Indian private power firms on shaky credit?

Operational cash flows and number of long-term contracts found wanting by Fitch.

Capex performance of these firms in the past half-decade, although improving, is still riddled with target shortfalls.
The Indian power industry, as a whole, also has a problem with continually pushed back capex plans, notes Fitch.

"Delays have been common in thermal power generation due to land, environment, equipment and mining issues, in power transmission due to right-of-way issues, and in hydropower generation due to geological and environmental problems," says Fitch in a release attached to the special report.

"A lack of domestically available coal has also acted as an impediment to newly commissioned power plants", says Vivek Jain, Analyst in Fitch's Asia Pacific Utilities team.

But despite these setbacks, government counterparts are set to weather the storm due to stronger fundamentals.

"Large government-owned power generators, like NTPC ('BBB-'/'Fitch AAA(ind)'/Stable), NHPC ('BBB-'/'Fitch AAA(ind)'/Stable) and Neyveli Power Corporation ('Fitch AAA(ind)'/Stable), are better positioned to withstand increased risks from capex delays due to their comfortable liquidity, large CFO and strong power purchase agreements that allow pass-through of interest costs during construction into tariffs", says Salil Garg, Director in Fitch's Asia Pacific Utilities team.