Firms caught in the welter of supply-side constraints include Tata Power Ltd, Adani Power Ltd and Reliance Power Ltd.
Nayak and his co-author Nirav Vasa, in a 2 March presentation to their clients, listed 37 projects that have been hit. At a ballpark estimate of Rs.5 crore needed to generate 1MW, investments of nearly Rs.2.3 trillion could have been affected.
Coal is the fuel used to generate most of India's electricity requirements, with 78% of domestic production of the fuel being consumed by power projects. India has an installed power generation capacity of 190,593MW, of which 55.3%, or 105,437.38MW, is coal-based.
Government-owned Coal India Ltd (CIL), which has a monopoly over coal mining, has projected an overall coal shortage of about 142 million tonnes in FY12, to be met from more expensive imports. Imported coal costs have more than doubled to $120 per tonne since FY09.
Tata Power, India's largest private power producer, said it has shared its concerns with the Indian government and "was exploring alternatives to mitigate this situation to the extent possible". In an email, it added that blending of coal can partially offset the price and the company had been sourcing low-grade coal from Indonesia, Africa and other existing mines and running trials to find if this could cut costs for the 4,000MW Mundra power project that depends on Indonesian coal.
In a 7 March interview with Bloomberg, Tata Power's executive director S.Padmanabhan said investment had stalled in coal-fired plants that have become "impossible" to develop.
On 27 February, Essar Energy Plc's chief executive Naresh Nayyar told reporters on a conference call that coal scarcity was forcing the company to go slow on three power projects—Salaya II, III and NavBharat I—worth $3.1 billion.
"We are managing our risks. Unless we have clear-cut regulatory approvals, we believe the capital commitment should be regulated," he said, adding that any progress would be tied to specific milestones—environmental approvals, land clearances and fuel linkage.
Adani Power announced on 27 December that it was putting on hold capacity expansion of 6,500MW due to shortage of coal.
Private equity firm Blackstone Group, which has invested about $500 million across three Indian power projects, says it had foreseen the shortage of domestic coal from CIL and, hence, invested only in plants that had their fuel secured.
"We are actually more concerned with other issues plaguing the sector such as delays in getting permits/clearances, the deteriorating health of the SEBs, retrospective policy changes aimed at regulating tariffs and lack of financing for the sector," said a Blackstone spokesperson in an email, adding, fundamentals of the power sector remained strong as "demand (was) still greater than supply".
"...without substantial equity injections and/or debt restructuring, many merchant power projects that either do not have domestic fuel supply arrangements or are unable to exploit captive sources (therefore having to rely on imported coal) are unlikely to meet the obligations on their bank debt in a timely manner as projects become operational in the next 12-18 months," wrote Venkataraman Rajaraman, sector analyst with Fitch Ratings, in a 20 December report.
According to the Reserve Bank of India data, banks had Rs.3.18 trillion outstanding to the power sector in January 2012, up from Rs.2.54 trillion a year ago and Rs.1.79 trillion in January 2010. .