Power projects of Jaypee, Lanco, Essar, Monnet and GMR groups are among the 34 stressed assets that are at risk of adding Rs 1.8 lakh crore to banks’ bad loan pile.
The Ministry of Power is in talks with the finance ministry to resolve 40,130 MegaWatt of power capacity, according to a presentation by the Department of Financial Services. BloombergQuint has obtained a copy of the document.
Among the reasons identified by the Inter-Ministerial Group for the stress were,
- Non-availability of of fuel after the cancellation of 204 coal mines by the Supreme Court and projects sanctioned without any fuel linkages;
- No power purchase agreements due to inadequate demand;
- Delayed payments by discoms;
- Inability of the promoter to infuse equity and service debt;
- Aggressive tariffs quoted by bidders in PPAs;
- Regulatory and contractual disputes;
- Legal issues related to auctioned coal mines.
According to the Finance Ministry’s presentation, 15,725 MW or more than a third of the stressed capacity is still under construction while the rest has been commissioned. Stalled and delayed power projects are expected are a significant share of banks’ non-performing assets, which jumped after the Reserve Bank of laid down stricter timelines for stress recognition and corrective actions like initiating insolvency proceedings.
Progress So Far
- Fuel supply issues of seven projects with a total capacity of 7,620 MW have been resolved. They have a project cost of Rs 51,441 crore and debt of Rs 29,591 crore.
- No physical work has been done on ground for another seven projects with 8,460 MW capacity; with a total project cost of Rs 59,961 crore and debt of Rs 25,537 crore.
- Two projects of the Lanco Group’s are being resolved under the Insolvency and Bankruptcy Code – the 1,200-MW Anpara, Uttar Pradesh project of Rs 4,845 crore and the Rs 12,865-crore Amarkantak, Madhya Pradesh project.
- The government is optimistic of resolving issues to make eight other projects operational. They have a capacity of 11,100 MW and total cost of Rs 83,018 crore. In these projects the lenders have initiated either Strategic Debt Restructuring or Outside Strategic Debt Restructuring Scheme. In some cases like Jaypee’s projects the lenders are looking at change in management.
- Ten projects with a capacity of 10,430 MW and a debt of Rs 63,971 crore have inadequate power purchase agreements. The government is considering piloting a scheme to procure 2,500 MW power. The government also expects demand to rise as a result of the Saubhagya Scheme and further electrification of the railways.
The government expects Jaypee’s Nigrie (1,320 MW) and Bina (500 MW) plants in Madhya Pradesh, and the Prayagraj project (1,980) in Uttar Pradesh to be resolved. The total cost of Jaypee’s projects is Rs 31,405 crore with debt of Rs 18,686 crore.
Lanco’s two projects in Babandh, Odisha (1,320 MW) and Vidarbha, Maharashtra (1,320 MW) have made insignificant on ground progress and await resolution through the National Company Law Tribunal under the new bankruptcy law. The Rs 20,863-crore projects have a debt of Rs 11,738 crore.
- No significant progress has been made on Essar’s Rs 10,441-crore Tori, Jharkhand project with a capacity of 1,200 MW – it has debt of Rs 3,112 crore.
- Essar’s 1,200 MW Mahan, Madhya Pradesh plant too has an inadequate power purchase agreement. The Rs 7,173-crore project has a debt of Rs 5,951 crore.
Monnet’s Rs 9,500-crore Malibrahmani, Odisha project with 1,050-MW capacity is under the insolvency process with the NCLT. It has a debt of Rs 5,300 crore.
Fuel issues for GMR’s Warora, Maharashtra (600 MW) and Kamalanga, Odisha (1,050 MW) projects have been resolved. The Rs 10,769-crore projects have an outstanding debt of Rs 7,005 crore.
The companies are yet to respond to BloombergQuint’s email queries.