The Telegraph
Tuesday , June 24 , 2014
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Bid to energise power projects

Power minister Piyush Goyal with ministry officials and representatives of the industry in New Delhi on Monday. (PTI)

New Delhi, June 23: The Narendra Modi-government wants to fast-track the change of ownership in stranded power projects, whose unpaid loans have piled up to over Rs 1 lakh crore.

The government is also considering a proposal to set up a cabinet committee on energy to quickly clear around 3,500 projects stuck over environment clearances and involving the state governments as well.

The power ministry has impressed upon the Prime Minister in a presentation made earlier, which was followed up today by internal meetings, that there is a need to fast track the change of ownership of the stranded projects.

Work on the projects and repayment of debt were stuck as either clearances took a long time or fuel supply could not be arranged. The government wants to expedite the change of ownership, either through banking consortiums who lent money or through stressed asset fire sales by the current owners.

The ministry in a note said “allowing change of ownership of stranded assets (including land, fuel supply and power purchase agreements) with due process (that is, state cabinet approvals) to ensure disproportionate gains are not made” should be the proposed solution to the issue of “Rs 1 trillion of doubtful debts in the power sector”.

The presentation to the Prime Minister showed 35 gigawatts of electricity capacity was “stranded” because of the shortage of fuel.

A report released earlier this year by Fitch group’s India Ratings & Research has cautioned that investments worth around Rs 1,75,000 crore in the pipeline could turn non-performing unless coal and gas fuel supply glitches were resolved.

Sources said several distressed power projects were already being sold by their promoters. Foreign buyers as well as state-run NTPC are among those who have been approached by potential sellers desperate to exit projects which they fear cannot materialise in the near future, while their debts pile up.

The cabinet committee on energy, in the meantime, is expected to clear around “3,500 projects awaiting environmental clearance and 8,300 projects awaiting forest clearance.” The power ministry pointed out that the “cabinet committee on investments only dealt with projects that cost over Rs 1,000 crore and did not look into cases held up at the state level”.

To get over this difficulty, it stressed that the chief secretaries, or key secretaries of state governments, needed to be involved.