Mothballed power plants await Reserve Bank help

The lenders of stressed power projects, barring a few, continue to be in limbo since the Supreme Court struck down Reserve Bank of India's (RBI's) February 12 circular last month.

"About 10 companies are at different stages of negotiations or buyout plan or for OTS. However, the lenders continue to wait for a fresh circular for the RBI to proceed ahead in the cases where no headway has been made for months now," said a lender.

The delay continues to increase the financial stress on each of the assets.

A source said that the fresh set of guidelines on stressed assets is expected soon, possibly within a fortnight.

Once the framework is out, there would also be a need to sign power purchase agreements for non-operational power projects to make them viable.

On April 2, the apex court had termed RBI's circular as "ultra vires" and quashed the directive. The circular pertained to framework for resolution of stressed assets, across sectors.

As per a parliamentary committee report, there are 34 stressed power projects. Of them, 14 big accounts comprise debt pile of around Rs 1.75 lakh crore.

Under the Power Finance Corporation Ltd's (PFC) portfolio there are 29 stressed power projects.

"Of these 29 projects, 15 are in National Company Law Tribunal (NCLT) and the balance 14 are at different stages outside of NCLT," said Rajeev Sharma, chairman and managing director of PFC.

The 14 outside the NCLT ambit include Rattan India Amravati, Essar Mahan, Dans Energy, Shiga Energy, Essar Transmission, he said. For Dans Energy, Shiga Energy and Essar Transmission around 100% recovery is expected with aggregate exposure of Rs 1,400 crore.

Only Jhabua Power has got admitted by NCLT, which was moved by an operational creditor and not the lenders.

"In the case of Rattan India Amravati, PFC has received an OTS proposal and the company is in advanced discussion stage to negotiate with the borrower. Likewise, OTS is also on the cards for Essar Mahan and others," Sharma said.

However, the fate of other power projects that have not been referred to NCLT is unknown with no progress made since the last two months.

Last month, Adani Power had withdrawn its offer to acquire KSK Mahanadi project in Chhattisgarh. Hence, the lenders have now decided to move NCLT again.

With regards to Rattan India Nasik, as envisaged, the Maharashtra Electricity Regulatory Commission has already given its nod to operate 507 megawatt (mw) PPA with Maharashtra State Electricity Distribution Company Ltd.

In the case of GMR Chhattisgarh, all the 17 lenders have given their clearance on Adani Power's proposal. This power project owes Rs 5,800 crore to the lenders as well as suppliers. PFC is staring at a 50% haircut as against the provisioning of 51% for its Rs 920 crore exposure. The deal is expected to be closed in another two months.

The fate of the rest of the stressed projects under its fold continues to be uncertain with the lenders awaiting a fresh set of RBI guidelines, Sharma told DNA Money.