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Stress Booster for Plant with Idling Capacity

<p>India has 34 stressed plants with a capacity of 40,000 megawatts, combined debt of the projects is Rs 1.77 lakh crore.&nbsp;The major reasons for stress in the power sector are non-availability of regular fuel supply arrangements, lack of power purchase agreements, promoter&rsquo;s equity crunch, and regulatory and contractual issues.&nbsp; The government&#39;s novel scheme to revive stressed power assets has invited competitive bids from them to supply electricity for three years. RKM PowerGen, Jaiprakash Associates, IL&amp;FS and MB Power are among seven companies that have bid the lowest in an auction of three-year power supply contracts with stressed plants, quoting a price of Rs 4.24 per unit.&nbsp;</p> <p>A move that will give state utilities cheaper electricity and help stranded plants start operation and start repaying debt. The proposal aims to help idling power projects tie up medium-term contracts. The proposed scheme will remove contractual requirement for the buyer to pay a fixed cost to the power plant even if no power is purchased. Through this the government plans to encourage state power distribution companies to float tenders seeking electricity supply and sign new PPAs, which in turn will help the stranded power stations get fuel supply from Coal India.The proposal, however, will mandate the state distribution companies to offtake a minimum capacity of electricity from the plants</p>