The Centre is in talks with banks, financial institutions, states and other stakeholders to revive the stressed and stalled power projects and a solution would be found soon, power and coal minister Piyush Goyal said on Monday. Industry estimates the total capacity of such projects to be over 35,000 MW with investments of around Rs 2 lakh crore. “We have come to a close resolution mechanism for (at least) those stressed power plants, where the promoters are not found to be wilful defaulters and which do not have significant irregularities,” Goyal said, briefing the media on his ministry’s achievements in the three years of the Narendra Modi government. Bankers are taking proactive measures to take over such plants which have defaulted. The government is asking the bankers to find a resolution which, apart from resolving the issue of non-performing assets, would ultimately bring down power costs, Goyal said.
As in February, 29,575 MW thermal power projects in the country were stressed and stalled due to financial issues, fuel shortage and transmission constraints. The cumulative cost of these projects is Rs 1,70,766 crore.
Experts believe that providing relief to the sector would not be an easy task, especially at time of slow growth in power demand, lack of new power purchase agreements and falling price of renewable power.
“Each distressed case in the sector has its own set of issues and would require distinct intervention in agreement with multiple stakeholders in a regulated environment and in a concurrent sector set up,” said Sambitosh Mohaptra, partner – energy and utilities, at PwC.
Average plant load factor (PLF) for thermal power plants across the country was 59.8% in FY17. PLF for private sector plants was 55.7%.
Even though the government has set a goal to produce 100 crore tonnes of domestic coal by FY20, the minister said coal import cannot be stopped completely as 83,100 MW of coal-based power plants are designed to run of imported coal. The minister noted that foreign exchange worth Rs 25,900 crore have been saved through reduced coal imports.
Though the government would continue to support and encourage new coal power plants, which would remain the baseload energy source for electricity generation, Goyal said that as of now the government is trying to ensure maximum intake of green energy into the grid.
In order to decide on the right composition of the energy mix for power generation, the government is in talk with the NITI Aayog to frame a energy policy for the next 25-30 years, the minister said.
Goyal added that as evolving technologies change the dynamics of power generation, the government intends to design a dynamic policy which would accommodate industry transformations due to technological innovations.
About stressed hydro power projects, the government said it is also looking at solving the stress of the hydro power sector. Going forward, the Centre has asked the state governments to take over some of the stressed hydro projects. However, economic viabilityof such projects should be kept in mind, Goyal said.
He said there is no proposal for the merger of Sutlej Jal Vidyut Nigam (SJVN) and National Hydro Power Corporation of India (NHPC). The minister did not mention raft of the hydro policy, which according to sources, will soon be taken up by the Cabinet for approval.
The draft policy has proposed a 4% interest subvention during construction period and 3% during the operational phase. The move, proposed to be applied to both public and private sectors, involves a financial implications of Rs 16,709 crore for 40 projects totalling11,639 MW. The draft also proposes to increase the tenure of the loans to 25-30 years.
To ensure power offtake, hydro power projects of more than 25 MW have been proposed to be eligible for renewable status. This means that the power produced from such projects can be used to meet the renewable purchase obligations of the states.