CCEA approves recommendations of GoM on stressed power assets

The government on Thursday approved recommendations of a group of ministers (GoM) on stressed power projects which include grant of coal linkage for short-term PPAs and increase in quantity of coal for special forward e-auction for power sector.

Various stressed power projects that could benefit from the decision are of Adani, GVK, GMR, Jaypee and Essar groups. These assets were listed as non-performing assets or bad loans in a Standing Committee on Energy report.

According to the report of a High Level Empowered Committee (HLEC) headed by Cabinet Secretary P K Sinha, 34 projects with total capacity of 40.13 GW were identified as stressed assets which were facing issues related to coal, slow power demand, delay in payments by discoms and slow development by developers.

"The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has approved the recommendations of GoM constituted to examine the specific recommendations of HLEC," an official statement said.

Recommendations of the GoM include grant of linkage coal for short-term power purchase agreements (PPAs), allowing existing coal linkage to be used in case of termination of PPAs due to payment default by discoms and procurement of bulk power by a nodal agency against pre-declared linkages.

The GoM has also recommended that Central/State Gencos may act as an aggregator of power, increase in quantity of coal for special forward e-auction for power sector, coal linkage auctions to be held at regular intervals.

Besides, it recommended non-lapsing of short supplies of coal and ACQ (Annual Contract Quantity) to be determined based on efficiency.

The panel also recommended that payment of Late Payment Surcharge be made mandatory, non-cancellation of PPA/FSA (fuel supply agreement)/LTOA (long term open access) post NCLT proceedings and non-cancellation of PPA for non-compliance of COD (commercial date of operation).

The government said with the implementation of these recommendations, many of the issues affecting the thermal power sector are likely to get resolved.

Government had constituted the HLEC to address the issues of stressed thermal power projects. It submitted its report in November 2018.