State Bank of India and Jaypee put bids to sell power projects to NTPC

NTPC’s tender to purchase stressed power assets has got four big-ticket bids — three from the country’s largest lender State Bank of India (SBI) and the other by debt-laden Jaypee group.
 

SBI, which has a high exposure of Rs 30,000 crore to stressed power units, has put bids for the 1,988-Mw Bara plant (Jaiprakash Power Ventures), the 1,980-Mw Lalitpur plant (Bajaj Hindusthan Sugar), and the 1,200-Mw Angul plant (B C Jindal). The SBI is the key lender to all these units. The Jaypee group has put a bid to sell its 1,320-Mw Nigrie power unit.
 

The state-owned thermal power giant had issued a tender in November to purchase stressed assets through reverse bidding. It was open for private independent power producers, lenders and states. The tariff was capped at Rs 3.18 per unit.

An NTPC executive said these were technical bids. “We will study the bids as well as the projects on sale to decide which meet the criteria. After that, financial bids would be called from the eligible ones,” the executive said.
 

The bidding was open for units above 500 Mw, which were commissioned on or after 2014 and are capable of running at 100 per cent domestic coal. Coal availability, either through mine or linkage, should be within 500 km of the range of the plant. Those with no fuel linkage should have a coal source within 500 km. The lack of power-purchase agreement (PPA) was no hindrance, as NTPC was dabbling with the idea to sell power from such units in the merchant or open markets.
 

The Angul plant in Odisha lost its coal blocks after a Supreme Court judgment in 2014 cancelled all coal block allocations. Since then, it has been facing problems with getting new source of fuel and getting into PPAs. The SBI is the lead lender to Angul, with a debt financing of Rs 14 billion. The Lalitpur plant in UP also faces the same issue and does not have any long-term agreements. In December, the SBI had initiated the restructuring of the Rs 82-billion debt to Bajaj Hindusthan.

The SBI has a debt exposure of Rs 109.3 billion for the Bara thermal power plant in UP. Last year, an SBI-led consortium of lenders had invited bids to sell a majority stake in the power plant. Now, the SBI has put a bid to sell the plant to NTPC. The Nigrie power plant in Madhya Pradesh had its PPA cancelled by the UP government recently, citing high cost of power. It was put on the block by the lenders under the ongoing debt restructuring of the Jaypee group.

Failing to find buyers, about 25,000-Mw capacity in thermal power is on sale at present, Business Standard reported recently. Most promoter companies — some operational and others still under development — want to exit to lighten debt burdens.

In the past five years, except two state distribution companies, none have floated tenders for additional power procurement. To add to the woes, banks are concerned about non-performing assets increasing. As lack of power demand has hit most of the projects, experts say that till the end of the 13th Plan (2022), new private investment is unlikely.