Lenders scramble to resolve stressed power assets before SC hearing

ksenia kondratieva Mumbai | Updated on December 18, 2018

Several stressed projects are under auctions or restructuring   -  AFP

‘Out of 30 that figure in Parliamentary panel report, only a third are resolvable’

Lack of interest from investors in stressed power assets is forcing lenders to become more proactive in resolving at least one-third of the projects identified as stressed by the government earlier this year, according to industry sources.

Out of the 30 stressed accounts profiled in the Parliamentary Standing Committee report, a resolution is possible with regard to at least eight to nine assets in the next two to three months, several industry players who did not want to be identified told BusinessLine.

“Up to nine projects are ‘buyable’ at around ₹2.5-3 crore per MW. These are the only resolvable assets,” a person involved in the exercise said. The resolution is done either through a one-time settlement (OTS) put through a Swiss challenge process, or via a loan restructure. So far only one stressed asset — Jaiprakash Associates’ Prayagraj Power, which operates a 1,980-MW supercritical power plant in Uttar Pradesh — was able to find an investor. Lenders are currently in the process of conducting Swiss challenge auctions for several projects, including Essar Power’s 1,200 MW Mahan plant in Madhya Pradesh and RKM Powergen’s 1440 MW Ucchpinda plant in Chhattisgarh.

Though a resolution was almost finalised for KSK Mahanadi Power — a thermal power project of KSK Energy Ventures in Chhattisgarh — and a 600-MW Jhabua Power of Avantha Group, the deals did not go through, sources said.

They added that three projects of Jaiprakash Power Venture Ltd (JPVL) are under restructuring.

Lower prices under NCLT

“The government feels that once the assets are referred to the NCLT, the price goes down by almost 70 per cent,” an industry player said, adding that the price currently quoted for assets outside the NCLT is ₹4-5 crore per MW, while it is not more than ₹2 crore if the asset is already under NCLT.

Industry watchers believe the resolution should be done by the next hearing of the petitions that have challenged the RBI’s February 12 circular on non-performing assets before the Supreme Court. While the hearing is scheduled for January 13, the apex court will first hear the batch of petitions dealing with the constitutional validity of the provisions of the Insolvency and Bankruptcy Code.

Published on December 18, 2018

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