Essar group’s power unit in Gujarat has sought to negotiate a settlement with its biggest lender, State Bank of India, six months after it was dragged to the National Company Law Tribunal (NCLT) over non-payment of dues.
Essar Power Gujarat, which owes ₹3,700 crore to SBI, had to shut down its 1,200-MW power plant at Salaya, Gujarat, earlier this year due to financial viability issues.
The plant was run on imported coal whose 80 per cent output was routed to State-owned Gujarat Urja Vikas Nigam (GUVNL).
The plant has been lying idle since the start of this financial year which became the reason behind the non-payment of dues to the lender.
SBI had filed the application in the NCLT in May this year which was accepted in June.
The case has already seen three hearings with the latest being held on December 13, where Essar Power Gujarat admitted that it will negotiate a settlement with the lender.
“Senior Counsel for the corporate debtor, Soparkar, states the corporate debtor is endeavouring to negotiate settlement with the applicant.
“The same is admitted by Learned Counsel for the applicant (Aishwarya Reddy),” the latest order delivered by the NCLT stated.
At the request of both sides, by consent, the NCLT adjourned the case to February 2, 2022.
‘In active discussion’
When contacted, an Essar spokesperson said, “Due to delay in implementing the High Power Committee’s (HPC) recommendations in 2018, the PPA, GERC approval and debt restructuring by lenders got delayed. PPA and GERC approval have since come in November 2021. Currently, both parties are actively in discussion for debt restructuring of EPGL.”
“In the power business, Essar has already reduced its debt from around ₹20,000 crore to around ₹10,000 crore. The remaining borrowings shall be brought down to close to ₹3,000 crore in the next two quarters. This is a part of our deleveraging strategy following which Essar has repaid over ₹1,40,000 crore in the last two years — the largest debt repayment in the history of corporate India,” the spokesperson added.
Essar Power Gujarat (EPG) has a 25-year PPA (Purchase Power Agreement) with GUVNL and is responsible for supplying 10 per cent of the State’s power requirement. The company had approached the State earlier this year to inform about its decision to shut down the thermal plant.
EPG is one of the three companies that has a long-term PPA with GUVNL to supply 4,000MW. Tata Power and Adani Power, the other two entities, also had to temporarily shut down plants due to price hike in imported coal.