As per Tuesday’s order, the RBI has been asked to maintain status quo on February 12 circular on going ahead with insolvency proceedings against stressed power companies
In a relief for stressed power companies, textile companies and ship owners, the Supreme Court (SC) on Tuesday stayed the Reserve Bank of India’s (RBI) February 12 circular and has transferred all the non-performing assets (NPAs) petitions filed in different high courts to itself.
On February 12, the RBI had come out with a notification stating the lenders or banks had to implement a resolution plan to troubleshoot the stressed assets of Rs 2,000 crore and above within 180 days. In case of failure in implementing the resolution plan, the banks had to file for insolvency application in the National Company Law Tribunal (NCLT).
As per Tuesday’s order, the RBI has been asked to maintain status quo on February 12 circular on going ahead with insolvency proceedings against stressed power companies.
“Supreme Court’s order certainly is a positive sign for the stressed projects in the private sector who have been struggling on various fronts, be it lack of availability of coal or power purchase agreement (PPA) related challenges amongst others,” said an Adani Group’s official.
According to a report on stressed assets in the electricity sector based on RBI’s data and tabled in the Parliament, the total outstanding debt with around 34 stressed power generating projects stands to the tune of Rs 1.74 lakh crore as on June 2017.
Among these 34, two are of Adani Group – Korba West in Chhattisgarh and Tirora in Maharashtra. Korba West power plant has an outstanding debt of Rs 3,099 crore and Tirora project has an outstanding debt of Rs 11,665 crore.
Similarly, two of Essar Power’s projects are under stress: Essar Power Mahan (Madhya Pradesh) and Essar Power Tori (Jharkhand). These two projects have an outstanding debt of Rs 5,951 crore and Rs 3,112 crore, respectively.
“With the status quo ordered by the Supreme Court, there will be uniformity on how to go ahead. In the next two months, we would see more sectors that are under stress and have not moved any of the courts tagging along for relief,” a source from Essar Power told DNA Money.
IN NICK OF TIME
The order comes at a time when several banks led by SBI were preparing to send a list of 11 power companies that they had taken up under the Samadhan Scheme to the NCLT
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