Small lenders to stressed power generation assets have been asked to furnish their resolution plans before October 10 to a group of bankers which met on Thursday to discuss the issue.
The development came after the Supreme Court had halted the insolvency and bankruptcy process through its September 11 decision, providing a temporary respite to 34 stressed coal-based projects with a combined capacity of about 39 GW and banks’ exposure of Rs 1.75 lakh crore.
Sources said all the lenders would meet after October 10 to assess the situation. The lenders’ meeting, which took place in the headquarters of the Power Finance Corporation (PFC), included representatives from State Bank of India and Punjab National Bank.
Major financial institutions which are lead lenders to stressed power projects are PFC, REC, SBI, Axis, ICICI, IDFC, IDBI and PNB. Sources said resolution for a number of stressed assets are stuck at advanced stages because a fraction of small lenders in the consortiums do not agree with resolution plans, leading to precarious delays. Receiving small lenders’ consent in the process would be instrumental in making headway towards salvaging stressed assets.
PFC had said earlier this week that the SC decision would save seven PFC-funded coal-based power projects with generation capacities of 10,190 MW from going to the National Company Law Tribunal (NCLT).
The government has also formed an empowered committee on stressed power assets which is chaired by Cabinet secretary PK Sinha and comprises senior officials from various ministries and major banks and financial institutions. Thursday’s lenders meet was held separately outside the aforementioned committee’s purview.
The committee has deliberated on irregular payments from discoms to independent power producers, possible changes in fuel allocation policies and ways of making discoms comply with terms of power purchase agreements.
It has been asked by the Allahabad High Court to come up with a report by the end of September.