 "Govt proposes additional 180 days for resolution of stressed power firms")
Additional 180 days could be provided for resolution of 34 stressed power projects with a view to avoiding potential value erosion of operating plants, according to a government report.
As per the current RBI norms, banks need to restructure stressed assets within 180 days or six months.
If recommendations of the report which was in compliance of the order of Allahabad High Court are accepted, banks would get about a year for restructuring their power sector loans of about Rs 1740 billion.
The High Court on May 31 stayed the February 12 RBI circular on companies other than willful defaulters and directed the Finance Ministry to hold a meeting of all stakeholders on resolutions.
Acting on the direction, a meeting chaired by Financial Services Secretary Rajiv Kumar with all stakeholders was convened on June 22. On the basis of the meeting, a report was prepared and sent to the Power Ministry for further action as per the Court order.
According to sources, the report pointed out that the commissioned power plants with capacity of about 40,000 MW needs to be considered differently to avoid potential value erosion and unreasonable haircut for banks that may happen otherwise.
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"For these commissioned assets, additional time of 180 days beyond the period permitted by February 12, 2018, circular before the case is referred to NCLT could be provided a window for optimising operations," it said.
During this additional period of 180 days, it said, banks should undertake more intensive monitoring of the said assets and its cash flow to save it from turning non-performing.
Similar recommendations were made by Standing Committee on Energy earlier in March. The Parliamentary Committee recommended that an additional 180 days beyond the timelines prescribed under RBI's February 12 circular may be allowed to commissioned power projects which have been commissioned before February 12 or have not been referred to NCLT.
Besides, the report suggested setting up of a High Level Empowered Committee (HLEC). In line with report the report, the government last week constituted a high-level empowered panel under Cabinet Secretary to resolve and revive 34 stressed power projects.
The HLEC will have representatives from the ministries of railways, finance, power, coal and the lenders having major exposure to the power sector.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)