Aper new mechanism, lenders will appoint cash flow monitoring agency to verify cash flow and actual costs incurred
The power producers have sought clarity on the launch of new mechanism 'Trust Retention Account' for certain stressed power plants to utilise their surplus after meeting operating expenses for servicing debt in the first place.
The power ministry had come out with the new mechanism in consultation with the Department of Financial Services to provide relief to the promoters of stressed thermal power projects with a total generation capacity of 24,405 mw.
In the case of a developer using linkage coal under the amended SHAKTI policy, TRA must be put in place and all revenues generated will be deposited into the TRA and the lead banker will act as TRA agent.
CURRENT STAND
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- Aper new mechanism, lenders will appoint cash flow monitoring agency to verify cash flow and actual costs incurred
- Lenders' financial adviser and lenders' engineers/ project manager would be appointed as cash flow monitoring agency
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However, in case of non-banking finance company like Power Finance Corporation or Rural Electrification Corporation, any bank which is one of the lenders can be assigned the role of a TRA agent. All financial costs will be allowed on actual basis.
Association of Power Producers director general Ashok Khurana told DNA, “The Office Memorandum on new mechanism talks of net surplus utilisation. However, to generate a net surplus, the recommendations made by the high-level empowered committee need to be implemented.'' However, he said no recommendation has been implemented as yet.
Further, as per new mechanism, lenders will appoint cash flow monitoring agency to verify cash flow and actual costs incurred, and lenders' financial adviser and lenders' engineers/ project manager would be appointed as cash flow monitoring agency.
Independent Power Producers Association of India director general Harry Dhaul said it is not clear whether the new mechanism will have a positive impact on banks and stop them taking IPPs to National Company Law Tribunal, as per the new RBI guidelines.
According to the new mechanism, the priority (in the descending order) for allowing the expenditure from revenue deposited in TRA will include statutory payments, fuel costs, transmission expenses, operation and maintenance expenses, interest principal payments to lenders. The companies will first make statutory payment (taxes) followed by fuel costs, transmission expenses, operation and maintenance expenses and then pay interest on loan and principal payments.
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