Nine private power projects shortlisted for bank takeover

It is in line with decision of the central govt to convert stressed assets into 'national assets

Banks have shortlisted nine coal-based power projects and are evaluating them for equity purchase and for NTPC to likely operate them subsequently.

Of the nine, three major ones were Jindal India Thermal Power’s (JITPL’s) Derang project in Odisha (1,200 megawatt, or Mw); the RattanIndia Power plant in Nashik, Maharashtra (1,350 Mw); and Lanco Infratech’s Babandh 1,320 Mw power project in Odisha, official sources told Business Standard.

The move is in line with the recent decision of the central government to convert stressed assets into ‘national assets’. In a meeting held in the first week of June, Union Minister of State for Power (Independent Charge) Piyush Goyal had said as regards the stressed power assets, the banks agreed to take over, NTPC offered to operate them.

“Banks need assistance… We are focused on finding solutions to make stressed assets national assets,” Goyal said after the meeting with banks on June 7.

Emailed queries sent to Jayant Kawale, managing director, RattanIndia Power, did not elicit any response. Lanco Infratech is in process of selling its assets to pare debt. The company’s spokesperson declined any interaction with the media. While the government has tried to assist thermal projects with the new coal linkage policy, it will step up efforts by offering last-mile equity to some.

Senior power ministry officials said the banks concerned were evaluating the assets and would soon come up with the final report on the equity push needed by them. NTPC, on the other hand, is not part of the financial evaluation. 

“NTPC would just take care of operations and maintenance and there is no question of it investing in these sick units,” said an official.

However, NTPC is learnt to be weighing the idea of taking equity also in these projects. “The idea is if the banks give us 3-4 per cent equity, we have suggested that we may not charge fees for operations,” said an NTPC executive.

The three plants under evaluation have been on the lookout for buyers for over a year. The Derang power plant and Lanco’s Babandh unit have been facing a fuel crisis after the Supreme Court in August 2014 cancelled all coal block allocations made during the past two decades. RattanIndia’s Nashik unit, however, has been facing problems because of lack of power-purchase agreements. JITPL is controlled by listed firms — Jindal Poly Investments (JPIL) and Jindal Photo (JPL) — through Jindal India Powertech, a holding company owned by JPIL and JPL. A lack of fuel supply, along with increasing interest costs and tepid power sale, has hurt the bottom line of the company. The promoters have been trying to hive off the power unit. Earlier some private players had evinced interest in the Derang plant, but no deal could go through. The paper could not reach the spokesperson for JITPL. 

RattanIndia Power, which suffered a loss of Rs 215 crore during FY17, has been looking to restructure its core assets. The company in its annual report has said it will constitute a Refinancing and Restructuring Committee to “consider, examine, evaluate the ways and means of bringing about a restructuring of the core business of the company through a proposed demerger of Nashik plant from the company”.

Business Standard recently reported thermal power projects of about 25,000 Mw were on sale. But as finding buyers is posing a challenge, most promoter companies of the projects — some operational and others under development — want to exit to lighten their debt.

Sources said the projects in question were “ready to be fired up” but no state power distribution company was floating tenders for additional power procurement. To add to the woes, banks are concerned about non-performing assets increasing. As lack of power demand has hit most of the projects, sector experts say till 2022 new private investment is unlikely.