Power transmission lines are suspended from an electricity pylon that also serves as a mobile phone tower in Clifton, New Jersey, U.S. (Photographer: Steve Hockstein/Bloomberg)

PFC Hopes To Resolve Seven Stressed Power Projects 

The Power Finance Corporation Ltd. is hopeful of resolving seven stressed power projects funded by it in a month as the Supreme Court granted status quo till mid-November.

“I'm sure we will be able to resolve the projects in which bids have already been received,” Rajeev Sharma, chairman and managing director at Power Finance Corporation, told BloombergQuint in New Delhi today. The lender has selected the highest bidder in at least two and, in some cases, received one-time settlement offers, he said.

The Supreme Court will next hear the plea of power producers on Nov. 14 seeking a relaxation from RBI guidelines that mandate insolvency proceedings for power companies that fail to service debt beyond 180 days. That deadline ended on Aug. 27.

PFC has a total exposure of Rs 16,410 crore to the seven projects. These are KSK Mahanadi Power Project, Chhattisgarh; Avantha Power Ltd.’s plant in Jhabua, Madhya Pradesh; RattanIndia plant at Amravati, Maharashtra; Indiabulls power plant, Nashik, Maharashtra; Essar Power’s Mahan project, Madhya Pradesh; GMR thermal project in Chhattisgarh; and RKM Powergen (I and II), Chhattisgarh. They are among the 34 stressed coal-fired plants with a debt of Rs 1.8 lakh crore at risk.

All the other lenders will also have to come on board for speedy resolution of assets, Sharma said. In government projects, PFC is generally the sole lender “so we can take our decision quickly”, he said. “In private sector projects, it’s a consortium lending and in one there are as many as 27 lenders.”

Of these seven projects, three are under the State Bank of India-run Samadhan scheme. Lenders have so far not been able to arrive at a consensus on bidders under the plan, Bloomberg had reported citing an unnamed official. Sharma said the three projects have received bids.

According to Sharma, here’s the list of projects that PFC expects to resolve:

KSK Mahanadi Power Project, Chhattisgarh: The highest bidder has been finalised, and 22 of the 27 lenders are on board, Sharma said. “We will be able to close this project once the five others come on board.”

RKM Powergen (I and II), Chhattisgarh: The project has got letter of authority under a pilot scheme of PTC India Ltd. and PFC Consulting Ltd. “We are trying to restructure this project with the existing developer itself,” Sharma said. “We have asked the rating agencies to find out the sustainable debt and we will be able to use the project again within a month.”

Avantha Power’s plant in Jhabua, Madhya Pradesh: Lenders have received a one-time settlement and will be able to close it.

Indiabulls power plant, Nasik, Maharashtra: PFC is discussing the Nashik project with the state government. “The valuation is complete and due diligence by NTPC is over,” Sharma said. “Now the lenders have to take a call but there are fairly good chances that we will be able to close Nashik too.”

RattanIndia plant at Amravati, Maharashtra: Lenders have a one-time offer and PFC would be able to close the project soon.

Essar Power’s Mahan project, Madhya Pradesh: One-time settlement for Essar Mahan is very attractive, Sharma said, and the lenders are on board. “We are likely to close this stressed account too.”

GMR Chhattisgarh: The highest bidder has been finalised and the lenders are discussing it. “We are hopeful of being able to close this.”