PFC expects EOI for KSK Mahanadi project in a month’s time

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Mumbai | Published: October 17, 2019 4:09:07 AM

At present, the project supplies power to distribution utilities in Andhra Pradesh, Tamil Nadu, Chhattisgarh, Gujarat and Uttar Pradesh. KSK has a 25-year power purchase agreement with Uttar Pradesh.

Power Finance Corporation, pfc, KSK Energy Mahanadi project, Chhattisgarh, National Company Law Tribunal, nclt, bankruptcy code, PFC bankruptcy, NCLT pfcThe project had to be taken to NCLT after PFC and other lenders failed to close a deal with Adani Group in an out-of-court settlement.

Power Finance Corporation (PFC), the lead lender to the KSK Energy’s Mahanadi project in Chhattisgarh, expects an early resolution to the 3,600-MW power project after the National Company Law Tribunal (NCLT) accepted its petition to resolve the case under bankruptcy proceedings on October 3.

The project had to be taken to NCLT after PFC and other lenders failed to close a deal with Adani Group in an out-of-court settlement.

A senior PFC official told FE, they expect the expression of interest (EOI) to be invited in a month’s time after all the lenders file their claims in NCLT. A consortium of 27 lenders have time till October 17 to file their financial claims with the NCLT. A committee of creditors (CoC) will be constituted following the verification of claims.

Mahendra Kumar Khandelwal, the resolution professional for the project, however declined to put a timeline for the EOI, but he stated, it will happen immediately after the constitution of CoC. “We are planning to resolve the project within the stipulated timeframe of 180 days or by March 31, 2020,” Khandelwal said.

KSK Energy Ventures, the owner of the project, owes PFC Rs 3,000 crore, and Rs 15,700 crore to the consortium of lenders.

The lenders in their petition to NCLT had said that KSK Mahanadi had defaulted on payments of `1,315 crore, following which it was taken to NCLT.

On October 3, the Hyderabad bench of NCLT allowed PFC to start insolvency proceedings against the 3,600-MW power project of KSK Energy in Chattisgarh.

KSK Mahanadi has an operational generation capacity of 1,800 MW from three units of 600 MW, while the other 1,800 MW capacity was expected to come online in the second phase. However, issues related to coal availability and non-payment of dues by discoms, led to deterioration of cash flows for the company, leading to default.

At present, the project supplies power to distribution utilities in Andhra Pradesh, Tamil Nadu, Chhattisgarh, Gujarat and Uttar Pradesh. KSK has a 25-year power purchase agreement with Uttar Pradesh.

In April, the owners of the project had tried to reach an out-of-court settlement with the Adani Group, but lenders later rejected the offer made by Adanis on account of higher demand for hair cut. Adanis subsequently withdrew their offer after the Uttar Pradesh Power Corporation, one of the key customers of the plant, decided to reduce the tariffs it was paying.

In June this year, ICRA moved the rating of KSK Mahanadi to its “issuer not cooperating” category following lack of disclosures from the company. This rating was reiterated in July.

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