Power Ministry asks GENCOs to consider acquiring 6.55 GW of stressed power assets

The Central government has asked GENCOs to consider acquiring 6.55 GW of stressed thermal power and hydel power assets which are currently undergoing CIRP
Power Ministry asks GENCOs to consider acquiring 6.55 GW of stressed power assets
Power Ministry asks GENCOs to consider acquiring 6.55 GW of stressed power assetsEnergy Watch

New Delhi: The Central government has asked state-owned power generating companies (GENCOs) to consider acquiring 6.55 GW of stressed thermal power and hydel power assets which are currently undergoing Corporate Insolvency Resolution Process (CIRP). In an advisory dated November 1, the Ministry of Power told state Energy Secretaries and CMDs of GENCOs, “State-owned Generating Companies (GENCOs) may therefore be advised to acquire the stressed power assets through IBC under NCLT route, and contribute to the overall generation capacity of the nation.”

Central PSUs like NTPC Limited, NHPC Limited, SJVN Limited, PFC and REC etc have been involved in resolving various stressed power assets under IBC. “Participation of Central PSUs has ensured that significant public investments and national resources stuck in stressed power assets are resolved and revived, providing much required capacity addition with definite cost and time savings in comparison to a greenfield investment. This has enabled availability of power at competitive prices to the end-consumers from stalled power project which would have otherwise been lost/scrapped due to devaluation/liquidation,” said the Power Ministry.

“The enactment of Insolvency & Bankruptcy Code, 2016 (“IBC”) has provided a significant push to the revival of stalled thermal power assets to the benefit of all stakeholders including power procurers, end consumers, creditors etc,” the ministry added.

‘Acquire stressed power assets of strategic, commercial importance’

Urging state-owned GENCOs to participate in the CIRP, the Ministry of Power said that stressed power assets which are of strategic and commercial significance to the capacity addition plans of the concerned states should be acquired by these power generating companies.

The Power Ministry said that stressed projects mainly face challenges like inadequate capital investment, shortage/disruption in coal supply and FSA issues, inadequate working capital funding and prolonged recovery of receivables under power purchase agreements etc. “Participation of GENCOs would ensure that such issues are addressed, thereby expediting the revival of these assets. Their operational and implementation expertise would also help in reducing the turnaround time and bringing these stressed assets to operation stage quickly in partnership with other concerned government agencies. This would also help the states to meet their increasing power demand economically with significant control on such power generated. State-owned Generating Companies (GENCOs) may therefore be advised to acquire the stressed power assets through IBC under NCLT route, and contribute to the overall generation capacity of the nation,” said the Power Ministry.

Power Ministry asks GENCOs to consider acquiring 6.55 GW of stressed power assets
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Govt lists indicative list of stressed power assets for GENCOs

In the advisory, the government has attached an indicative list of stressed power assets which can be acquired by state-owned GENCOs. The list includes projects totalling 6.55 GW — Rattan India Power Ltd TPP, Maharashtra, Coastal Energen Pvt Ltd ICB TPP, Tamil Nadu, KSK Mahanadi Power Co Ltd TPP, Chhattisgarh and Shri Maheshwar Hydel Power Corporation Ltd, Madhya Pradesh.

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