Gujarat Meet Today On Rescue Plan For Tata And Adani Power Plants

Gujarat Meet Today On Rescue Plan For Tata And Adani Power Plants

The Gujarat government is scheduled to discuss with lenders on Monday a future course for the Tata and Adani groups’ imported coal-fired power plants that have fallen into dire straits.

Sources said the meeting, scheduled in Gandhinagar, is expected to be attended by top members of the state administration, while the lenders will be represented by State Bank of India brass. It will pick up the threads of last month’s brainstorming session at the Union power ministry on ways to prevent these projects, with a collective capacity of over 8,000 mw, from turning into non-performing assets (NPAs) for lenders.

In an act of desperation, the promoters have offered 51% stake in the project to the state government for Re 1. They took the step after failing to secure adequate tariff to make up for higher fuel cost due to changes in the coal pricing policy of Indonesia, where both have their captive mines.

The power ministry has taken the stand that it was a matter to be decided by the stakeholders, including the state government, but it could do some hand-holding to prevent further power sector NPAs for lenders.

One of the options discussed at the June meeting envisaged lenders taking over the projects and transferring it to the state government for operation. The Gujarat government suggested lenders taking 100% equity for Re 1, instead of the 51% offered by the promoters.

It is not yet clear whether Gujarat alone will take control of the ownership or share it with other states that have 25-year power purchase agreements with the projects.

READ  Tata Power eyes stake sale in renewable power arm

The change in ownership of these projects, awarded through tariff-based bidding, will turn them into public property. This will allow new owners to seek suitable tariff from regulators under ‘cost-plus’ formula, which allows any rise in fuel costs to be passed on, and make them viable.

But this will not get the promoters off the hook as lenders have insisted that the corporate guarantees given by the groups should continue even after change in ownership of the plants.

 

 

Source Link – ET Energy World

Leave a Reply

Your email address will not be published.