Private producers are seeking 10 per cent additional debt exposure by banks to the power sector to fund projects stranded by lack of fuel.
In a presentation to Reserve Bank of India Governor Raghuram Rajan, the Association of Power Producers (APP) sought easier rules for banks to fund stranded projects.
The meeting was attended by executives of Reliance Power, Tata Power, Jindal Power, and the Adani, GMR, GVK, Essar, Indiabulls, Lanco and Welspun groups, among others.
“Stressed assets as well as stalled projects are viable, and can yield positive results within 12th Plan period compared to new projects with higher capital expenditure, interest rates and foreign exchange requirements. Revival of existing projects will result in faster capacity addition at affordable rates,” an APP member said.
The association gave a debt restructuring plan for power plants stranded by unfulfilled fuel linkages. “The sector is looking at financiers to provide additional debt of 10 per cent of the project cost, which can be replaced with equity by developers or strategic investors within a specific period,” the APP said.
Investments of Rs 1,57,730 crore have been affected by the underrecovery of fixed and variable costs in power projects due to factors beyond the control of developers. Close to Rs 61,050 crore of investment is stranded in gas-fired power projects totalling 13,566 Mw capacity.
Private power producers also suggested if a project was stranded because of fuel, banks be allowed to classify these assets as standard, defer interest and capitalise these, reduce the interest rate to the State Bank of India’s base rate till the plants were operational and extend the loan tenure suitably.
In a presentation to Reserve Bank of India Governor Raghuram Rajan, the Association of Power Producers (APP) sought easier rules for banks to fund stranded projects.
The meeting was attended by executives of Reliance Power, Tata Power, Jindal Power, and the Adani, GMR, GVK, Essar, Indiabulls, Lanco and Welspun groups, among others.
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APP sought the banking sector’s support in creating an enabling environment for all participants in the power sector — project developers, lenders, distribution companies and consumers.
“Stressed assets as well as stalled projects are viable, and can yield positive results within 12th Plan period compared to new projects with higher capital expenditure, interest rates and foreign exchange requirements. Revival of existing projects will result in faster capacity addition at affordable rates,” an APP member said.
The association gave a debt restructuring plan for power plants stranded by unfulfilled fuel linkages. “The sector is looking at financiers to provide additional debt of 10 per cent of the project cost, which can be replaced with equity by developers or strategic investors within a specific period,” the APP said.
Investments of Rs 1,57,730 crore have been affected by the underrecovery of fixed and variable costs in power projects due to factors beyond the control of developers. Close to Rs 61,050 crore of investment is stranded in gas-fired power projects totalling 13,566 Mw capacity.
Private power producers also suggested if a project was stranded because of fuel, banks be allowed to classify these assets as standard, defer interest and capitalise these, reduce the interest rate to the State Bank of India’s base rate till the plants were operational and extend the loan tenure suitably.