The Uttar Pradesh energy watchdog - UP Energy Regulatory Commission (UPERC), has reserved the order on the sale of a stressed thermal power plant in Prayagraj (Allahabad) owned by the Jaypee Group to a Tata Power-controlled entity.
Prayagraj Power Generation Company Limited (PPGCL), a unit of Jaiprakash Associates, operates the stressed 1,980 megawatt (Mw) power plant. It had signed a 25 year power purchase agreement (PPA) with UP power distribution companies (discoms) in 2008 and executed a fuel supply agreement in August 2013 with Northern Coalfields for supplying about 7 million tonnes per annum (MTPA) of coal.
The project was commissioned about three years behind schedule due to several delays pertaining to land acquisition, slow equity infusion, foreign exchange fluctuations, rate of interest, cost of equipment etc leading to time and cost overruns.
In November 2018, Tata Power had announced that Renascent Power Ventures, a wholly-owned subsidiary of Resurgent Power Ventures, had signed a share purchase agreement with a consortium of lenders led by State Bank of India (SBI) to acquire more than 75 per cent stake in the PPGCL.
Resurgent Power Ventures is backed by Tata Power and ICICI Bank. The share purchase agreement was the result of the stressed asset resolution initiated by lenders through competitive bidding.
Earlier, Resurgent and JSW Energy had counter bid each other to gain control of the asset with JSW even reportedly agreeing to pay Rs 6,200 crore for the unit, thus bettering Resurgent’s proposal of Rs 6,086 crore even as both the firms agreed to bear the plant’s tax liabilities of nearly Rs 2,850 crore.
Yesterday, UPERC concluded the final hearing with regards to the transfer of project ownership in the presence of representatives of all stakeholders.
A UPERC source told Business Standard on condition of anonymity that the commission’s decision could be announced later this week.
Meanwhile, the UP power consumers’ forum has demanded that PPA rates be lowered along with transfer of assets, as new owners were getting the stressed project at a much lower price compared to the initial investment.
While SBI is the lead banker, other major financial institutions among lenders included Punjab National Bank, Indian Overseas Bank, Bank of India, LIC, Union Bank of India etc. The total outstanding debt of the plant stood at about Rs 11,500 crore, while the project cost nearly Rs 14,500 crore to the developers.
Forum president Awadhesh Kumar Verma said that since the new owners would gain control of the project for only Rs 6,000 crore, retail consumers should also get the benefit from the original levelised power tariff of Rs 3.02 per unit.
The thermal power project is currently generating almost 800 Mw of thermal power a day and supplying to the discoms.