You are here: Home » News-IANS » Business-Economy
Business Standard

PFC takes stressed projects before NCLT

IANS  |  New Delhi 

At a time when stressed projects and the bad loans of banks are in focus, state-run (PFC) has approached the National Company Tribunal (NCLT) to start insolvency proceedings against promoters of stressed power projects, officials said on Monday.

The PFC and other consortium lenders have filed appeals with the NCLT under the new (IBC) in some of the cases which include thermal, gas-based, as well as hydro power projects, PFC officials said.

The sources, however, refused to confirm that projects with a total of 14,000 MW capacity and involving loans of around Rs 30,000 crore are being considered for taking up with NCLT.

said the cases already before the NCLT include the Konaseema gas power plant, East Coast Power's coal projects, KVK Nilachal, Ind-Barath Madras, and JAL's hydro power project in

The reports added that projects waiting to go before the Tribunal include Essar Mahan, Maheshwar hydro project and GMR Chhattisgarh, among others.

PFC officials, however, refused to confirm to IANS the names of the firms referred to the NCLT.

The IBC provides for a time-bound insolvency resolution process that does not exceed six months. According to ministry sources, with corporate highly leveraged, there has been difficulty in disposing off power assets, leading to most cases ending up with the NCLT.

told reporters here last week that the two financing arms of the ministry -- PFC and (REC) -- have been directed not to grant loans to distribution companies (discoms) making heavy losses unless these submit time-bound plans for reducing such losses.

Singh said he had directed the REC and PFC to follow prudential norms when granting loans to discoms.

"When approving loans, our financing arms must look at the financials and the revenue stream of the borrowers," he said.

"If a borrower is running substantial T&D (transmission and distribution) losses, there should be no loan given unless the discom has a plan for reducing losses over a period of time and reports on how it is sticking to the plan."

According to the ministry, the time frame for reducing losses should not exceed two years, while action taken by the discom will be vetted by the "and only then will the grant of loan be considered for such discoms".

Singh cited three main reasons for projects becoming stressed: Coal supply shortages, lack of adequate equity from promoters and the absence of long-term power purchase agreements (PPAs) for discoms.

He also said the state-run (SBI) has a large volume of loans given for stressed power projects, which is causing considerable "worry".

A Parliamentary panel report has revealed that there are as many as 34 with a total capacity of over 40,000 MW.

In its report on "Stressed/Non-performing Assets in Electricity" tabled in Parliament last week, the Standing said that, as of June 2017, a total of Rs 1.74 lakh crore is tied up as outstanding debt in these stressed projects.

Among these thermal power projects, the has an outstanding debt of Rs 11,665 crore on account of its Tirora project in Maharashtra, and of Rs 3,099 crore for its project.

The Jaypee Group's Bara project has an outstanding debt of Rs 11,493.5 crore, Nigrie (Rs 6,211 crore) and Bina (Rs 2,253.85 crore).

Essar's Mahan project has an outstanding debt of Rs 5,951 crore and its has a debt of Rs 3,112 crore.

The KSK Mahanadi Power Co's Akaltara project has a total outstanding debt of Rs 17,194 crore.

SBI said last week that the crisis had come to a head as the discoms had signed few PPAs in the last two years.



(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, March 12 2018. 19:20 IST