Lenders keen on reviving Tata, Adani, Essar power projects
Indian lenders, who have filed debt recovery suits under the Insolvency and Bankruptcy Code against 977 companies in the last two years, have said that the three Gujarat-based loss-making power projects – Coastal Gujarat Power in Mundra, Adani Power Mundra and Essar Power – should be revived with the efforts of all stake holders and not become insolvent.
In their submissions before a highpowered committee headed by former Supreme Court judge R K Agarwal, the lenders said the net worth of these projects is already wiped off and they are primarily managing to survive on additional fund infusion by their promoters.
“There is likelihood of further erosion in the credit worthiness of power generators, and the projects may become non-performing assets, thereby leading to further significant losses to be borne by lenders,” the draft report quoted lenders as saying.
“The lenders further said they are handling various stressed accounts in the power sector due to multiple reasons and therefore it would be desirable to resolve the issues pertaining to master circular dated February 12, these projects with some effort, rather 2018, and had presented a resolution than allow them to become insolvent,” plan to the lenders. the report said, quoting the lenders. “In effect, Adani Power is unable to
The high-power committee was set continue operations with mounting up by the Gujarat government in July losses year-on-year and is getting this year to resolve the high cost of pushed towards liquidation,” the report imported coal hitting these firms after warned. On the 4,000-mw Coastal the Indonesian government changed Gujarat Power project, a subsidiary of its coal export policy mid-way. This Tata Power, the report said that due to made these projects unviable. change in Indonesian coal export laws,
The three projects were based on the foreign project’s lenders stopped imported coal and the Supreme Court making disbursements to Coastal rejected a petition by these companies Gujarat Power. Spokespersons of Adani to seek higher tariff from the electricity Power, and Essar Power declined to distribution companies based in comment. An email sent to Tata Power Gujarat, Punjab, Maharashtra, Haryana did not elicit any response. and Rajasthan with which they had “As a result of the financial stress, signed power purchase agreements. Coastal Gujarat Power is in multiple
The report said Adani Power has breaches under loan agreements and suffered financial losses of ~97.48 billion repayments are being done by Tata and its entire equity capital has Power,” the draft report said. been wiped off. The promoters infused The report is not final and may go an additional ~90 billion between fiscal through changes after discussions with 2013 and fiscal 2018 as promoters’ loans the five state governments and the to sustain the operations. Adani Power companies, said a source close to the has been mentioned as a special mention development. account (SMA 1) under the RBI