A Study on 'Impact of Investment Impeding Factors on Equity Rate of Return' in Power Projects

Investors reluctant to invest funds in the power sector, due to the high level of risks involved in the projects. Presently, the Indian power sector requires an additional power generation capacity of 100,000 MW. And also it requires an investment of USD665 billion up to the year 2030. In this scenario, the government have only the way to balance “demand and supply” of the funds in this sector is, inviting private sector investment. The private investors mainly consider the level of risk involved in the projects. If the risk of the project is less, they put funds in the sector. Based on this fact, the study undertake to identify various investment impeding factors and measure the impact of these factors on internal rate of return on equity, by using categorical regression analysis (CATREG). This statistical technique shows that, the result of R2 is 0.741. It clearly shows that, there is a significant impact of investment impeding factors on internal rate of return on equity. Based on this, the study suggested various ways and means to reduce the risk of these factors in power projects