Investors back down from funding power projects on coal uncertainty

Mumbai: Investor interest in the power sector is petering out, with lenders now starting to apply the brakes on funding of new private generation projects.

The big concern is about adequate coal supplies for new projects, amid signs that developers of projects close to commissioning could default on their loan repayments due to fuel shortage. A crash in merchant power rates and reluctance among cash-strapped State Electricity Boards to buy power from the spot market are adding to investors' jitters.