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Power minister Piyush Goyal on Monday said his ministry may not seek any exceptional relaxation of RBI guidelines to bail out power sector borrowers, even as bankers suggested creating a special fund with contributions from power PSUs, as well as sovereign wealth funds and pension funds, to mobilise resources for financing the capacity addition programme.

“There will be no major change in RBI laws (for lending to the power sector),” Goyal said while briefing reporters on the outcome of his meeting with chiefs of leading power sector lenders, including State Bank of India, on Monday.

The minister's statement assumes significance in the context of power companies' plea that lenders be allowed to extend scheduled commercial operation date (CoD) of power projects unable to start generation due to non-availability of fuel, a move that will allow developers to postpone repayment without bankers restructuring the loans. On their own, lenders can allow extension of CoD by a maximum of three years only and any extension beyond that needs RBI permission.

Meanwhile, Yes Bank MD & CEO Rana Kapoor, who attended the meeting, told FE that he proposed a Powering India Fund (PIF) to ensure 24x7 supply in the country. Through PIF, the government can look at ways to raise INR 50,000 crore (INR 25,000 crore domestically from the cash surplus of around INR 1.5 lakh crore that Coal India, NTPC, RFC and PFC have as well as another INR 25,000 crore from overseas funds, including sovereign wealth funds, pension funds and multi-lateral agencies) to help kickstart stalled power projects, he added.

According to industry estimates, 10,000-11,000-MW coal-based capacity has been left high and dry in the absence of fuel-supply agreements and could eventually become non-performing assets. Another 8,000-MW gas-based capacity too could meet the same fate due to non-availability of domestic fuel. As much as 48,000-MW capacity is stranded due to fuel shortages. While bankers are getting their loan repayments from these projects, developers are having to do without profits.

Significantly, banks and financial institutions, especially from the public sector, are reeling under non-performing assets. As per Moody's estimate, power sector accounts for 20 Percent  of public sector banks' bad loans.

Public sector banks have taken a significant hair cut due to implementation of the INR 1.9-lakh-crore financial restructuring plan ( FRP) for state-owned power distribution companies. Under FRP, lenders had to lower interest rates and provide a three-year repayment moratorium on short-term loans taken by discoms in exchange for state governments agreeing to take over half of discoms' loans on their balance sheets.

Bankers, including SBI, ICICI Bank, Punjab National Bank and Canara Bank, called upon the power minister to discuss a long-term road map for the power sector, which is beset by issues like fuel shortages, default on power supply contracts and discoms' poor finances. It was agreed at the meeting that more private players should enter the power distribution business.

Also discussed was a 100-day plan as well as a medium-term strategy to create a positive sentiment in the sector by preserving the value of the assets. Bankers sought tax incentives on the bonds issued by them to raise capital, which, in turn, can be used for the benefit of infrastructure sector, including the power sector.

Orissa, TN UMPPs

State Bank of India and ICICI Bank, two banks with considerable exposure to the power sector, have told the power ministry that they would rather not finance Orissa and Tamil Nadu ultra mega power projects where tendering is being held on the basis of new bidding norms.

Sources said SBI chairperson Arundhati Bhattacharrya aand ICICI Bank chief Chanda Kochhar, who met power minister Piyush Goyal along with chiefs of other banks here on Monday to discuss financing issues related to the power sector, conveyed to the minister that the new tender documents based on design-build-finance-operate-transfer (DBFOT) model were not bankable.

About half-a-dozen private companies, including Adani Power, Tata Power and Reliance Power, which have submitted technical bids for the two UMPPs, have warned that they could drop out of the bidding race.

Duty on solar gear

The ministry wants a review of a proposal to impose anti-dumping duty on imports of solar gear because the country does not have sufficient capacity to make equipment to harness the sun's energy.

"We have asked the commerce and finance ministries to re-look into the recommendations of the report...India does not have adequate manufacturing capacity to support the kind of thrust we want to give to solar. Therefore, we have appealed to them to take a view," Goyal said. "It is a short-term view since we are also looking at expanding the (solar) manufacturing base in the future," he said.

Source-On Request