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With the entry of many private sector players – such as L&T-Mitsubishi, Bharat Forge-Alstom, BGR-Hitachi and JSW-Toshiba – into power generation equipment, thetechnology landscape is changing. Indigenous development of ultra-supercriticaltechnology has also begun, with a memorandum of understanding being signed betweenIGCAR, BHEL and NTPC to develop a power plant that uses the technology.D. Factors that hinder financingThe financial health of the off-takers is a major concern. For instance, several powerdistribution companies (Discoms) have precarious financial health and negative networth. Estimated accumulated losses of Discoms have run up to Rs 1,200 billion(US$23.6 billion), with a widening gap between average revenue realization (ARR) andaverage cost of supply (ACS). Furthermore, several major power projects may have toundergo financial restructuring in view of the extensive delays and associated costescalations. Areas that create difficulties in timely execution of projects include:• Land acquisition;• Firm power purchase agreements and off-take arrangements;• Fuel supply and transportation arrangements;• Choking transportation network; and• Undue delay in government clearances and evacuation arrangements.E. Current status and the way forwardAt present, aggressive lending is extremely selective, based on the project preparednessand the track record of project developers. Furthermore, power sector lending is nearingsaturation, with several banks breaching power sector exposure ceilings. As on 31March 2010, Indian banks and financing institutions had approximately Rs 3,300 billion(US$64.9 billion) power sector exposure.Debt to equity ratio has moved from 80:20 to 70:30, or even 60:40 in the case ofrenewable energy, and there is demand for higher upfront equity. Interest rates havehardened quite significantly during the past three years, and lenders are preferringshorter loan tenures, which are especially inadequate for hydro and renewable sectors.In addition, lenders demand collaterals other than project assets. All these factors areslowing down power sector investments.In the future, the financial performance of Discoms needs to be improved through:• Aggressively pursuing steps to reduce aggregate technical and commercial losses;• Undertaking steps to achieve tariff rationalization to recover the costs; and• Capitalization of Discoms and debt restructuring on priority basis.Coal mining needs to be stepped up and the implementation of the "Dedicated FreightCorridor" speeded up. Power projects, especially the major ones, need to be closelymonitored and the government needs to intervene proactively wherever needed to sortout matters. In addition, the government could expedite forest and environmentalclearances, as well as coal linkages and coal blocks. Take-out financing could befacilitated, with longer overall tenures that will increase debt servicing capacity ofprojects.122