The crucial meeting of stakeholders of the power sector with the finance ministry as per the directive of Allahabad High Court will be held tomorrow to discuss ways to address issues faced by stressed power plants.
Financial Services Secretary Rajiv Kumar will chair the meeting of all stakeholders tomorrow where the issues and concerns will be discussed at length, a senior finance ministry official said.
Besides power producers, the meeting would have representation from the power, coal and petroleum ministries along with top RBI officials. Some state-owned units including NTPC, GAIL, Coal India, REC and PFC have also been called for the meeting.
It has been decided that the assertion and submission of those present in the meeting has to be in writing so that there would not be any deviation from the stand in the future, the official said, adding, eventually recommendations of the meeting will be submitted to the high court.
The recommendation would also be submitted along with the parliamentary committee power report on the issue, the official added.
Earlier this month, the Allahabad High Court had in a ruling on May 31 directed the finance ministry to hold a meeting of other stakeholders in June to find out whether the issues of stressed power projects facing insolvency proceedings could be resolved.
It also provided reprieve to a clutch of power projects under financial stress and facing the threat of being pushed into insolvency proceedings by ordering that no action be taken in their cases under the Reserve Bank of India's Feb. 12 circular.
Most lenders to stressed power assets were making recoveries on their loans gone bad through resolution under the bankruptcy law and that the ministry did not expect more public sector banks to come under the RBI's prompt corrective action framework. PCA involves imposition of various curbs such as stopping branch expansion, halting dividend payments, limiting loan limits, audits and restructuring, if warranted.
The court's ruling, though applicable to only the petitioners under the banner of Independent Power Producers' Association of India, is likely to be welcomed by banks who have been unhappy over the circular curtailing their freedom in dealing with stressed assets in various sectors.
The court asked the finance secretary to hold the meeting with his counterparts in the power, petroleum and coal ministries as well as the representatives of the RBI and the Insolvency and Bankruptcy Board of India.
The power ministry has been vocal against the RBI circular's impracticality and a parliamentary panel too had concurred with it, saying, many power plants were currently under SMA-1/2 stage or on the brink of becoming non-performing assets due to unforeseen circumstances that hit their cash flows, credit rating, etc.
The RBI's circular requires banks to finalise a resolution plan in case of a default on large accounts of Rs 2,000 crore and above within 180 days irrespective of sectors, failing which insolvency proceedings will have to be invoked against the defaulter. Since the deadline for the resolution of the first set of such cases is end-August, power producers have been seeking urgent relief.