REC working on SAMADHAN-like scheme for stressed power plants: R K Singh

Union Minister R K Singh today said Rural Electrification Corp is working on a scheme similar to what the SBI-led group of bankers came out with to takeover unsustainable debt of stressed power plants to avoid their liquidation.

The Rural Electrification Corporation (REC), which is under the administrative control of the power ministry, has drawn up a plan to turnaround assets of such stressed power plants, the power minister said.

Under SAMADHAN (Scheme of Asset Management and Debt Change Structure, or Samadhan), the bankers' consortium shortlisted 11 power plants with an overall capacity of over 12 GW, which are either complete or nearing completion. This scheme is an effort to avoid liquidation of these plants at throwaway considerations.

"State Bank of India and some banks have come together. They blew up a scheme called SAMADHAN. Under this scheme, they will try to revive some assets to run. They have selected 11 plants," Singh said at a press conference here.

Elaborating further, he said, "The debt order will be reduced to a manageable level and converted into equities which are held by banks. That equity would be bid out to any players who want to buy those assets. That is how these assets would work."
"REC has also drawn up such a scheme in our ministry. We have mentioned this to the finance ministry. The attempt is that the assets which can be salvaged are salvaged. We don't want that these assets are sold for Rs 1 crore or 2 crore per MW (against investment of Rs 6 to 7 crore). We want to put in a mechanism to make these assets turnaround."
The minister said, "The REC scheme is also a variation of this. They will form an SPV which would hold this asset and run this asset till the situation improves."