Move to prevent projects turning into NPAs

Nearly 8,770 MW of power projects ready for commissioning but stranded due to lack of fuel supplies may get some relief.

The Government is looking to bring in changes in accounting standards that would prevent these units from being categorised as non-performing assets.

“It is on serious consideration of both the Ministries (Power and Corporate Affairs). The Power Ministry is reviewing the issue and would soon send the recommendations to the Corporate Affairs Ministry. No sooner this exercise is done, we will take the decision. It will not take more than 10-15 days,” said Veerappa Moily, who holds charge of both the ministries – Power and Corporate Affairs.

To prevent the projects from turning into NPAs, private power producers have approached the Corporate Affairs Ministry for change in Accounting Standards 10 and 16, to allow provisioning of capitalisation of borrowing cost for the stranded gas-fired power units.

Moily on Friday met private power producers to discuss issues related fuel linkage, finalisation of standard bidding documents, commissioning of hydro power projects and distribution sector reforms, among others.

“The question is how to get imported gas in the stream and make it affordable. The Government will come up with changes in policy framework to see that all plants get gas to fire up to 70 per cent of plant load factor,” said Director-General of Association of Power Producers Ashok Khurana.

The power companies want the Power Ministry to take up with Petroleum Ministry for allocation of additional 16 mmscmd, expected from new gas sources, to be allocated for the sector. They also want power sector to be accorded the top priority.

However, the imported coal-based projects run by Tata Power and Adani Power would not see any changes in their contracts. These units are facing trouble as coal prices in Australia and Indonesia have shot up.

“The Ministry is very clear that they would not like to consider issues which are before the regulatory commission. But, for the prospective biddings these shortcomings would be corrected,” Khurana said.

Coal prices have fallen but still they are three and half times more expensive than linkage coal. There are also technical limits to blending, he added.

(This article was published on August 31, 2012)
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