State firms may Help Res­cue Stressed Pvt Power Plants


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Govern­ment com­pa­nies are poised to play a cru­cial role in the re­vival of stressed power plants by ac­quir­ing them or en­abling their lenders to op­er­ate them on con­tract. Once con­verted into pub­lic as­sets, the pri­vate projects will re­solve is­sues of lack of fuel, funds or even power pur­chase agree­ments (PPAS).

The Na­tional Tar­iff Pol­icy, amended in Jan­uary last year, al­lows state-run power gen­er­a­tion com­pa­nies to sign PPAS with discoms without tar­iff bid­ding.psus are also en­ti­tled to coal blocks and coal sup­plies from Coal In­dia on a nom­i­na­tion ba­sis.

The govern­ment is con­sid­er­ing set­ting up a hold­ing com­pany for iden­ti­fied stressed as­sets with the help of NTPC, Power Fi­nance Cor­po­ra­tion (PFC) and Ru­ral Elec­tri­fi­ca­tion Cor­po­ra­tion (REC) be­sides banks, which will auc­tion such plants or lease them on con­tract ba­sis af­ter the lenders take man­age­ment con­trol, a se­nior govern­ment of­fi­cial said.

The pro­posal in­cludes con­vert­ing debt into eq­uity, bring­ing last mile eq­uity for un­der-con­struc­tion projects, or auc­tion­ing the power projects once the lender takes over their man­age­ment, he said. In most cases, the lender and pro­mot­ers will have to take a hair cut through debt-eq­uity swap, the of­fi­cial said.

The pro­posal was made at a meet­ing by Power, Coal, New & Re­new­able En­ergy and Mines Min­is­ter Piyush Goyal with bankers, of­fi­cials from fi­nan­cial in­sti­tu­tions, de­part­ment of fi­nan­cial ser­vices and cen­tral pub­lic sec­tor units (CPSUS).

Es­ti­mates show that more than half of the stressed as­sets in the coun­try are in the power gen­er­a­tion sec­tor.

Gen­er­a­tion com­pa­nies of states such as Andhra Pradesh, Tami Nadu and Gu­jarat are in ac­tive talks to take over pri­vate power plants that can come for at­trac­tive val­u­a­tions af­ter eq­uity ero­sion. Andhra Pradesh Power Gen­er­a­tion Cor­po­ra­tion is in talks with lenders of East Coast En­ergy Pvt Ltd to ac­quire a 1,320-mw plant in the state. Neyveli Lig­nite Cor­po­ra­tion and Tamil Nadu Power Gen­er­a­tion Cor­po­ra­tion are in dis­cus­sions for buy­ing out GMR Group's 1,370-mw power plant in Raipur.

Lenders to some of the stressed power projects that do not have power pur­chase agree­ments or coal sup­plies are en­cour­ag­ing state power gen­er­a­tion com­pa­nies to ac­quire pri­vate plants rather than set­ting up new ones to meet elec­tric­ity de­mand. “We are ask­ing state gen­er­a­tion com­pa­nies to look at the ex­ist­ing and un­der-con­struc­tion plants of pri­vate com­pa­nies that can be ac­quired, rather than the states set­ting up ad­di­tional ca­pac­i­ties. Many such deals are ac­tively be­ing pur­sued,“said a se­nior PFC of­fi­cial. The stress in the power sec­tor pro­vides a good op­por­tu­nity to state run gen­er­at­ing com­pa­nies to scale ca­pac­i­ties rapidly, the govern­ment of­fi­cial said.

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