The PSU banks’ power assets of around 70% are at the moment stressed although not necessarily NPAs
Pradeep Kumar Pujari, Power Secretary said about the surplus generation capacity in the power sector that the way demand will be grown in the subsequent three years and the market is expected the imbalance market to be corrected.
On Tuesday, the Reserve Bank of India identified 12 non-performing accounts which are 25% of India’s gross NPAs which can be taken under the Insolvency and Bankruptcy Code (IBC).
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As per Pradeep Kumar Pujari, the power plants are struggling due to lack of power purchase agreement PPA or PPA tariffs and there is a need to address the issue first.
The issue can be probably addressed when the banks take over the assets probably because of either the write down of equity or debt restructuring. It is depend on the market in coming two year. In the recent coal linkage policy, the medium term PPA had been allowed to be bided out.
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He said that he is hoping for the aversion in the market for the long-term PPA but there could be appetite for the medium-term PPA.
He said there seems to be some appetite for short-term and medium-term PPA from discoms. He said, “shorter term is already put out in the market by discoms but for more assurance, it is medium-term for which timeframe is between one year and five to seven years, we expect that the medium-term PPAs will come into the market because this particular provisions for using the linkage coal for the medium term PPA was not there. The new coal linkage policy allows the linkage coal to be used for the medium term PPAs. Now that I think is opening which discoms will be willing to explore.”
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