Deadline to bid for Essar Power Jharkhand project extended for 6th time

Essar Power’s Tori thermal power project (1,200 MW) in Jharkhand, which is undergoing insolvency proceedings, has so far been unable to draw the interest of buyers. The Insolvency Resolution Professional (IRP) has extended the deadline for submission of resolution plan by interested parties for the sixth time now. The new deadline is December 19, 2018.

The deadline has been extended as some applicants wanted more time to do due diligence, said sources close to the IRP.

“The prospective resolution applicants want three-four months to do due diligence on the company and the asset. The applicants need to be sure if the plant can run. Since the power plant in current state is incomplete, the future is uncertain,” said the executive, requesting anonymity. He did not disclose the names of interested parties.

The Tori project is in the list of 34 identified stressed thermal power assets by the finance ministry. The project’s lead lender ICICI Bank moved the National Company Law Tribunal (NCLT) in January 2018 to recover dues of around Rs 36.26 billion. The company was declared a non-performing asset on September 30, 2016.

The project is one of the projects which is incomplete and has been tagged “difficult to resolve” by the Centre.

Envisaged in 2008, the project is long overdue and barely 45 per cent complete till now. Its cost has doubled in these years to Rs 104 billion, according to estimates of the Central Electricity Authority (CEA). The coal block allotted to the project was deallocated post a Supreme Court ruling in 2014. However, it has a power purchase agreement signed with Bihar at a tariff of Rs 2.64 and Rs 3.48 per unit.

According to the information submitted by the finance ministry, state-owned lenders PFC and REC have not disbursed funding to the project because of non-satisfaction of certain conditions such as fuel supply linkage. The developer has close to $285.5 million of imported equipment lying in Kolkata Port and bonded warehouse in Jharkhand since August 2011, the consignments could not be exbonded due to non payment of custom duty.

Essar Power Jharkhand owes creditors around Rs 56.4 billion as of May 22, according to a legal document on the company’s website.

Workmen and employees of Essar Power Jharkhand have filed claims worth Rs 3.52 million with the resolution professional. As on May 22, the resolution professional accepted claims worth Rs 43.87 billion.