The government may ask the Reserve Bank of India (RBI) to allow banks and financial institutions to lend working capital to imported coal-fuelled power plants that have been classed as non performing assets so that they can resume generating power, officials aware of the deliberations said.
This comes follows the power ministry directing two power sector lenders — state run Power Finance Corporation (PFC) and REC Ltd — to arrange loans for up to six months to financially stressed imported coal-based (ICB) power generation plants to enable them to restart generation.
The reported move comes at a time when the country is going through a severe power crisis due to lower availability of coal and high power demand with the early onset of summer.
The loans availed through the special window would have to be given priority in terms of repayment to the banks, experts said.
Experts were of the view that for banks to be able to give loans to these plants, RBI may have to restructure the existing loans for more loans to pour in.
Sumit Khanna, Partner & National Head, Corporate Finance & Restructuring Services at Deloitte said: “One option can be restructuring of loans, and the other option is that the NPA status is kept there (for the previous loans) and a new loan is allowed for a short period and the amount is put into an escrow account for further use.”
Several of the imported coal-based power plants are not working to their full capacity amid financial stress and the high cost of coal in the international markets.
Earlier this month, the power ministry asked all imported coal based plants to start operating at 100% capacity, saying these plants need working capital to buy coal and start generating power in order to restart their operations.
ICB plants have a total capacity of 17,600 MW but only around 10,000 MW is operational.
The ministry had also mandated blending of 10% imported coal by power plants to meet soaring demand. Power demand spiked last month leading to fears of a crisis situation with low availability of coal and railway rakes to transport the mineral to plants.
Although, the power demand has softened since then and the shortage seems to have eased, temperatures have begun rising again. The maximum demand met in a day has again crossed the 200 GW mark. On Monday, it was 201.74 GW. The highest peak demand met this year was 207.11 on 29 April .
As of Monday, the total stock at the power plants tracked by the Central Electricity Authority was 20.78 million tonnes, less than a third of the required 66.49 million tonnes. Of the 173 plants under the ambit of CEA, 79 plants based on domestic coal are running on critical stock, with less than 25% of the requirement. Another 10 imported coal plants are also surviving on critical coal invetory levels.
Queries sent to the ministries of finance and power and the RBI remained unanswered till press time.