Senior officials from various ministries and major lenders attended the meeting and deliberated upon the issues related to resolutions of the stressed thermal power projects
The Power Ministry gave a detailed presentation to a high-level empowered committee on measures to deal with problems of struggling power assets, a source said.
"The power ministry today gave a detailed presentation in the second meeting of the High Level Empowered Committee to address the issues of stressed thermal power plants," the source said.
Some of the suggestions from bankers, financial institution and senior officials include bring out a payment security mechanism for private power generators, new power purchase agreement with add-on incentives like coal linkage and strict instruction to states for timely payment by discoms.
The first meeting of the panel was held on August 31, 2018. The panel was constituted by the government, with representatives from the Ministry of Railways, Ministry of Finance, Ministry of Power, Ministry of Coal and the lenders having major exposure to the power sector on its board on July 29, 2018, to resolve the stress and revive such assets.
A Power Ministry statement said that the second meeting of the High Level Empowered Committee to address the issues of stressed thermal power plants was held.
The meeting was chaired by the Cabinet Secretary. Senior officials from various ministries and major lenders (Banks and Financial Institutions) attended the meeting and deliberated upon the issues related to resolutions of the stressed thermal power projects. The deliberations will continue further, it added.
However, the source said that the RBI representative did not attend the second meeting held today. The RBI was also not part of the deliberations of the panel in its meeting held on August 31, 2018.
Earlier the Reserve Bank had turned down the Power Ministry's request to give certain concessions for setting up of an Asset Reconstruction Company (ARC) for warehousing stressed assets to prevent distress sale of these plants. The government wanted the RBI to relax the norm of making upfront payment of 15 percent the value of an asset to lenders by the ARC and upfront valuation of the asset.
Stressed power assets are a cause of concern which led to setting up an empowered committee.
The issue of stressed assets in the power sector became more vicious after the Allahabad High Court did not give any reprieve to these plants from RBI's new framework for resolving bad loans, issued on February 12, 2018.
The RBI framework provided for strict timeline for resolution of these bad loans where debt is Rs 2,000 crore or more. It mandates insolvency proceedings to start in case no resolution plan is provided by lenders within 180 days of default.Setting up an ARC is a legal option available to avoid insolvency proceedings for these stressed power assets.