Lok Sabha Question No. 4336 (UNSTARRED), answered on 2020-03-19
Subject: Steps to Prevent NPAs in Power Sector
Ministry: POWER
Asked by: Rajiv Pratap Rudy

## GOVERNMENT OF INDIA MINISTRY OF POWER

## LOK SABHA UNSTARRED QUESTION NO.4336 TO BE ANSWERED ON 19.03.2020

## STEPS TO PREVENT NPAs IN POWER SECTOR

4336. SHRI RAJIV PRATAP RUDY:

Will the Minister of POWER be pleased to state:

- (a) whether the Government has taken steps to prevent Non-Performing Assets (NPAs) in  the  Power  sector  and  ensure  completion  of  ongoing  projects  on  time  and  if  so,  the details thereof;
- (b) the details of the number of firms that have initiated insolvency proceedings in the Power sector, year-wise, in the last 10 years and the current status of these proceedings;
- (c) the  details  of  the  risk  exposure  to  the  Power  sector  by  various  banks  in  the country, bank-wise; and
- (d) details  of  the  current  quantum  of  NPAs/debt  in  the  Power  sector  in  the  country, particularly in the State-owned power companies?

## A N S W E R

THE  MINISTER  OF  STATE  (INDEPENDENT  CHARGE)  FOR  POWER,  NEW  &  RENEWABLE ENERGY AND THE MINISTER OF STATE FOR SKILL DEVELOPMENT & ENTREPRENEURSHIP

( SHRI  R.K. SINGH)

(a) to (d) : Department  of  Financial  Services  on  22.03.2017  had  provided  a  list  of  34 coal  based  Thermal  Power  Projects,  mostly  private,  totaling  to  40,130  MW  which  were considered 'Stressed'.

A High Level Empowered Committee (HLEC) was constituted by Government of India in July, 2018 which gave its recommendations in November, 2018. In the report, factors  like  coal  supply  issues,  slow  growth  in  power  demand,  delayed  payments  by Discoms, Banks/ Financial Institutions related issues, aggressive tariffs quoted by bidders in competitive bidding process, legal issues related to auctioned coal mines, regulatory & contractual  disputes,  inability  of  promoters  to  infuse  equity,  tardy  implementation  and other operational issues were identified as cause of stress in coal based power plants. Out of 34 stressed projects, 14 projects with capacity of 16,450 MW have already been resolved and 14 projects with capacity of 17,320 MW having debt of Rs 91,773 Crore are likely  to  be  resolved  under  National  Company  Law  Tribunal  (NCLT)  or  outside.  The remaining  6  projects  with  capacity  of  6,360  MW  are  unlikely  to  be  resolved  and  are heading towards liquidation, having a debt of Rs 26,806 Crore.

……….2.

The  following  Steps  have  been  taken  by  the  Government  to  resolve  the stress in thermal power sector:

(i) Introduction of Transparent Linkage policy: On 22.05.2017, Government introduced SHAKTI  Policy  for  grant  of  linkage  to  power  sector.  Linkages  granted  under  SHAKTI Policy:

- (a) Shakti Policy Para B(i): Linkage granted to 23 nos. Thermal Power Projects (TPPs) totaling 25,060 MW under Central/State Sector category.
- (b) Shakti Policy Para B(ii): Coal linkages have been allotted under 1st round of B(ii) of Shakti (IPP Projects having PPA but no linkage) for 9045 MW capacity (32.68 MT) and 2nd round of B(ii) for 877.4 MW capacity (3.34 MT).
- (c) Shakti Policy Para B(iii): Bidding held from 5 th  to 7 th  February, 2020. A total capacity of 3775 MW (Total 5995 MW) which did not have PPAs have secured linkage for 6.49 MT.
- (d) Shakti  Policy  Para  B(iv):  Coal  linkages  granted  to  the  State  of  Gujarat  for 4,000 MW, to the State of UP for 1,600 MW and to the State of MP for 2640 MW power to be raised through tariff based competitive bidding based on the above linkage.
- (e) Under  B(v),  aggregator  (PFC)  has  been  allotted  Coal  linkage  (10  MT)  for aggregating demand for tariff based bidding.
- (f) Shakti Policy Para B(viii)(a): Methodology issued by MoP. Guidelines issued by CEA. Applications received from 14 nos. of bidders with plant capacity of 9,813 MW and 8145 MWs without PPAs.

(ii) Pilot project for procurement of 2500 MW power: In order to address the problem of lack  of  Power  Purchase  Agreements  (PPAs)  in  the  country,  the  Ministry  of  Power  had notified  a  scheme  for  procurement  of  2500  MW  on  competitive  basis  for  a  period  of  3 years from the generators with commissioned projects having untied capacity.

- (a) 1 st  Round (2500 MW): Letter of Award (LOA) was issued to all the successful bidders (1900 MW) - PPA signed.
- (b) 2 nd  Round (2500 MW): Bid Security for 21 bidders for a total capacity of 6000 MW was received. Bids opened on 07.02.2020. 12 bidders were successful. Final tariff received is 3.26 per unit.

(iii) Payment  Security Mechanism:  Ministry issued an order on 28.06.2019 and subsequent  corrigendum  thereon  17.07.2019.  NLDC  &  RLDC  have  been  directed  to despatch power  only  after  it  is  intimated  by  the  Generating  Company  and  /Distribution Companies that a Letter of Credit (LC) for the desired quantum of power has been opened. This has ensured timely payments by Discoms to the generators.

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