The Power Ministry has proposed that state-owned power firms NTPC, PFC and REC will make special purpose vehicle (SPV) to operate stressed assets, reports CNBC-TV18.
Power Minister RK Singh told CNBC-TV18 that it was an idea by REC that this SPV can run assets which are under stress but are completed and ready to go.
He said this is just an initial proposal and has to be discussed by the Finance Ministry and bankers, and once it finds resonance, they would go ahead with it.
“The SPV will not take over the assets but just run them, so that they are not sold at lower prices, or so that there is no distress sale,” he said.
In the first tranche, the government plans to bring out 25,000 MW of thermal power capacity, and in the second, about 15,000 MW.
If there is a need for value addition, SPVs may operate the plants with 40-50 per plant load factor (PLF) with power purchase agreement and rest in the spot market.
It seems that the government is trying to make stressed assets attractive before they go for the insolvency and bankruptcy process.
On hydropower plants, Singh said there is a hydro policy to which some changes were suggested and were agreed to, adding that it will go before the Cabinet by a month.
Talking about gas-based projects, he said that the availability of domestic gas is limited and with whatever is available, the first priority is to use it for cooking, LPG, fertilizer and then power. Imported gas is expensive, he said.
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