State-owned firms NTPC, REC and PFC are planning to float a special purpose vehicle (SPV) to operationalise stressed assets of 25,000 MW in the first tranche, Power Minister RK Singh said today.
Barely a fortnight ago, a parliamentary panel had expressed concern over 34 stressed assets with an overall capacity of 40 GW and a total outstanding debt of Rs 1.74 lakh crore.
"There are many assets which are functional but have undergone stress for whatever reasons," Singh said on the sidelines of an event here.
"Apprehensions are that they may be sold for value much less than what they should be sold for. Lenders may have an option that if the asset is not attracting fair bid then the SPV can run it till they can realise value," he added.
He said some financing institutions have come up with the idea to him and the proposal has been discussed with the Ministry of Finance.
"REC, PFC and NTPC can get together to form an SPV," he said.
"Thermal power capacity which can go is 25,000 MW in the first lot and 15,000 MW in the second lot for the assets which are showing signs of stress," he added.
The SPVs will have to enter into power purchase agreements with the central public sector units (CPSUs).
"We are confident, we will get PPAs. It may be 40 per cent to 50 per cent of the capacity and the rest can be sold on merchant power basis," Singh said.
He added that even if the thermal plants are run at a capacity of 50-60 per cent, it will be in their interest.
A parliamentary panel earlier this month has made a case for modifying the process for grant of loan and supervision of funds provided to power companies saying that due prudence had not been observed while considering loans.
The Parliamentary Standing Committee on Energy in its report on stressed/non-performing assets in electricity sector has also recommended that the Reserve Bank should advise bank to follow credit rating system while giving loans to infrastructure companies.
The panel has noted that as on June 2017, the power sector had Rs 5.59 lakh crore of loans, of which Rs 37,941 crore was bad loan or non-performing assets while restructured advances were to the tune of Rs 60,858 crore.