To deal with stressed power assets, the Centre has decided to pursue state governments to have an assured demand and make timely payment to power generation companies.
“(The) Centre is going to pursue the state governments to ensure timely payment to power generation companies. We are in discussion with states for assured power demand. We are also thinking about several measures to revive stalled projects in the short term,” said a senior government official on the condition of anonymity after the second meeting of the High Level Empowered Committee (HLEC) on Friday.
The HLEC, which is chaired by Cabinet Secretary P K Sinha, is scheduled to submit its report by September 29. The Committee was formed on July 29 to resolve the issues ailing the stressed thermal power assets in the country. “Power generation companies have been complaining for a long time that the state distribution companies do not buy required power as signed under the power purchase agreement (PPA). Even when they buy power, distribution companies do not make their payments on time. States need to honour the PPAs and it is a major issue ailing the power companies,” added the official.
Distribution companies across the country are largely owned by the respective state governments. However, the power generation sector in the country has private companies as well as public companies. The official added that the Reserve Bank of India (RBI) was not present in the second HLEC meeting, which took place on Friday. The RBI was not present in the first HLEC meeting too, which took place on August 31. In a temporary relief to stressed power assets, the Supreme Court had on Tuesday asked banks not to refer any case for insolvency under the February 12 circular of the Reserve Bank of India (RBI) for the next two months.
On February 12 this year, the RBI had issued a ‘Revised Framework for Resolution of Stressed Assets’ that stipulates that default of even a single day in payment of interest or principal amount would trigger a formulation of resolution plan by the committee of creditors. This framework states that the resolution plan has to be implemented within 180
days, otherwise the stressed asset would end up with the National Company Law Tribunal (NCLT).
The Reserve Bank of India circular states that the resolution plan has to be implemented within 180 days with 100 per cent consensus among lenders. Currently, there are 34 stressed assets of total 38,870 MW in India, according to the Ministry of Finance.