Govt to probe if pvt firms ‘gold plated’ power projects
As part of its effort to address the problem of stressed assets in the power sector, the government will investigate whether private developers ‘goldplated’ project costs to increase the debt component, thereby reducing their equity contribution, power minister Raj Kumar Singh said in an interview.
The move comes at a time when India is trying to tackle the issue of stressed power assets. According to the second volume of the Economic Survey 2016-17, released in August, non-performing assets in electricity generation accounted for around 5.9% of the total outstanding advances of ₹4.73 lakh crore.
Mint reported on December 4, 2012 that private project developers were dressing up their accounts while approaching banks for funding and inflating capital expenditure to raise debt value. Also, developers placed equipment orders with manufacturers that quoted inflated order values and later transferred the balance back to the developers.
“There is a need to investigate it. While looking at stressed assets, we will also look at whether any over-invoicing etc. has happened,” Singh added.
A total of 34 coal-fuelled power projects, with an estimated debt of ₹1.77 lakh crore, have been reviewed by the government after being identified by the department of financial services. Issues faced by these projects include paucity of funds, lack of power purchase agreements, and absence of fuel security.
“The focus is on starting the stranded assets which can be run. Some (around 8,000 megawatts) have been cleared from the list of 36,000 megawatts. More will get cleared. We have called a meeting on 29 November to review the status,” Singh said.
This comes in the backdrop of the recently launched Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) providing the architecture through which the government intends to reduce imports of fossil fuels, boost underutilised power plants and meet its climate change commitments. This, in turn, will reduce India’s energy imports and generate demand for electricity.