The power sector’s woes don’t seem to end. While a Centre-assisted R1.9-lakh-crore financial restructuring plan (FRP) for state-run power utilities have just gotten off the ground, a slew of private power companies fear that they might soon begin faltering on the repayment of another R30,000 crore outstanding domestic loans.
The companies that could face problems in meeting the repayment schedules include Reliance Power, GVK Power, Lanco Power and Torrent, whose gas-fired plants haven’t got the fuel linkage in time, resulting in project delays.
Power minister Jyotiraditya Scindia has written to finance minister P Chidambaram on behalf of these companies, seeking his intervention to direct public sector lenders to relax the repayment schedules. Scindia also sought the Reserve Bank of India’s leniency for refinancing of a major portion of these loans — as against 40% allowed now — through external commercial borrowings, so that domestic lenders can extend fresh loans.
As per existing RBI guidelines, a loan for infrastructure projects can be restructured two years from the commercial operation date (COD), which could be extended by another year if a project has been delayed for reasons beyond the control of the developer. The power minister has supported these companies’ demand that the COD of these stuck projects be extended by three years, enabling them to get a waiver of 1% penal interest that comes with restructuring.
In addition to the gas-fired plants, the domestic loan exposure of which is R30,000 crore, a clutch of other col-based projects with outstanding loans of R1 lakh crore are also looking for relief, as evidenced by a petition to the power minister by the Association of Power Producers. These include projects of Adani Power, Essar Power, Tata Power, Reliance Power and Indiabulls, among others. However, sources said, the power minister hasn’t endorsed their demand for now.
These projects are likely to miss commissioning schedules for reasons beyond developers’ control, such as environmental hurdles, land acquisition problems and fuel shortages, according to AAP. Besides, big power companies are facing difficulties in accessing loans for new projects as majority of domestic lenders have hit the RBI’s group- and sector-specific exposure ceilings.
Significantly, delays in infrastructure projects have been a key factor behind domestic banks’ rising non-performing assets. Latest RBI data show the share of infra sector in banks’ total stressed assets have risen from 8.4% in 2010-11 to 21.2% in 2011-12 and further to 30.3% by September 2013. Gross NPAs