The deadline for finalising the resolution proceedings for defaulting power plants is August 27, according to Reserve Bank of India circular issued on February 12
Union power secretary Ajay Kumar Bhalla has convened a meeting with banks, state undertakings, including Power Finance Corporation and Rural Electrification Corporation, and oganisations representing power generating companies on August 17 to discuss options to address issues faced by stressed power projects.
The meeting is crucial as the deadline for finalising the resolution proceedings for defaulting power plants is August 27, according to Reserve Bank of India circular issued on February 12.
The circular has set stiff timelines for resolving large non-performing assets, failing which banks have to mandatorily refer them for insolvency proceedings.
Friday's meeting is in response to the concerns expressed by various stakeholders which fear increase in the provisioning needs by banks, leading to losses for the banks and erosion of equity of listed companies on account of provisions of Reserve Bank of India circular.
A high-level committee chaired by Union Cabinet secretary P K Sinha was formed last month to find a way out. About 52 gigawatt (gw) out of 80 gw, or around 62% of operational thermal capacity in the private sector is stressed, but not a single project in the public sector is stressed.
A source in the Union power ministry told DNA Money, ''Stress in power sector is due to regulatory and policy issues, constraints of fuel supply and pending receivables from distribution companies. Efforts are being made to address these issues for the revival of such projects.''
Ashok Khurana, director general, Association of Power Producers confirmed Friday's meeting and hoped there will be an early resolution of the issue.
The parliamentary standing committee on power in its report dated August 7 has observed that the new RBI guidelines will only deepen the crisis of the electricity sector as its leitmotif is distinct, peculiar and sector specific without any generic underpinning with other sectors of the economy.
According to the committee, the efforts of the private players in developing the electricity sector have not been given due recognition otherwise their genuine constraints that have led to stress might have been addressed.
The committee has suggested that necessary instructions should be issued regarding the availability of working capital or other financial requirements to salvage the commercially operational stressed projects. This will help will help them become standard again.
INSOLVENCY LOOMS
- The deadline for finalising the resolution proceedings for defaulting power plants is August 27, according to Reserve Bank of India circular issued on February 12.
- The circular has set stiff timelines for resolving large non-performing assets, failing which banks have to mandatorily refer them for insolvency proceedings
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