The Reserve Bank of India (RBI) is facing the wrath of the Association of Power Producers, which has accused the apex bank of over ruling the Parliamentary standing panel on power and key ministries with its February 12 circular that ended all the existing loan restructuring mechanisms and voted for insolvency code to resolve stressed assets.
The association has also sought a special dispensation from the Reserve Bank saying their defaults are caused mostly by non-payment/delayed payments by state discoms and regulatory delays coupled with poor coal supplies by Coal India, media reports said.
The association reportedly claims that regulatory delays have resulted in pending payments worth Rs 7,800 crore, while pending receivables from state discoms stand at Rs 8,300 crore. Also state-run Coal India is meeting only around 60 per cent of its committed supplies.
In a March 12 letter to the RBI — exactly a month after the February 12 RBI circular extinguishing all the existing bad loan management mechanisms like the 5/25, SDR, S-4A, CDR etc forthwith — the association has requested Governor Urjit Patel to intervene and exclude the power sector from the purview of the new NPA resolution rules, reported PTI.
Accusing the central bank of over-ruling the House panel on energy and the views of the Union power and coal ministries, association director general Ashok Khurana says, “The issue of stressed assets was discussed in depth with developers, bankers, regulators, and officials of power and coal ministries by the Parliamentary Standing Committee on Energy.
“After hearing all the stakeholders, theyve recommended that the revival schemes of the RBI or government should be realistic and not symbolic,” Khurana says in the letter.
“Every effort should be made to see that the projects with huge investment do not become NPAs for want of marginal financial infusion or adjustment in the way of making working capital available for passing on the interest variable to the stressed asset,” the letter further says quoting the House panel report.
The letter also reportedly notes that already there are over 75,000 MW assets- either under operation or under construction- severely stressed due to various reasons– lower coal availability, lack of long-term/medium-term PPAs, divergence between policy and regulations on pass through of incontestable changes in law (pending regulatory receivables of Rs 7,800 crore), huge delays in regulatory orders, and pending receivables from discoms with pending bills at Rs 8,300 crore.
