The power ministry has asked state-run NTPC to bid for potentially viable projects in the National Company Law Tribunal (NCLT) and acquire them if the prices are attractive.
Power minister RK Singh told FE that he had asked NTPC to take a look at all the plants undergoing the CIRP process. “I have asked them to identify the ones with good machinery,” Singh said.
Approximately, 40,000 MW of capacity across 34 power plants had been declared stressed with an outstanding debt of Rs 1.7 lakh crore. Around 13 projects worth Rs 59,000 crore are no longer in trouble. “Resolutions have been found for most and some are in the early stages of resolution,” he said. “All these projects are in different stages of completion,” Singh said, adding: “Some of them are in very early stages, with only land being bought.”
The minister clarified it is difficult for NTPC to bid for projects outside NCLT. “The valuations discovered in the tribunal are absolutely transparent whereas that may not be the case elsewhere,” he said.
The development comes at a time when major power conglomerates are cash-strapped and power plants are finding it difficult to find new takers.
It is reliably learnt that NTPC might not prioritise the availability of power purchase agreements (PPAs) while bidding for stressed assets in NCLT —- a business policy which the company would be resorting to for the first time.
A senior company official had told FE that the firm would be looking for operational parameters such as availability of water supply, rail connectivity and transmission infrastructure to assess if they are fit for takeover. “Another important issue would be easy availability of spare-parts which is related to the equipment manufacturers and suppliers to the project,” the person added.
The majority of the stressed power projects run on boilers and other equipment supplied by BHEL. Other major companies which have built the main power generation component are L&T and GE. China-based Harbin Electric and Dongfang Electric also have significant presence in this segment.
Stressed power assets got partial relief after the Supreme Court, on April 2, declared the Reserve Bank of India’s February 12, 2018 fiat as ‘ultra vires’. The circular stated that if a resolution plan wasn’t found for the ‘default’ cases by August 27, 2018, the accounts should be sent to bankruptcy courts. The SC, on September 11 last year, has also asked banks to maintain status quo and not to initiate insolvency proceedings against the defaulting companies under the circular. Following the SC order, RBI issued a new circular on June 7, which relaxed compulsory referral to the bankruptcy court.
The Cabinet Committee on Economic Affairs, in March, had also approved a slew of measures, mainly related to coal supply issues, payment discipline and sanctity of contractual agreements. The steps were in line with certain recommendations of a group of ministers and a high-level empowered committee constituted to address the issue of stressed power assets.