The Union Ministry of Power has told state-owned power generation companies to look at the option of acquiring stressed power assets under the insolvency process and has listed Coastal Energen’s 1,200 MW imported coal based project in Tamil Nadu among the potential asset.
The stressed power projects mainly face challenges like inadequate capital investment, shortage/disruption in coal supply and fuel supply agreement issues, inadequate working capital funding and prolonged recovery of receivables under power purchase agreements, it noted in a recent communication to Power Secretaries of All States and Chiefs of State and Central power generating companies.
The Ministry said participation of power generating companies would ensure that such issues are addressed, thereby expediting revival of these assets.
It also noted the generation companies operational and implementation expertise would help in reducing turnaround time and bring the stressed assets to operation stage quickly in partnership with other concerned government agencies.
It would help the States to meet their increasing power demand economically with significant control on such power generated, the Union Power Ministry said.
The enactment of the Insolvency & Bankruptcy Code (IBC) has provided a significant push to the revival of stalled thermal power assets to the benefit of all stakeholders, including power producers, end consumers , and creditors, it said in its advisory.
The Ministry pointed out that the central public sector undertakings (PSUs) such as NTPC Ltd., NHPC Ltd., SJVN Ltd., Power Finance Corporation Ltd., and REC Ltd have been successfully involved in resolving various stressed power assets under the IBC either through direct participation in the Corporate Insolvency Resolution Process (CIRP) as a resolution applicant, or by way of lenders’ backed resolution plan, it added.
The participation of central PSUs have ensured significant public investments, and national resources stuck in stressed power assets are resolved and revived, providing much- required capacity in addition to definite cost and time savings in comparison to a greenfield investment, the Ministry pointed out.
This has enabled availability of power at competitive prices to the end-consumers from stalled power project, which would have otherwise been lost/scrapped due to devaluation/liquidation, it added
State-owned generating companies may also be encouraged to participate in the CIRP of stressed power assets, which are of strategic and commercial significance to the capacity addition plans of the concerned States, the Ministry said.
It said that benefit of taking National Company Law Tribunal (NCLT) route is that “clean slate” principle is embedded in the IBC and would safeguard the power producers from any unexpected liability on account of issues/claims of period earlier to admission under the CIRP.
The Power Ministry has listed stressed power projects totalling 6,550 MW across the country.
Apart from Coastal Energen, the ministry has listed 1800 MW operational project of KSK Mahanadi Power Co. Ltd in Chhattisgarh. Tangedco sources 500 MW power from the plant through a long-term agreement.
Tangedco’s own thermal power capacity is 4,320 MW and along with the State’s share from Central Generating Stations (CGS), long-term and short-term power purchase agreements, the State’s conventional installed capacity stands at 16,417.38 MW.
The 800-MW North Chennai Thermal Power Station (NCTPS) Stage III project is expected to be completed by this month.
About 4,380 MW of coal-based power projects envisaged by the State sector in Tamil Nadu did not materialise during the 2017-2022 period, as per the data provided in the Draft Electricity Plan published by the Central Electricity Authority.
