Monday, December 15, 2014

Power Projects - Revival being worked out

According to Association of Power Producers, a grouping of private power companies, projects of 136,000 MW involving a capital outlay of over Rs 620,000 crores have been affected due to
various factors. A Panel headed by India Infra-structure Finance Company Chairman Santosh B Nayar has looked into their demands on ways to rescue the stressed assets and has submitted its recommendations to the finance ministry:

  • For projects stuck in court cases, the account may be allowed to continue as "standard" till a final settlement is reached.
  • For existing projects, delayed beyond two years, the provisioning by banks should be kept at 0.4 per cent instead of 5 per cent that is required at present. The panel also said that all viable projects may be allowed a one-time dispensation for refinancing with an extension in the repayment tenure.
  • In order to tackle the issue of funding of cost overruns, the lenders may be allowed to decide on the quantum of funding and revise the repayment schedule.
  • The power ministry should come out with a policy on long-term fuel linkage for projects whose coal blocks have been cancelled.

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