Power ministry to move cabinet soon to revive stranded assets

The stranded assets include Rs 50,000 cr worth of gas-based projects, which are set to turn into non-performing assets

The power ministry is working on a proposal seeking to revive stranded power generation assets that will be put before the Union Cabinet soon for approval. A host of issues including lack of fuel supply and delayed environmental clearances have impacted power generation projects worth over Rs 6.2-lakh crore.

“The oil and power ministries had a discussion on stranded power assets. We may move the Cabinet on relief for gas-based power plants soon,” said power, coal and renewable energy minister Piyush Goyal. He added the two ministries looked at all available options, including financing and gas availability for projects. The meeting was in the wake of representations by the Association of Power Producers (APP), the representative body of private power producers, to the finance ministry on how 136,000 Mw of projects involving a capital outlay of Rs 6.2-lakh crore are affected due to various factors.

The finance ministry had set up a committee under India Infrastructure Finance Company chairman Santosh Nayar to look into the issues.

The stranded assets include Rs  50,000 crore worth of gas-based projects, which are set to turn into non-performing assets. Independent power producer, or IPP, projects of 13,000 Mw have been stranded for want of gas and incurring losses owing to low-efficiency factors and under recovery of fixed costs.

The Santosh Nayar committee has recommended that lenders re-examine the viability of these projects and take up the matter for a “special package” on a case-by-case basis.

According to Goyal, banks are expected to cooperate to ensure the assets are revived and generation picks up. He, however, clarified no “financial package” was in the works.

Goyal added that the government would look at various ways to improve fuel availability for plants, including gas pooling, but no bailout was being considered.

Ashok Khurana, director-general, APP, said it’s reassuring to hear that banks would be brought on board to revive the assets.

Goyal said that after the upcoming e-auction of coal blocks, the government would take steps to ensure generation goes up by 50 per cent and power tariffs are kept affordable for consumers.