DNA Money Edit: Let there be light

Stressed power companies are heaving a sigh of relief as the Supreme Court stayed the controversial February 12 circular by the Reserve Bank of India (RBI) on bad loans. The reprieve came on the last day for lenders to refer their unresolved cases to the insolvency court following the mandatory 180-day resolution period. Two weeks ago, the Allahabad high court had denied interim relief to power companies. Hopefully, the SC verdict will now save several stressed power plants, running into over 12,000 mega-watt of generation capacity, from the insolvency pains.

Most stressed projects had nearly reached the doorsteps of the National Company Law Tribunal (NCLT). Bankers approved only about four-five stressed assets, ahead of the September 11 deadline to either resolve the bad loans or refer defaulting companies to the bankruptcy court.

Though multiple schemes for resolution are currently underway, banks were unable to get everyone to approve to any one plan. What is worrying lenders is the fact that they are recovering hardly any value from most assets. Most power plants, meanwhile, continue to struggle with the fuel supply. The government needs to do all that is possible to keep the power plants running. A power-deficit country like India cannot afford to let power plants go under liquidation.