10 September 2018
Rescue plans for stressed assets in power sector
As per the 37th standing committee on energy report there are a total of 34 power projects which have been labelled as “stressed/non- performing” by the respective lending banks in consonance with the RBI guidelines. In order to seek better synergy in the power sector the government has mooted the idea of auctioning the above mentioned assets and has invited bids or Expression of Interest from various interested parties. As per newspaper reports it has been suggested that a joint venture may be in the works between public sector undertakings/companies to set up plants at mines which do not have transportation access and acquiring private stressed assets. A rescue plan is also being mulled by banks such as SBI. The plan is to float a fund in order which is likely to take over as much as 14 stressed power plants of various private sector companies. The decision is aimed at preventing power generation projects from going into liquidation, receiving better valuations and securing speedy resolution. It is important to note that during the last ten years the private sector has solely contributed 77,891 MW capacity to the existing stock. Further, as power consumption is only likely to grow year after year it would be in the nation’s interest that an effective strategy should be put in place in order to extract maximum resource utilisation and also ensure that the bad debts are reduced to a manageable amount.