Here's why the power sector could bring in the next wave of stressed assets

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26 Aug, 2025 12:21

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The next wave of stressed assets could be from the power sector with companies such as Adani, Tata and Essar groups sitting on many unviable power projects incurring hefty losses.

The Gujarat-based power plants of these companies could see write-downs of thousands of crores, says a report in the Business Standard.

The projects turned unviable after Indonesia changed its law in 2010 making coal imports expensive.

According to the media report, Tata Power’s Mundra project employed capital worth Rs 18,000 crore. The project – under the vehicle Coastal Gujarat Power – has given negative returns so far.

Besides Tata Power, Adani's 4,620-MW Mundra Power Generating Business Undertaking and Essar Power's 1200-MW Thermal plant are also facing issues.

Adani plant was earlier operating with 100 percent coal imports from Indonesia.

Tata Power last week wrote to the Centre proposing to sell 51 percent stake in the stressed asset at a fee of Re 1. The company, after consultation with lenders, informed exchanges of plans of a possible acquisition.

Adani Power’s net worth is Rs 3,000 crore. It’s debt is Rs 49,230 crore. Essar Power has invested Rs 2,600 crore and currently has a debt of Rs 5,000 crore.

Earlier this month, the board of Adani Power announced plans for a sale of its loss-making power project to its own subsidiary. The Gujarat Urja Vikas Nigam is likely to pick-up the controlling stake.

According to a report in the Hindu BusinessLine, Essar Power is also exploring similar options.

Adani Power and Tata Power have both approached the Central Electricity Regulatory Commission (CERC) for compensation. However, the board said the change in policy cannot be classified as a change in the law. CERC had given a green signal for compensatory tariff under regulatory power.

The companies had then approached the Apellate Tribunal for Electricity, who had directed CERC to rethink its decision. In April this year, the Supreme Court had refused the compensatory tariff for power plants.

In May, the government said it is considering plan to auction Coal India's coal supply.