In its last cabinet meeting before the general elections, the Centre cleared a slew of proposals to support stranded thermal power projects. Measures such as fuel linkage for power producers with short-term power purchase agreements, continuing fuel linkage if thermal power producers cancel purchase agreements with State power distribution companies (discoms) due to non-payment of dues, short-term coal linkage for thermal power producers are among the many measures that were approved to rescue nearly 34 thermal power projects.
These measures are aimed at helping the banking sector reduce their power sector NPAs, make the power generators channel their produce to the short-term power market and ensure that they have sufficient fuel to generate power.
While the intent appears good, experts say that lack of demand from industrial customers can throw a spanner in the works. Unless demand picks up significantly, the power sector may not be able to emerge from the woods.
