Power sector lenders weigh takeover of stressed assets

Lenders to stressed power assets are considering takeover of such plants in partnerships with central public sector undertakings (PSUs) such as NTPC and Power Grid Corporation of India to avoid distress sale owing to the expected surge in demand for power and coal-based stations in the coming years.

Power sector financiers Power Finance Corporation (PFC) and REC Ltd had earlier discussed the possibility of creation of an asset management company (AMC) to take over viable projects through bidding or change of management route. A senior government official, however, said it has been decided to have a case-by-case resolution rather than creating an AMC.

The lenders are looking at a case-by-case solution instead of taking a one-size-fits-all approach.

NTPC and lenders to the Avantha Group's 600-MW Jhabua plant have decided to jointly take over the stressed asset. Similar negotiations are on for Lanco Infratech's troubled Amarkantak project. The proposal is to hold the projects for sale at a better price in future.

In the case of Jhabua plant in Madhya Pradesh, NTPC will hold a majority 51% stake and operate the project while lenders will own the rest. "The lenders have sought approval from National Company Law Tribunal (NCLT) for the lender-based resolution plan," said an official, who did not wish to be identified.