Govt sets up committee to address stressed thermal power assets issue

New Delhi: To address the concerns over Stressed Thermal Power Assets, the Government of India on Sunday set up a 'High-Level Empowered Committee', headed by the Cabinet Secretary P K Sinha, including representatives from the power, coal, railways and finance ministries.

"The committee will look into the various issues with a view to resolve them and maximise the efficiency of investment including changes required to be made in the fuel allocation policy, regulatory framework, mechanisms to facilitate sale of power, ensure timely payments, payment security mechanism, changes required in the provisioning norms/Insolvency and Bankruptcy Code (IBC), Asset Restructuring Company (ARC) Regulations and any other measures proposed for revival of stressed assets so as to avoid such investments becoming NPA," a ministry official statement mentioned.

Earlier this month, the acting finance minister Piyush Goyal asserted that the government at the centre accepted Sunil Mehta panel's suggestion of a five-pronged strategy to deal with the concerns. The panel was set up to study the feasibility of Asset Restructuring Company regulations for faster resolution of bad loans and it further suggested SME resolution approach, bank-led resolution approach, AMC/AIF led resolution approach, NCLT/IBC approach, and asset-trading platform. The finance minister further assured that "The government will not intervene in the resolution process which would be entirely led by banks."

Based on the suggestions, the independent committee has been set up.

However, in May, the power ministry had sought major changes in the Reserve Bank of India's (RBI) revised norms for identification and resolution of bad loans in the electricity sector, including ending the 90-day delay in repayment as a trigger for declaring a loan account as non-performing asset (NPA). The ministry also urged banking secretary Rajiv Kumar's intervention to extend the timeline for the submission of resolution plan for a defaulted loan account from 180 days to 270 days.

Later, the ministry submitted its recommendations after finance secretary Hasmukh Adhia held a meeting of all stakeholders to examine the power industry's demand for special treatment in the resolution of stressed assets in the sector.

The meeting was called with Allahabad high court's direction. The court took cognisance of the findings of the parliamentary standing committee on energy's report on stressed assets in the power sector in March. The panel's report had observed that private power plants involving an investment of Rs 1.75 lakh crore could be declared NPAs if an urgent intervention was not made by the government.