According to the resolution plan approved by the Hyderabad National Company Law Tribunal (NCLT) bench, NHPC would pay Rs 897.5 crore to the project's financial creditors.
In a first instance of a state-run company acquiring a stressed asset under the insolvency and bankruptcy code, NHPC on Friday signed an agreement to take over and implement the 500-MW Teesta-6 hydro electric project in Sikkim. The project was being developed by Lanco Energy but progress had stalled since April, 2014 due to funds constraints with the company.
According to the resolution plan approved by the Hyderabad National Company Law Tribunal (NCLT) bench, NHPC would pay Rs 897.5 crore to the project’s financial creditors. Including the bid amount, the total estimated cost of the project — expected to be completed in five years — is seen to be Rs 5,748 crore.
Power minister RK Singh recently told FE in an interview that it is difficult for state-run firms to bid for projects outside NCLT as “the valuations discovered in the tribunal are absolutely transparent whereas that may not be the case elsewhere”.
The power ministry has also asked state-run NTPC to bid for potentially viable projects in the NCLTs and acquire them if the prices are attractive. The main lenders to the Teesta-6 hydro asset were ICICI, IIFCL, PNB, REC and HUDCO. The project was initially scheduled to be commissioned in July, 2012. It was allotted by the Sikkim government for development in 2005 on build-own-operate-transfer basis.
Sources said about 53% progress has been made on the Teesta 6 project. It had a power purchase agreement (PPA) earlier with Maharashtra, which has been terminated. While approving its acquisition by NHPC, the Cabinet Committee on Economic Affairs, in March, had said that the “project shall help in meeting peaking demand of energy; balancing and ramping requirement of the grid and shall accelerate process of development of Sikkim state.”
Hydro power producers are hoping to gain from the latest hydro tariff regulation by the Central government which increased the ‘useful life’ of hydro generating stations from 35 years to 40 years, resulting in a reduction in depreciation expenses. “The new policy also categorises hydro power as renewable energy, which would open the access to cheaper green financing from global institutions,” Balraj Joshi, managing director, NHPC, recently told FE.