Ministry of Power to speed up sale of stressed power plants

The Union power ministry looks to conclude the sale of large stressed power plants, mostly coal-fired, at the earliest as energy demand picks up with higher industrial demand and peak hour household consumption.

According to people in the know, ministry officials are in discussion with private power producers as well as state-owned power generation companies to take over the stressed plants. Public sector undertakings (PSUs) like NTPC, NHPC, Power Finance Corporation, and REC are involved in resolving various stressed power assets, says the ministry.

India’s peak power demand has remained elevated at over 200GW in December amid the winter chill due to the use of heating appliances and geysers. The demand is expected to surge further during summer. India's total electricity production in fiscal 22-23 witnessed an increase of 8.9% compared to the previous year. According to the ministry, the peak demand escalated from 136 MW in 2014 to 243 MW in 2023.

The move of the ministry is helping conclude the power plant sales faster through the National Company Law Tribunal (NCLT), says an executive with a power generation company. The stressed power projects largely face shortages in funding, disruption in coal supply and fuel supply agreement issues and prolonged recovery of receivables under power purchase agreements. With the sale of assets, the ministry feels these issues can be addressed, he says.

The committee of creditors has recently approved a resolution by a consortium, which includes Adani Power to buy Coastal Energen under the Corporate Insolvency Resolution Process (CIRP). Coastal Energen Ltd. has an imported, 1,200-MW coal-based power plant operating in Tuticorin, Tamil Nadu.

For acquiring Lanco Amarkantak Power, Reliance Industries, Adani Power, Jindal Power and a Power Finance Corp-led consortium are in the race. NCLT Hyderabad has recently approved a resolution plan for GVK Power (Goindwal Sahib) Ltd. Punjab State Power Corporation (PSPCL) acquired the 540 MW thermal plant for ₹1,080 crore.

Jindal Power, Vedanta and Adani Power are among a dozen companies that have expressed interest in taking over IL&FS Tamil Nadu Power Corporation (ITPCL), one of the biggest assets under the IL&FS portfolio with a debt of about ₹10,000 crore. Vedanta took over Meenakshi Energy Ltd last year for ₹1,440 crore. State-owned power giant NTPC in 2022 acquired 600-MW Jhabua Power Plant for ₹925 crore.

The power ministry earlier said the generation companies with operational and implementation expertise would help in reducing turnaround time and bring stressed assets on stream quickly in partnership with other concerned government agencies. It would help the states to meet their increasing power demand economically, it said.