Three contractors, including state-owned BHEL and infrastructure major Larsen & Toubro, have submitted to the resolution professional that they wish to recover unpaid dues of Rs 20 billion from Visa Power, which is facing insolvency proceedings.
Bank of Maharashtra filed the bankruptcy proceedings against Visa Power. The petition was admitted by the NCLT in December 2017. A consortium of 11 lenders has a debt exposure of Rs 19 billion to the company.
The team handling the resolution of Visa Power, however, has expressed concern that the sale of the company will not generate enough revenue to pay the pending dues of contractors. According to the insolvency law, financial creditors have the first right over dues recovered through sale of the company, followed by operational creditors.
Sources also said informal interest from number of buyers was pulled out when they learnt that Visa Power’s project is incomplete.
A source said the resolution professionals were hopeful of drawing some bidders once the cost of completion report was received. Even if the company found a buyer, bankers would have to take big haircuts, he said.
The company’s 1,200 Mw power project in Raigarh in Chhattisgarh remains a non-starter owing to lack of fuel supply and slow construction. Thermal power generators face tepid demand and power buyers are caught up in regulatory hurdles. Visa Power had signed an MoU in 2007 with the Chhattisgarh government to build a 1,200 Mw power plant. In 2008, the union ministry of coal allotted the Fatehpur East coal block, with reserves of 99 million tonnes, to the company for its proposed power plant. The block, however, was part of the 218 coal blocks whose allocations were cancelled by the SC in August 2014.
Since then, Visa Power has failed to arrange other means of coal supply. In 2016, the status report on thermal power plants by the Central Electricity Authority (CEA) mentioned Unit 1 of the Visa Power project as commissioned in 2017. In its January 2018 report, the CEA changed the status for the plant to “uncertain”. State-owned BHEL was given the contract for constructing the boiler generating unit while L&T won the tender for power plant construction. During the years of delay, the cost of the project has also ballooned to Rs 39 billion from Rs 26 billion.