countless offers, but our hands are full and pockets are empty. There is no scope for buying any project," said the executive, who did not want to be identified.
Analysts said the best hope for stranded projects is to find foreign buyers. "Now the problem is absence of buyers' interest in these projects. Large Indian players themselves are struggling to deal with existing capacity and completion of ongoing projects.