Cabinet to decide soon on stressed power assets, says RK Singh

By: |
Published: January 23, 2019 1:46:22 AM

A group of ministers headed by finance minister Arun Jaitley is deliberating on the HLEC recommendations and deciding on their viability.

Power minister RK Singh

The recommendations of a high-level empowered committee (HLEC) on stressed power assets will be placed before the Cabinet soon for approval, power minister RK Singh said on Tuesday.

A group of ministers (GoM) headed by finance minister Arun Jaitley is deliberating on the HLEC recommendations and deciding on their viability, Singh added.

The recommendations of HLEC, headed by the Cabinet secretary, include a proposed mechanism through which REC and PFC — major lenders to discoms — can make upfront payment to independent power producers, allowing power plants which relinquish PPAs due to payment delays to use linkage coal for selling power elsewhere, and letting NTPC pool power from private plants for their existing PPAs for under-construction plants.

READ ALSO | Paytm Mall Republic Day Sale: Grab cashback on iPhones, up to 80% off on these items; check details

As reported by FE earlier, experts were sceptical about the extent of its impact due to the absence of any prescribed timeline. It was also silent on the long-standing demand of private power producers, seeking a government advisory for pass-through of additional cost of fuel procured through other sources for meeting the deficit of contracted linkage coal. This had led to 13 GW of generation units cumulatively losing out at least `2,500 crore since March 2017.

“Currently, nine assets worth `11,400 crore are out of stress, seven of them owing to additional coal allocation through the Shakti scheme,” Singh said, adding that “implementation of the HLEC recommendations would also salvage few more plants”. The minister also said he expects to implement the new electricity tariff policy from April 1, 2019, and the Cabinet should soon be taking it up for approval.

The proposals in the upcoming tariff policy have a provision where the regulator would assess if discoms have sufficient long-term and mid-term PPAs to meet their respective annual average demand, warranting new PPAs to be offered.

Additionally, the provision of penalty for gratuitous loadsheddings in the tariff policy would also push discoms to have adequate PPAs tied up. “Doing loadshedding would be costlier than buying power from the spot markets,” the minister had told FE in a recent interview.

Do you know What is Repo Linked Lending Rate (RLLR), Wholesale Price Index (WPI), Public Debt, Finance Commission Grants & Other Transfers, Economic Survey? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.